FMCSA Map-21 update
On October 1st, the Federal Motor Carrier Safety Administration (FMCSA) requires that bonds for domestic property brokers and freight forwarders be increased from $10,000 to $75,000. There will be a 60 day phase-in period for enforcement which ends November 30th 2013. A copy of the federal register notice can be viewed here.
FMCSA? Don't you mean the FMC?
No. The Federal Motor Carrier Safety Administration (FMCSA) has jurisdiction over interstate commerce and domestic transportation. The Federal Maritime Commission (FMC) has jurisdiction over steamship lines, ocean freight forwarders, terminal operators and cruise lines, among other ocean maritime entities and businesses.
What is MAP-21? The Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law by the President in July, 2012. A portion of this act requires anyone acting as a property broker or domestic freight forwarder and subject to the FMCSA's jurisdiction to register, obtain authority and provide financial security to the agency.
International Bond and Marine is committed to educating you, our customers, about MAP-21, the agency's definitions of the regulated parties, and the responsibilities and financial impact of both compliance and non-compliance.
You just said "broker" or "freight forwarder". How are those terms defined?
In the final rule, published in the Federal Register, the FMCSA defines:
Broker:
"...a person or an entity that, for compensation, arranges or offers to arrange, for the transportation of property by a motor carrier. A broker does not transport the property and does not assume responsibility for the property."
Freight forwarder:
"..a person or entity that holds itself out to the general public as providing transportation of property for compensation, and in the ordinary course of business:
- Assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;
- Assumes responsibility for the transportation from the place of receipt to the place of destination; and
- Uses for any part of the transportation a rail, motor, or water carrier subject to the jurisdiction of either FMCSA or the Surface Transportation Board.
So what part of this applies to my company as a Customs broker or International freight forwarder delivering imported cargo or picking up export cargo?
We have seen several legal opinions about this, and our interpretation is that domestic movements undertaken as part of an international through bill of lading do not require registration and a bond. Picking up or delivering cargo that is not part of a through bill of lading are activities that the FMCSA regulates, and you should register and be bonded. If you are handling domestic movements that are not part of an international shipment, your smartest choice is to either forego the shipment or to follow the regulations and register yourself with the FMCSA.
Great. Another bond. How much again?
Companies currently acting as property brokers or freight forwarders (under the FMCSA definition) already carry a $10,000 bond. On October 1st, the requirement for the bond increases from $10,000 to $75,000.
There is good news, though.
The FMCSA has said that legal entities acting as both a broker and freight forwarder under the same name will only need one $75,000 bond and both BMC-84 and BMC-85 forms will need to be updated (see above). If, however, the two entities are acting under different legal names, then there will be a requirement for separate $75,000 bonds.
How long do I have to get this done?
Sixty (60) days. The phase-in period begins on October 1st and by November 1st; notifications will go out to all brokers and forwarders who haven't met the $75,000 financial security requirement.
So sixty days pass and I've done nothing...what happens?
Great question. If the new financial security is not in place, the FMCSA will mail a notification providing thirty days notice before terminating a broker's or freight forwarder's operating authority.
If the authority is revoked and a company knowingly engages in interstate brokerage or freight forwarding operations in violation of the regulations, there is a civil penalty not to exceed $10,000. The broker or freight forwarder may also be held liable to any injured third party for all valid claims regardless of the amount (meaning: no limiting your liability if you're not registered). For household goods, that penalty is $25,000.
It sounds like I need a bond. Can IB&M provide that?
Yes, International Bond & Marine offers the required $75,000 bond for property brokers and freight forwarders as required by the FMCSA.
In addition to the legal requirements imposed by the FMCSA, we recommend that companies protect their interests and their shipper's interests by carrying insurance. IB&M offers a broad spectrum of coverages for property brokers, including, but not limited to: Contingent Cargo & Contingent Auto Liability, Errors and Omissions, Warehouse Legal Liability, and All-Risk Cargo Insurance.
Rates and terms are available upon request. Underwriting and premium decisions are made based on company operations and financials that are submitted to International Bond & Marine directly with your application. For more information, you can also contact Jason Wieselman at 201-653-6100 Ext. 202.