The Quest
August 2011 - Issue 71
Inside this issue:
CBP updates 301 bond form

New bill proposed to fight fraud in trucking

Ways to red-flag fraud, by Andrew Spector, Esq.

New report identifies cargo theft trends

China proposes increase in FMC optional bond rider

Updates on liquidated damages for Periodic Monthly Statement

CBP updates mitigation guidelines for advance cargo information violations

U.S. government urges companies to strengthen Internet security
Trucking associations ask NHTSA to examine truck crashworthiness standards


New bill proposed to fight fraud in trucking
A new bipartisan bill was introduced in the House of Representatives to fight fraud in the trucking industry. H.R. 2357, the “Fighting Fraud in Transportation Act of 2011,” sponsored by Reps. Frank Guinta (R-N.H.) and Russ Carnahan (D-Mo.), aims to protect the trucking industry from “scam artists.”

The Transportation Intermediaries Association (TIA), the Owner-Operator Independent Drivers Association (OOIDA) and the American Trucking Associations (ATA) have joined together in their support of the act. The bill’s language is nearly identical to last year’s Motor Carrier Protection Act.

Several changes were proposed in the bill’s language to protect legitimate businesses in the industry, including:

  • Increasing the FMCSA property broker bond amount from $10,000 to $100,000.
  • Providing further details on requirements for new companies looking to register as property brokers, freight forwarders or motor carriers.
  • Establishing significant penalties including unlimited liability for freight charges when companies operate without the required authority.
  • Clarifying that a motor carrier may provide transportation of property with self-propelled motor vehicles owned or leased by the motor carrier or through interchanges as permitted under regulation, provided that the originating carrier must physically transport the cargo at some point, and retains liability for the cargo and payment of interchanged carriers.
  • Providing more oversight of transportation broker surety companies.

To view a copy of the bill’s wording, click here.

TIA has acknowledged that a $100,000 broker bond was not the ideal solution, but the increase was considered a reasonable compromise. Many brokers will qualify for the increased bond amount based on Avalon's current underwriting approach. A $100,000 bond level is not entirely different in magnitude from bonds required for other transportation activities, such as OTI bonds required by the Federal Maritime Commission, the SDDC bond, etc.

Knowing that a bond increase is likely will allow brokers to prepare for the change. Through TIA’s Performance Certified Program underwritten by Avalon, companies can already obtain bonds up to $100,000 and $250,000 going beyond the existing $10,000 FMCSA requirement. In addition, with some shippers now requiring that brokers purchase individual, shipper-specific surety bonds, the Performance Certified Program offers the best solution. When shippers agree to accept this protection in lieu of a shipper-specific bond, you save bond premium and avoid high aggregate bond amounts.

For more information, please contact your local Avalon office or Andriana Davis at (847) 700-8087 or at adavis@avalonrisk.com. A list of our offices may be found at www.avalonrisk.com.

Avalon Risk Management
150 Northwest Point Boulevard | 4th Floor | Elk Grove Village, IL 60007
Phone: (847) 700-8100 | Fax: (847) 700-8116



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