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Transportation Bill Shutters Independent Freight Brokers and Forwarders
BOCA RATON, Fla., Dec. 20, 2013 /PRNewswire/ -- Since December 1st, nearly 10,000 family-owned companies across the country were forced out of business because of a little-known provision in the "Moving Ahead for Progress in the 21st Century" transportation bill (MAP-21). These businesses are independent freight brokers and forwarders who compete with big transportation companies to arrange transportation between manufacturers and carriers of goods.
Texas was most severely impacted, losing 927 businesses during December. Next was California, with 906 businesses gone, and Illinois with 533 companies lost. Rounding out the top ten states affected are Florida, Ohio, New Jersey, Georgia, Pennsylvania and New York. The tally is rising, and closings continue to affect all 50 states.
These businesses closed as a result of MAP-21 Section 32918, requiring freight brokers to pay a $75,000 bond, up from the traditional $10,000 bond. Independent brokers must raise the same cash collateral as large multinational competitors, favoring big businesses at the expense of smaller companies.
An FMCSA ruling, enforced without public participation, dictates that brokers unable to raise $75,000 in cash collateral by December 1 lose their licenses. Up to 17,000 small businesses could be wiped out, and consumer prices will likely rise as competition is diminished and a few large companies dictate the cost of moving goods.
The Association of Independent Property Brokers & Agents (AIPBA) has appealed to the House and Senate Judicial Committees, asking the judiciary to call for proper rulemaking and fact-finding in the FMCSA ruling.
James Lamb, president of AIPBA, says, "On December 1, there were 21,080 independent brokers; today there are 12,996. Many are home-based businesses who will no longer be able to compete with large companies that can easily secure $75,000. This is a crisis for the independent freight industry and for American consumers and manufacturers, as costs will rise for virtually all goods shipped within the U.S."
AIPBA is an independent, not-for-profit trade group, a "business league" under IRC 501(C)(6). Its mission is to promote the common business interests and improve business conditions for small and mid-sized independent property brokers, as defined in 49 CFR Part 371, who are authorized to conduct business by the Federal Motor Carrier Safety Administration ("FMCSA") having annual revenues of $14m or less, and for their duly appointed agents.
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