Since early December 2013, 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 21(st) Century" transportation bill (MAP-21), according to the Association of Independent Property Brokers & Agents (AIPBA). These businesses are independent freight brokers and forwarders that compete with big transportation companies to arrange transportation between manufacturers and carriers of goods.
Texas was most severely impacted, losing 927 businesses during December 2013. 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.
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, a requirement that favors big businesses at the expense of smaller companies, according to (AIPBA).
A Federal Motor Carrier Safety Administration (FMCSA) ruling, enforced without public participation, dictated 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, according to AIPBA.
The association 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 United States."