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.
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Tom Finken
Many carrier use an insurance broker to get the lowest rates on ever increasing insurance rates. Shippers are no different. Now that carrier rates average $3 per mile more and more shippers are using freight brokers. Brokers don’t ask carriers how much profit they have in the shipment and it is none of the carriers business how much the broker will make. The market sets the rates.
ron
The problem with the comment that carriers don’t have any business seeing the gross amount the broker is being paid (and I hav,nt seen it on here is) the brokers are telling carriers they only take up to 16 percent average..but in reality it is as high as 75 or 80 percent…Heavy haul and military loads have total rates so all forms of freight should also.
Anthony Calderon
This report seems more towards the sikh the all drivers in general ,since when have the sikh drivers been “enormously talented” at truck driving most of them cant even park .
RJ
I am for transparency. I have no problem publishing rates. As a matter fact, most military loads have the gross rate printed on the bill of lading for full display. We also believe in paying drivers more money, however the level of admittance to be a professional driver must be raised. I feel that truck drivers’ reputations are being soiled due to a few who communicate poorly, negatively and overall display bad practices. I am for more of an awards based system based on safety for all carriers over 2 years of authority.
In short, full transparency is needed. Trucking companies and drivers must raise their standards on driver candidates and in turn pay more.
Thank you.
Bryant W Ramsey
The brokers are feasting off of small trucking businesses that are out here trying to make a honest living. Meanwhile the small trucker gets a little messy on the bone while paying all sorts of overhead. We miss out on our families week in and week out. We use public restrooms that aren’t properly cleaned. We get prices gouged at truck stops because it’s the only place we can stop and menuver our trucks safely. Meanwhile the broker is packing up and leaving the ole 9 to 5 and ripping us off. The rates for freight has to be transparent or there is no AMERICAN DREAM!
John Turner
Not to many years ago truckers received payments from shippers. Brokers figured out away to get the money first and that is when the theft started. Truckers payed brokers 5-7%most brokers had a phone line at the market and that it. Most freight was COD,shippers load receiver unload.
thomas c heine
Your history lesson is leaving out very important info. I started in the freight business in 1977. A common carrier would charge $5-6000 to move a truckload from NJ to LA. To give you an inflation benchmark,In 1977, I bought a brand new toyota for $3400. Carriers had to have authority and it was so restricted that rates were insanely high. A carrier might only have authority to haul one product in ONE direction, and then only on specific routes. IE: Steel wheels (not aluminum) between dayton OH and Detroit MI. It was that specific for many carriers. Also, shippers were required to pay their bills within 7 days (and they did!)
After deregulation, In the 90’s, I was a freight broker, and we also ran our own trucks. We had 7-9 trucks that ended up in LA every monday. I could have gone to shippers to get freight directly, but we ONLY wanted truckloads back to NJ on Monday afternoons. How would I find a customer like that? SO, we went to a freight broker – who lined us up with 7-9 loads every monday, and he even paid us on delivery. Dealing with a broker with overnight payment was totally unlike our brokerage customers who paid us in 30-90 days. So, even though WE were freight brokers, we went to a broker for our needs on backhauls.
Shippers are tricky, they pay slowly. Most < 5 truck independent truckers can't afford to wait to get paid by them. Shippers also don't want to on-board a small carrier to carry a single load, or small volume. Its expensive for them. Shippers generally would prefer to deal with one entity that does the work and vets all the dozens or hundreds of carriers used over a year.
ThaGearJammer25/8
Perhaps this particular group is feeling prejudice which I’m sure many folks with “accents” feel. Unfortunately no amount of legislation would ever solve that issue. The truck driver is very diverse yet brokerages/mechanics/dot/ lobbyinggroups/ not so much… mb it’s less about transparency and more about access to capital? As costs increase and margins decrease the ability to “bootstrap” up is not in the drivers favor.
Doc
Brokers are a festering pustule on the buttocks of the transportation industry. Thieves and robbers. Remember when the proposal to increase the bond was made and how hard they cried? 90% of them shouldn’t be in business. On the issue of Indian drivers (from India/Pakistan not the ones that own casinos) we have lots in Canada. Most are good, hard working drivers. Unfortunately, some have sullied the reputation of the drivers by running licence mills and poor safety practices. Canadians all remember the Humboldt disaster, and that was an example of a poorly run Indian business. Also, the trucking associations all started lobbying for useless changes that protected their members from any real government scrutiny.
Stephen Webster
I know of a number of brokers that charge 7 to 12 percent off the top and they have very little trouble finding trucks. Other brokers who mislead trucking companies and take or offer cheaper freight complained about truck shortage. Also some larger wholesalers and shippers do not want to pay fair freight rates per mile plus fair rates of pay for detention rates. In Ontario Canada the private insurance companies are pushing many brokers and small trucking companies out of business.