Policy Statement : All freight brokerages must secure a bond or letter of credit worth $250,000.00 from a recognized financial institution.
Delivery carriers have the right to claim unpaid freight charges from the bond or letter of credit if payment is not received within 60 days of delivery. Unpaid freight charges must be reported to the insurance company on a monthly basis to safeguard third-party carriers and owner-operators. If the bond or insurance company fails to compensate the delivery carrier, the purchaser of the goods must pay the freight charges as claimed by the carrier. All freight brokers and asset-based and non-asset-based carriers shall be regulated under this policy to ensure compliance.
- PurposeTo ensure the financial protection of delivery carriers and owner-operators by regulating freight brokerage practices and providing mechanisms for recovery of unpaid freight charges.
- ScopeAll freight brokerages, both asset-based and non-asset-based. Delivery carriers and owner-operators engaged in the transportation of goods. Financial institutions providing bonds or letters of credit to freight brokerages.
- Definitions
- Freight Brokerage: A company that arranges the transportation of goods on behalf of shippers without owning the vehicles used for transport.
- Bond/Letter of Credit: A financial guarantee provided by a bank to ensure payment to carriers in case of non-payment by the broker.
- Unpaid Freight Charges: Transportation fees that remain unpaid 60 days after the delivery of goods.