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Why Is It Important to Work with a Licensed and Bonded Freight Broker?

bonded freight broker

Logistics professionals need to consider a myriad of factors in their daily operations. Making the right choice for a freight brokering partner is often one of the important tasks on their to-do list. Whether you’re a shipper or a carrier, working with a bonded freight broker is essential for your workflow. Brokers function like the middlemen who ensure a smooth transportation process and top service prices for all parties involved.

Because of brokers’ central role in the logistics industry, you need to carefully consider who will be your most appropriate partner. Working with a licensed and bonded freight broker provides you with the needed security in this process. That’s why it’s highly recommended that you check the credentials of your broker before you start your collaboration.

Here are the top reasons why partnering with a licensed and bonded freight broker is the wisest choice for your logistics company.

The FMCSA license ensures brokers’ legitimacy

All freight brokers in the U.S. need to undergo a rigorous licensing process with the Federal Motor Carrier Safety Administration (FMCSA). They have to apply via the Unified Registration System (URS) to obtain their operating authority. This is the only way that brokers can operate legally in the country.

The licensing involves meeting a number of requirements set by the FMCSA. They include registering a company, setting up an office- or home-based office, and appointing a process agent for each state in which they operate. Brokers also need to comply with the strict bonding and insurance criteria.

Since the requirements are considerable, the licensing truly ensures that licensed brokers are trustworthy. Their professional and financial stability is checked by the FMCSA to guarantee they are safe to do business with. You can check online if the broker you are about to choose is registered with the FMCSA

The freight broker bond provides protection

One of the reasons why the licensing ensures that you can safely work with a freight broker is the bonding requirement. Brokers have to post a $75,000 bond to obtain their operating authority. The bond’s penal sum was increased from $10,000 to this new amount in 2013.

The freight broker bond is an extra layer of protection for brokers’ working partners and clients. It is designed to safeguard your interests against misuse and fraud on the side of brokers. If you suffer any damages because of brokers’ unlawful actions, you can demand a compensation by filing a claim on the broker bond. Affected parties can get a reimbursement up to the penal sum of the bond, which is considerable. This ensures that shippers and carriers will not be unfairly treated by the brokering partners.

The bonding process itself involves detailed checks of brokers’ personal and company finances. This is another round of security approval, which guarantees that only stable businesses enter the industry. Before you start working with a broker, check the validity of their surety bond on the FMCSA’s website. 

Bonded Freight Brokers Provide Additional Security Factors You Can Consider

The active license and freight broker bond are the minimum requirements you should check when selecting your brokering partner. You can also look at other factors to further see the suitability of the broker.

You can inquire whether the broker has all needed insurance. Typically, brokers have to get loss and damage insurance (BMC-34) and in some cases, BMC-91 or BMC-91X insurance for bodily injury, property damage and environmental restoration. You can decide whether you want to collaborate with a broker depending on their insurance situation.

It’s also advisable to check if the broker is accredited with the BBB and what their score is. See also if they have a TIA membership. These are additional factors that ensure the legitimacy and trustworthiness of your brokering partner and it might be wise to check all of them.

What is your experience in working with a licensed and bonded freight broker? Please share your comments in the section below.

Todd Bryant

Todd Bryant

President & Founder at Bryant Surety Bond
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping freight brokers get bonded and start their business.
Todd Bryant
Todd Bryant
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