NOOA President on Surge Transportation bankruptcy: “Broker reform is needed…NOW.”

Following the news of one of the largest freight brokers filing for Chapter 11 bankruptcy, Michael Boston, President of the National Owner Operators Association (“NOOA”), offered an opportunity to help those affected by the devastating news.

“We saw this in 2008 in the banking industry where the term ‘too big to fail’ came from. Broker reform is needed desperately to protect owner operators. Now,” demanded Boston.

“NOOA goes after these brokers. Surge’s authority under the Federal Motor Carrier Safety Administration (“FMSCA”) remains active despite having already filed for bankruptcy. They can still do business even though they know they will not pay,” said Boston. For owner-operators affected by the bankruptcy, they have found a home in the NOOA and a fighter in Boston.

Surge Transportation, a digital freight brokerage founded in 2016, was destined to become one of the leading trucking companies in the world. That prospect has now lapsed. According to Freightwaves, sixteen of Surge’s top twenty creditors are factoring companies that pay small carriers. Omar Singhe, the founder of Surge, was appointed to the Transportation Intermediaries Association who boasts itself as the “voice of third-party logistics,” in May of 2021. This situation could have been easily avoided, according to President Boston.

“The unsecured total owed to the top 20 creditors is $8,336,119.19. All of these are factoring companies, carriers and owner operators Brokers only need a $75,000.00 bond to start operations. To obtain that bond broker will usually only have to put up a $1000.00 deposit,” Boston pointed out.

The solution, according to the NOOA, is large-scale reform to protect owner-operators from corporations who fail to meet the realities of the industry and neglect the impact truckers face. “This is unsatisfactory. Congress needs to address this issue with broker reform now,” Boston demanded. He elaborated on the need for Congress to enact broker reform, stating:

“This is not 1980 and brokers like Surge Transportation create a risk for the supply chain with uncertainty. The FMCSA must be forced to regulate brokers and audit them to make sure they are able to carry out the obligations of the business that they operate in. A $75K bond to cover $8.3 million in losses is a joke. The government needs to step in and do more to protect small businesses that operate on a credit-based system in this country.”

Logistics operations have seen a paradigm shift in the post-covid world. The New York Times reported in June that Yellow, one of the largest trucking businesses in the world, faces bankruptcy after a $700 million bailout. Surge’s filing has sent another shockwave through the logistics world, threatening both the economy and many owner-operators like those Boston and NOOA advocate for.

“Remember that 91% of the industry are fleets of 6 or less trucks and a majority of those companies do factor,” said Boston. “Companies will be charging the carriers back very soon,” he added while offering an avenue for folks concerned about their future in the post-Surge world.

“We CAN recover that debt most of the time by pursuing the beneficial parties. If you are owed money by Surge Transportation and you are not a member of NOOA - this would be an excellent time to sign up.”