SAN ANTONIO – The one consistent theme in opening addresses at the Capital Ideas Conference of the Transportation Intermediaries Association was that freight fraud remains a major problem for brokers, and there are few signs of progress in combating it.
Two years after then-TIA President Anne Reinke described double brokering as “out of control,” none of the three TIA officials who spoke at this year’s gathering gave any hint that fraud is on the decline. Reinke’s comments in 2023 were directed at double brokering; this year it was fraud in general, of which double brokering is one part.
The meeting here with more than 1,500 attendees is the first for Chris Burroughs as president of the TIA. He moved into the top slot last September after Reinke took over leadership of the Intermodal Association of North America.
Burroughs, in his first remarks to a TIA conference as president, said the organization has been “tackling this problem” since the 2012 passage of a federal antifraud law. He noted it was one of the first pieces of legislation he had worked on at TIA after joining the organization that year.
Nonetheless, Burroughs said, “the situation has obviously exploded into a massive fraud.”
2020 data from the Federal Motor Carrier Safety Administration said that the agency had more than 80,000 complaints of freight fraud in its database, a figure Burroughs said was “staggering and quite frankly unexpected.”
“It’s tarnishing our industry and our reputation,” he said.
He cited a list of actions TIA has taken that have no enforcement mechanism but do raise the profile of the freight fraud issue: a task force, “best practices” brokers can follow to reduce the amount of fraud, white papers, work with other organizations and the launch of a media campaign “to continue to raise awareness on this issue.”
“We’re also working directly with Congress and the federal agencies to push forward and getting regulations that are already on the books enforced,” Burroughs said.
Rob Kemp, the president and founder of K-R Sales Inc. and DRT Transportation and incoming chair of the TIA, said he recently had a frustrating experience in his own company’s battle with fraud.
“We just had a situation not too long ago. We ended up calling the FBI and were disappointed to hear the FBI say, and you guys have probably heard this, ‘We can’t help you.’ So if they can’t help you, who can help you?” Kemp said.
Mark Christos, the president of SolvLogix Inc. and outgoing chair of the TIA, opened the conference with a push for the TIA as a bulwark against fraud.
“Every time I’ve been on the phone with a shipper or a prospective customer who has reservations about something really unfortunate that happened with them, relative to brokerage, I find that it’s not with a TIA member,” Christos said. “Same thing with the carrier side. They will tell us stories, all legitimate. I will ask the carrier, who is that with specifically? And they’ll all say it is not a TIA member.”
Broker transparency raised as an issue
Burroughs also took the opportunity to tamp down the view that brokers and carriers are at odds with each other. Perceptions of that relationship hit bottom in spring 2020, when in the face of extremely low rates soon after the pandemic started, truckers took to the streets of Washington to protest the low levels and blamed brokers. Bob Voltmann, who had the TIA head job before Reinke, made a stunning short video defending his members. He was ousted soon after, and it was never clear whether the video was the cause of his departure.
Tensions between the two groups may be arising again over the issue of broker transparency, with the FMCSA recommending new regulations.
“Carriers and brokers obviously need each other,” Burroughs said. He did not mention the broker transparency regulations but said that “instead of trying to expose this sensitive business data, we should focus on the real issues, building trust, enhancing efficiencies and strengthening our partnerships together. Brokers don’t survive without carriers.”
“We don’t want to be enemies, but when bad policy threatens our industry, we will obviously stand up,” he added.
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