The Moving Ahead for Progress in the 21st Century ( MAP-21) has many parties nervous. Insurance agents have little understanding of the ramifications of what the act means to truck brokers, freight forwarders, motor carriers, and the shipping community.
The world of transportation of freight involving an intermediary changed. Now, if someone else is involved in the handling of freight besides just the carrier and the shipper, the game changed
So what changed?
Requirements for Truck Brokers, Freight Forwarders and Motor Carriers:
· the truck broker surety requirement rose to $75,000 ( formerly $10,000)- a significant increase and in this author's opinion completely unwarranted
· a motor carrier must have separate broker authority with a distinctive registration number. That means for happy transportation insurance underwriters that the brokerage operation will be finally separated from carrier's authority -whether the carrier wants to or not ( and they typically do not).
We did hear from one notable transportation attorney that existing common, contract, and brokerage operations with combined authority under one name may be grandfathered ( exempted) from seperating the authority. We feel the jury is still out and we have seen no enforcement of MAP-21 (yet).
Penalties for Non-Compliance:
· $10,000 per violation fine Payable to the United States Government
· $ unlimited dollars for all claims to an injured party
· Individual, officers corporations can be liable for civil damages- sounds like a bigger need for E & O and D & O insurance coverage
While this may be succinct, you will need to note enforcement of MAP-21 and the tweaking of the rules will be a work in progress. Does that mean the parties involved here should blow it off? No!
I saw an article in a recent Transport Topics that I will abridge here by David Dwinnell, a leader in broker training nationally. I will paraphrase it accordingly and modify it to fit what it means from an insurance perspective.
Shipper Changes.
1. If a shipper contracts with a motor carrier, only that motor carrier can transport the load.
2. If another carrier has to be involved, the bill of lading will need to be in the new carrier's name ( note we get a lot of resistance from truck brokers and their insurance agents that truck brokers have to be able to allow shippers to put the bill of lading in their name. MAP-21 will put an end to that practice.)
Motor Carrier Changes.
1. It will be illegal to take cargo for brokering purposes- period.
2. Only a motor carrier's separate truck brokerage operation will be allowed to arrange transportation.
Truck Broker Changes .
1. Double brokering is prohibited- It will be interested to see if co-brokering is also prohibited as it is this author's take MAP-21 is vague on the subject.
2. A truck broker can never be in possession of the cargo or have a beneficial interest in the cargo.
3. A truck broker cannot be a party to the bill of lading as the carrier.
So with all this mentioned, has the game changing? Yes. Do all parties need to get on the same page? You bet.. Have smaller brokers gone out of business due to the new bond requirements? Absolutely. Will motor carriers who are trip leasing need to get brokerage authority? Absolutely. Are insurance agents and insurance companies prepared for all this? Absolutely not. Are truck brokers, motor carriers and shippers prepared for this? Absolutely not.
As Aldous Huxley said, it's a Brave New World.
