In its simplest, big rigs generate revenue when wheels are spinning, and they run up costs when parked. Money is made when cargo is moving; however, wrecks, engine failure, or other casualties might require an employed unit be towed to a service station for repairs. As the unit stays laid up, costs go up and revenue grinds to a halt.
There’s an earnestness to return to shipping and some towers have figured out how to leverage a motor carrier’s urgency by submitting inflated tow bills and repair invoices. Until the bill is paid, the truck remains in the tower’s custody essentially under arrest. To make matters worse, each day the truck remains in the shop, storage fees stack up and revenues are lost.
Two obvious options exist to address the situation: 1) pay the inflated cost of repairs and towage to get the semi back quickly or 2) leave the unit in the yard while disputing the invoice, which can drag on for months and months.
The immediate benefit is that the asset gets back to creating revenue for the company. Further, fighting usurious invoices sends a long term signal to tow companies that bloated bills will not be tolerated, which ideally will lead to a change in their behavior. The alternative is to continually swallow the high costs of a casualty.
Bonds have been used more often in recent years because the trucking industry is at max capacity and the surety bond industry is in a soft market. With trucks in demand, operators want their rigs in use and the towers know it so the frequency of disputes has risen. At the same time, the surety companies have become aggressive by dropping premium rates in an effort to win business.
This makes the bonds easier for companies like International Sureties to issue, and since they are needed more often, agents are streamlining the process to serve their clients. The critical element to any of this working effectively is speed, and if the bond cannot be readily issued, then the process slows and leads to more storage costs for the operator or insurance carrier.
For years Garageman’s Lien bonds were an afterthought. With the trucking industry in demand, towers taking advantage, and a soft surety market, these bonds have become more useful to keep operations moving and easier to obtain than ever. Attorneys, insurance carriers, and self-insured operators should all have their own resources readily accessible to call upon for a bond in a moment of crisis.