The divide in the trucking industry between drivers and brokers — both in terms of policy and in culture — is on full display in the comments on the Federal Motor Carrier Safety Administration’s (FMCSA’s) proposed broker transparency rule.
What’s striking about the comments — now numbering well over 800 with the comment period over at the end of month — is the sheer number of them from drivers whose name suggests they are Sikhs, an enormous source of talent behind the wheel but a group that is rarely represented in public trucking forums.
As Tim Hindes of StayMetrics said at the Truckload Carriers Association (TCA) conference earlier this year in Orlando, Florida, the Sikh population is such an integral part of trucking in America. But at a large conference like the TCA’s, they’re essentially invisible.
But they aren’t invisible in the comments. While it is impossible to know if an Indian name is a Sikh rather than simply a name with ties back to India, the huge number of names suggests that the Sikh presence on the comment board is large.
Unlike the comments that come from 3PLs, or in a few cases from large carriers like ArcBest, the comments from all drivers are not as structured or well written. It’s also notable that with these comments all filed in the last few weeks, the significant increase in freight rates and the shift in power to carriers does not appear to have dampened the drivers’ anger at the low rates of earlier this year or the highly competitive market itself.
The comment period opened by FMCSA is in response to two petitions. One is from the Owner-Operator Independent Drivers Association (OOIDA) requesting that brokers be required to provide carriers with an electronic copy of every transaction within 48 hours. Drivers can now request that but rarely do, claiming that such a request opens the door to retaliation and blackballing. The OOIDA request is that the transaction record would be sent automatically to parties in the transaction, including the driver. A request from the Small Business in Transportation Coalition (SBTC) would stop brokers from engaging in what it says is coercion against drivers to discourage them from making those requests.
The commenter’s employer or location is not required to be disclosed in the comments, although in the case of several 3PLs, they are filed under the company’s name.
“Putting all that money in their pockets”
“Brokers charge rate to customer to move their load,” a driver named Harpreet Aulakh wrote. “But they don’t give us that money, they suppose to charge us 5-10% or whatever the rate we agree and we should get our money straight. But instead they hide everything and putting all that money in their pockets.”
A driver named Kulwinder Benipal said brokers “are working as looters.” Action is needed “so small business or owner-operators can get paid what they deserve at least $4 to $5 miles cause now days brokers companies making at least 80% and paying only 20% to us. This will kill trucking if no action will take against these brokers transparency so plz make this happen God bless America.”
There were numerous comments submitted that were a verbatim argument in favor of the transparency requirements written by OOIDA in a letter from May. That is often standard procedure when a government agency requests comments on a proposed rule. A trade association writes the language, sends it out to its members and the wording is filed by dozens if not hundreds of the group’s members.
A review of the transaction records “allows our members to know precisely how much a shipper paid the broker and how much the broker then paid the carrier,” the submission says. “Unfortunately, brokers continue to circumvent this federal regulation in two ways.”
The prepackaged OOIDA response says one of those ways is a standard waiver in broker contracts that waive the carrier’s rights under the existing regulation — 49 CFR 371.3 — to see the documentation. The other way, according to the statement, is putting up “hurdles” to carriers obtaining the documents, like requiring that they view them at a broker’s office during a set number of hours. Given that a driver is roaming across hundreds if not thousands of miles, the request is effectively saying “no.”
“Small-business truckers would never get away with blatantly and deliberately evading federal regulations,” the statement says. “Brokers must be held to the same standard. Unfortunately, rampant evasion is increasingly resulting in carriers assuming fairly or not that brokers have something to hide.”
Linda Allen, who runs two trucks out of Florida, said most of her dealings are with one broker. Their arrangement, she wrote in her comment to FMCSA, is that there is an understanding that she will receive 80% of the line haul, “but without transparency I am dependent on the Broker informing me of what that 80% is,” she wrote. “If I ask to see the actual paperwork I am told it is a matter of confidentiality.
“I want the FMCSA to prohibit Brokers from requiring waivers in exchange for loads,” Allen added. “If the regulations were enforced and electronic copies mandated Brokers would be less likely to cheat drivers of their earned income.”
The comments from brokers often trended toward “it’s the market.” A comment from Dan Nester notes the volatile nature of rates and that the shoe can switch feet with great speed. There are markets, Nester writes, when “there are other times during a given year where the roles are reversed. The carrier is able to name their price for hauling a shipment. Even though their fixed costs haven’t changed, they are able to take advantage of the arbitrage between supply and demand.” And when that happens, the broker sometimes needs to “eat the loss.”
“It seems the owner-operators want to have it both ways,” Nester added. “They want to see what brokers make on shipments when the market is soft but not want anyone to know what their own margins are when the market heats up.”
Michael Flannery, whose employer was not identified, said the fact that drivers agree to waive their rights under the existing 49 CFR 371.3 federal regulation, “presumably … they are receiving other concessions or consideration from the broker(s) in exchange. If they are not, that is a failure of their skills as a negotiator and not a design flaw in the current regulation.”
Flannery goes on to say that his company’s contract doesn’t have a waiver clause in it, that to his knowledge no carrier has ever asked to see those records and nobody has been “blackballed” for asking. (One problem with this summary: If nobody ever asked, then it is not possible to know if anybody would be blackballed for asking.)
It isn’t their business
Karla O’Malley writes, in essence, that it isn’t the carrier’s business to know the numbers. “While allowing carriers to see the pricing brokers receive on loads sounds reasonable, is it really? Do we get to see what retailers pay for their products?” she writes. “The carrier has the final say on what they will haul a load for. The dollar amount the broker receives for their services and dealings with the shipper is frankly none of the carriers business. The carrier can source and find their own shippers if they so choose.”
A listening session on the broker transparency question will be held later this month.