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  • 3 Ways to Qualify for a $75K Broker Bond

    BROKER BOND UPDATES:
    Since the transportation bill became law a few months ago, I have received a lot of calls from brokers who want to understand the implications for their business. The law, dubbed Moving Ahead for Progress in the 21st Century (MAP-21), includes many provisions that affect freight brokers, but the $75,000 bond requirement has been the subject of the biggest controversy.
    When concerned clients ask my advice about the new bond, I urge them to calm down. The Federal Motor Carrier Safety Administration (FMCSA) has announced that its target date for enforcement is October 1, so there is still time to prepare and to consider the options.
    There is also a lot of confusion and misinformation about the bond. For example, many brokers fear that the larger bond will not be available.  That simply is not true.  There are sureties that are eager to provide $75,000 bonds to qualified brokers and freight forwarders.
    Here are three things you need to know about the bond:
    1. For the first time freight forwarders will be required to post bonds.  If a company has both broker and freight forwarder authority, two bonds will be required.
    2. Carriers that broker loads will be required to obtain brokerage authority and post a bond. 
    3. Brokers will have to increase the amount of their current bond or trust account.
    It is important to understand that surety bonds are completely different from insurance policies.  With an insurance policy, the insurance company agrees to pay for defined risks of loss in exchange for your premium payment.  The insurance company uses its own money to pay claims.  A bond is merely a guaranty, backed by the surety’s financial strength, that the broker will pay legitimate freight bills in the agreed-upon manner.  The surety is not assuming risk, because it will use the broker’s money to pay those bills.  The underwriting on a bond is based upon the broker’s credit history, reputation, and financial strength.  That means the broker’s financial statement is crucial; it must show that the broker has the cash to reimburse the surety if there are any claims against the bond.
    Here are three ways for small brokers and freight forwarders to prepare for the underwriting requirements of a $75,000 bond:
    1. Talk to your accountant about improving your financial statement to support the $75,000 bond. 
     
    2. Provide a letter of credit from a bank. 
    3. Use the brokerage owner’s personal financial statement to support the bond. 
    You may find that some combination of these strategies is best for your company. You may also need to consider changing your corporate structure, especially if you are operating as a Sub-S corporation or LLC.
    What’s your next step? Meet with a good accountant and a banker to prepare for the surety’s underwriting requirements, so you can secure a $75,000 bond and keep your business on a solid footing.
    Mark Yunker, vice-president of business insurance agency RJ Ahmann Company, is an expert in the area of contingent cargo insurance for the transportation industry. With more than 20 years of experience, Mr. Yunker is a consultant to DAT on insurance issues.
  • FMCSA suspends authority of carrier for not releasing safety records

    FMCSA suspends authority of carrier for not releasing safety records
    Overdrive Staff|August 08, 2014
                   


    The Federal Motor Carrier Safety Administration announced Aug. 8 it had suspended the operating authority of Espinal Trucking, based in Michigan City and headed by Francisco Espinal Quiroz.

    The agency says the carrier did not cooperate with an investigation into its compliance history.
    One of the carrier’s tractor-trailers collided into a line of passenger vehicles in a construction zone on Interstate 55 in Will County, Ill., FMCSA says, and in a subsequent agency investigation, Espinal denied the agency access to its safety records.
    The MAP-21 highway funding law from 2012 gives the agency the authority to revoke the authority of motor carriers who do not comply with administrative subpoenas or letters demanding the release of safety records.






    Todd E. Smith, President          

    Thomas Wilson Group, LLC  
    5214 Maryland Way, Ste. 303
    Brentwood, Tennessee 37027



    615.277.0751
    615.277.0754 fax



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  • Feds: Company owned by Browns owner and Tenn. Gov. brother to pay $92M fine


    Published July 14, 2014

    FILE: Undated: A Pilot gas station.AP
    NASHVILLE, Tenn. –  A truck-stop company owned by Tennessee GOP Gov. Bill Haslam and Cleveland Browns owner Jimmy Haslam has agreed to pay $92 million in fines for cheating customers out of promised fuel rebates and discounts, federal prosecutors said Monday.
    According to the U.S. Attorney’s Office for the Eastern District of Tennessee, Pilot Flying J, the country’s largest diesel retailer, accepts responsibility for the criminal conduct of its employees, including 10 who have pleaded guilty to participating in the scheme, and agrees to cooperate with the ongoing investigation.
    “The terms of this agreement …demonstrate quite clearly that no corporation, no matter how big, influential, or wealthy is above the law,” said U.S. Attorney Bill Killian.
    The agreement, signed Friday by company attorneys, also does not protect any Pilot worker or former worker from future prosecution.
    Jimmy Haslam has said he was unaware of the scheme.
    Through a spokesman, he declined an interview on Monday, but issued a statement: “We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business.”
    Gov. Bill Haslam, his brother, holds an undisclosed ownership share in the company but has said he is not involved in Pilot’s day-to-day operations.
    Their father, James, started in company in 1958.
    Pilot agreed in November to pay out nearly $85 million to settle claims in a class-action lawsuit with 5,500 trucking companies. Several companies have filed separate lawsuits against Pilot that are ongoing.
    Federal officials said the company also must, under the so-called Criminal Enforcement Agreement, periodically report what it has done “to ensure that a system of internal accounting controls and other compliance procedures have been established to prevent fraudulent conduct from occurring again in the sale of diesel fuel.”
    The joint FBI-IRS investigation resulted in search warrants being executed on April 15, 2013, at multiple locations, including Pilot’s headquarters in Knoxville.
    Since that time, the 10 employees, including those with supervisory responsibilities, have agreed to cooperate with the federal investigation and entered guilty pleas to mail and wire fraud charges related to their involvement in the fraudulent reduction of diesel-fuel price discounts owed to Pilot customers.
    In the agreement, Pilot confirmed that fraudulent conduct involving diesel fuel price discounts was prevalent within its Direct Sales group and carried out with the knowledge and participation of employees responsible for the operation and oversight of Direct Sales. And Pilot further confirmed that supervisory employees encouraged participation in discount fraud for the company’s benefit, federal officials also said.
    The Associated Press contributed to this report.






    Todd E. Smith, President          

    Thomas Wilson Group, LLC  
    5214 Maryland Way, Ste. 303
    Brentwood, Tennessee 37027



    615.277.0751
    615.277.0754 fax
  • Gasoline Falls to $3.669 a Gallon in Survey

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    The average for regular gasoline at U.S. pumps fell 3.99 cents in the three weeks ended July 11 to $3.669 a gallon, according to Lundberg Survey Inc.
    Daniel Acker/Bloomberg News
    The survey is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company.
    The average, which is 7.91 cents below a year earlier, may fall another four cents to six cents in the next several days, Trilby Lundberg, president of Lundberg Survey, said in a telephone interview today.
    “The wholesale price cuts are continuing now as refiners pass along the lower prices they’re paying for crude oil,” Lundberg said. “If we can assume that crude oil prices don’t shoot right back up, we may see further declines at the pump.”
    The highest price for gasoline in the lower 48 states among the markets surveyed was in San Francisco, at $4.12 a gallon, Lundberg said. The lowest price was in Tulsa, Oklahoma, where customers paid an average $3.35 a gallon. Regular gasoline averaged $3.92 a gallon on Long Island, New York, and $4.09 in Los Angeles.
    By Bloomberg News






    Todd E. Smith, President          

    Thomas Wilson Group, LLC  
    5214 Maryland Way, Ste. 303
    Brentwood, Tennessee 37027



    615.277.0751
    615.277.0754 fax