Freight Broker Bonds: What Logistics Companies Need to Know About Compliance and Costs
Freight brokers are an essential link in the U.S. supply chain. They connect shippers with carriers and make sure freight moves efficiently across the country. But with this responsibility comes strict federal regulation. One of the most important requirements is the freight broker bond, also known as the BMC-84 bond.
If you operate as a freight broker or plan to apply for authority with the Federal Motor Carrier Safety Administration (FMCSA), understanding the BMC-84 bond is critical. This guide breaks down what it is, why it matters, how to get it, and how to manage the cost.
What Is a Freight Broker Bond?
The freight broker bond is a type of surety bond required by the FMCSA. Its official name is the BMC-84 bond. It guarantees that a freight broker will pay carriers and shippers as promised.
The structure follows the standard surety bond model:
Principal: The freight broker posting the bond.
Obligee: The FMCSA, which enforces the requirement.
Surety: The company issuing the bond.
If a broker fails to pay carriers or shippers, the surety covers the claim and then seeks reimbursement from the broker. This system protects the trucking industry from losses caused by non-payment.
Why It Matters
The freight broker bond exists to build trust in the logistics industry. Brokers often handle large sums of money. Carriers and shippers need confidence that they will be paid for their services. The bond creates financial accountability and levels the playing field.
Operating without a valid bond is not an option. The FMCSA requires every licensed freight broker to maintain a $75,000 BMC-84 bond. If your bond lapses, your authority can be revoked immediately.
Who Needs the BMC-84 Bond?
Any company or individual seeking freight broker authority from the FMCSA must file proof of a bond. This includes:
Startups entering the logistics industry.
Established brokers renewing their authority.
Brokers expanding into new states.
Even if you only manage a small book of business, the requirement applies equally. The bond is not based on revenue size or freight volume.
The Cost of a Freight Broker Bond
The FMCSA requires a $75,000 bond amount. But you do not pay $75,000 up front. You pay a premium, which is a percentage of the bond amount.
Typical costs range from 1% to 10% of the bond amount annually. For example:
A broker with strong credit might pay between $750 and $2,250 per year.
A broker with poor credit might pay between $5,000 and $7,500 per year.
Your exact rate depends on your financial profile. Sureties review credit history, years in business, and financial stability when setting premiums.
Factors That Affect Premiums
Credit Score: The most important factor. Higher scores mean lower rates.
Business Financials: Positive cash flow and strong statements reduce risk.
Experience: Years of operating history help. Startups are higher risk.
Claims History: Past bond claims raise costs.
Alternatives to the BMC-84
The FMCSA allows freight brokers to meet the $75,000 requirement in two ways:
BMC-84 Surety Bond
Provided by a surety company.
Requires only a premium, not the full bond amount.
BMC-85 Trust Fund
Requires depositing $75,000 in cash or assets with a trust company.
Ties up working capital.
Most brokers choose the BMC-84 bond because it avoids locking away $75,000. Working with providers such as Single Source Surety
gives you access to the BMC-84 bond at competitive rates.
The Application Process
Prepare Information
Gather your FMCSA license details, business records, and credit information.
Apply With a Surety Provider
Submit your application to a company that offers BMC-84 bonds.
Underwriting Review
The surety examines your financial strength and credit profile.
Pay Premium
Once approved, you pay the premium based on your risk level.
Bond Filing
The surety files the bond with the FMCSA electronically.
Maintain Compliance
Renew your bond each year and stay current with payments to avoid claims.
Renewal Requirements
Freight broker bonds must be renewed annually. Missing a renewal can lead to suspension of authority. Set reminders 60 days before your expiration date.
Renewals are also an opportunity to lower your premium. If your credit improves or your business grows, you may qualify for better rates.
Common Mistakes to Avoid
Waiting Too Long to Apply: Bond approval can take several days. Apply early to avoid delays in getting authority.
Ignoring Credit Issues: Low credit leads to high premiums. Address credit problems before renewal.
Letting the Bond Lapse: Even a short gap can suspend your operating authority.
Choosing the Wrong Provider: Work with a surety that specializes in freight broker bonds for smoother approval.
Practical Scenarios
Startup Broker: A new company applies for authority. The owner has average credit. The surety sets a premium of $3,000 for the year. The bond is filed, and the FMCSA grants authority.
Established Broker: A broker with five years in business and strong credit history pays $1,200 annually for the bond. Their renewal rate drops each year as their record improves.
High-Risk Broker: A broker with poor credit and a history of payment issues pays $7,000 annually. Over time, improving credit and avoiding claims reduces costs.
How to Manage Costs
Improve Credit: Pay bills on time and reduce debt.
Renew Early: Give underwriters time to review improved financials.
Work With the Right Provider: Agencies like Single Source Surety
shop multiple carriers for the best rates.
Maintain a Claim-Free Record: Avoid disputes with carriers and shippers.
Benefits of Staying Bonded
Compliance: FMCSA authority depends on it.
Trust: Carriers prefer working with bonded brokers.
Growth: Bonding helps you expand operations and win more clients.
Without a valid bond, your business cannot legally operate. The risk of lost revenue far outweighs the cost of maintaining compliance.
Freight Broker Bonds vs. Other Bonds
While freight broker bonds are specific to logistics, they share features with other surety bonds. Contractor bonds, auto dealer bonds, and court bonds all protect the public by holding businesses accountable. The difference is in who the obligee is and what risk is covered.
For freight brokers, the FMCSA is the obligee, and the risk is non-payment to carriers and shippers.
Key Takeaways
Every freight broker must have a $75,000 BMC-84 bond.
Premiums range from 1% to 10% annually, depending on credit and business history.
The BMC-85 trust fund is an alternative but requires locking away capital.
Renew bonds annually and improve credit to reduce costs.
Partnering with a knowledgeable provider ensures compliance and competitive rates.
Freight broker bonds are not simply a regulatory box to check. They protect the supply chain and demonstrate your credibility as a logistics professional. By understanding the requirements, managing costs, and staying compliant, you position your brokerage for stability and growth.