Freight Broker Bonds: Process, Costs and Procedures


Billions of tons of commodities are transported by trucks and cargo companies every year, according to the American Trucking Association. The freight and trucking industry is moving heavy-duty cargo to help transport commodities physically. 

Due to the risk factors involved in the process, freight companies resort to freight brokers that work as a surety agency, particularly in the American economy, to help connect shippers of the cargo, to ensure safe deliveries. 

In this article, we will look into the significance of freight broker bonds – without which the complex logistics required to commute these goods across the country would break down. 

What is a Freight Broker Bond?

A freight broker bond is a surety bond required for freight businesses to operate legally. Freight broker firms act as a third-party logistic company that acquires the license, to connect carriers to move cargo of goods for shipping companies. Their job is to negotiate, mediate terms and deliver the freight to the final destination. The role of freight brokers are as follows:

  1. Find shipping and cargo agencies.
  2. Maintain logistical records of each transaction regarding payments, receivables, agreements etc.
  3. Negotiate terms and conditions regarding rates and weight.
  4. Shipping freight.

It’s important to know the difference between freight agents, and freight brokers. They are not the same. A freight agent is an individual in charge of sales for a freight broker. 

It is the freight brokerage agency’s responsibility to have surety bonds in place, to protect the shipping companies. These are also known as freight broker bonds. 

It is a requirement of the Federal Motor Carrier Safety Administration (FMCSA), that all freight brokers have a valid license to operate in the industry – and obtaining a freight broker bond is a requirement before a permit can be issued to the freight broker.

FMCSA plays a key role in establishing regulations and guidelines for the freight industry entrepreneurs. The bond works as a preventive measure for mishaps and fraudulent activities. It ensures that all parties involved in transporting the freight are operating legally.

How Does it Work?

There are a set of requirements for freight broker bonds to operate legally. It simply involves a three-party agreement that mentions that the principal is the freight broker. The company in charge of guaranteeing payment, on behalf of the broker, is the surety. And the party that requires the surety bond is the obligee. 

This type of agreement ensures all parties involved that their interests are protected, including payment delays and checking invoices. One more reason for a surety bond to existing is that it guarantees that freight broker firms follow standard ethical practices, all across the industry.  Now let’s look at the qualification requirements to obtain freight broker bonds.

To qualify for a freight broker bond, brokers must often pay attention to three important elements. 

  1. Permission to operate from FMCSA. (also known as operating authority)
  2. Public Liability Insurance.
  3. A BOC-3 form from the FMCSA.

Getting an FMCSA operating authority requires public liability insurance, so these two requirements are counted as one. The second step is to register as a federally-approved process broker; you can easily apply for a freight broker bond, by contacting a surety bond company.  

It is then up to the surety company to check your credit score and issue a quote. The charge will entirely depend on your credit score, simply put, the lower the credit score, the higher the cost. 

Types of Bonds

If you are actively looking to contract surety bond companies – you’ll surely come across two recurring terms, BMC-84 and BMC-85. These are FMCSA approved financial terms and agreements for freight brokers. Let’s have a look at the two types of bonds. 

BMC-84 Bonds

The BMC-84 bond acts as a form of liability for the freight broker. It acts as a protection agency for the end customer, and shipping, companies. It helps prevent potential losses that can happen due to the violations of FMCSA regulations. 

The law orders compensation of up to $75,000 (value of bond), in damages, if any parties issue any valid claims. A certain percentage of the bond’s value ($75,000) will need to be paid to the bond company, as a part of the agreement. 

BMC-85 Trust Fund

BMC-85 is more popular amongst established brokers or large organizations. In this type of bond, the broker is responsible for fully funding the government-mandated $75,000. They will transfer the bond value into a bank account, and not withdraw it.

What is the Cost of Freight Broker Bond?

The cost depends on the freight broker bond applicant and the program type, as mentioned above. For example, if you have $75,000 to transfer for a bank account – you’re more likely to apply for the BMC-85 Trust Fund. 

The only additional charge will be the bank fees.  It is probably a significant amount for new freight brokers – so it is more achievable for smaller, or new companies, to opt for BMC-84 bonds. The cost, in this case, varies from $900 to $2000 annually. The actual amount will be derived from your credit history. 


It is an absolute necessity for freight broker firms to secure broker bonds, to operate successfully and legally. With the help of a bond, you’ll gain more credibility for your business, ensuring that you are a trustworthy and safe choice, in the freight industry. 

The goal is to guarantee that the goods are being transported ethically, fairly and ensure that payments are being fulfilled according to contracts. Surety bonds are a great indicator for freight brokers, that they are reliable and safe. 

We hope that you are now well informed about taking safety measures, to avoid fraudulent activities, by applying for a freight broker bond. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.