In order to obtain or maintain their licensing, freight forwarders and common carriers in the U.S. must provide proof of financial responsibility, typically in the form of surety bonds. Regulatory authorities promulgating these requirements are the Federal Maritime Commission (FMC) and the Federal Motor Carrier Safety Administration (FMCSA).
FMC bonding requirements. The FMC, which regulates the U.S. international ocean transportation system, requires ocean transportation intermediary (OTI) ocean freight forwarders and non-vessel-operating common carriers (NVOCCs) to provide proof of financial responsibility. This requirement often is satisfied through the use of a suretybond.
Notably, in order to obtain required licensing, ocean freight forwarders must submit proof of financial responsibility in the amount of $50,000; U.S.-based NVOCCs and licensed non-U.S.-based NVOCCs are required to submit proof of financial responsibility in the amount of $75,000. Additional amounts apply to ocean freight forwarders and NVOCCs with branch offices. Unlicensed non-U.S. based NVOCCs must submit proof of financial responsibility in the amount of $150,000.
The FMC requires all these bonds to be underwritten by a surety company acceptable to the U.S. Department of Treasury and listed on their Listing of Approved Sureties (Department Circular 570). Unique Surety represents more than a dozen surety companies on the Department of Treasury list as their agent and attorney-in-fact, and issues bonds for them. Applicants can easily apply and quickly obtain a competitively priced bond; once approved, the bond is electronically filed with the ICC.
A number of trucking firms are members of transportation industry associations and buy bonds through them, yet may not always get the best price. The bonds must be renewed annually and price quotes should be obtained through an experienced bonding agent, such as Unique Surety and Insurance Services, LLC. The agent represents several carriers that can compete for your business and provide a competitive price.
U.S.-China trade. NVOCCs involved in U.S.-China trade may obtain an optional rider to meet the Chinese government’s financial responsibility requirements. This rider adds $21,000 to the NVOCC bond to pay fines and penalties for activities in the U.S.-China trades imposed by the Chinese government.
Bonds may be cancelled by either the surety or the OTI with 30 days written notice. Licensed OTIs cannot maintain a license without active acceptable proof of financial responsibility; if a bond is cancelled, the license will be revoked 30 days after receipt of the notice of cancellation by the FMC.
FMSCA bonding requirements. The FMSCA requires brokers and freight forwarders must provide proof of financial responsibility in the amount of $75,000, typically in the form of an ICC bond, which is also known as a freight broker bond.
Unique Surety works with several competitive surety markets that provide each of these specialty transportation bonds. In many cases, bond applications can be completed quickly by phone and entered instantly online. Payment often can be made by credit card or bank wire transfer and bonds can be sent overnight or as an attachment to an email, according to specific regulatory requirements. As stipulated by the FMSCA (https://www.fmcsa.dot.gov/regulations/title49/section/387.43), the surety company will electronically file the bond with the ICC once the Unique Surety client is approved.
For assistance with transportation bonds, contact Unique Surety at 1-561-429-3600, ext. 1001, or contact us.