Background
The Federal Motor Carrier Safety Administration (FMCSA) has issued a final rule that establishes financial responsibility requirements for transportation brokers and freight forwarders. The rule, which was published in the Federal Register on May 16, 2023, is intended to ensure that these companies have the financial resources to meet their obligations to shippers and carriers.
Key Provisions of the Rule
The final rule requires transportation brokers and freight forwarders to maintain a minimum level of financial responsibility, which is based on the company’s annual operating revenue. The amount of financial responsibility required ranges from $75,000 for companies with annual revenue of less than $1 million to $500,000 for companies with annual revenue of $10 million or more.
Companies can meet the financial responsibility requirement by obtaining a surety bond, a trust fund, or a letter of credit. The rule also allows companies to self-insure, but they must meet certain criteria in order to do so.
Compliance Deadline
The final rule will take effect on September 1, 2023. Transportation brokers and freight forwarders must comply with the rule by that date.
Enforcement
FMCSA will enforce the final rule through its existing enforcement mechanisms. Companies that fail to comply with the rule may be subject to civil penalties of up to $10,000 per violation.
Benefits of the Rule
The final rule is expected to provide several benefits, including:
Conclusion
The FMCSA’s final rule on financial responsibility requirements for transportation brokers and freight forwarders is a significant step towards protecting shippers and carriers from financial losses. The rule is also expected to level the playing field for companies in the industry and improve the safety of the trucking industry.
Kind regards Kendra Peterson.
