WASHINGTON — The Federal Motor Carrier Safety Administration has denied a rulemaking petition by the Transportation Intermediaries Association (TIA) to remove a requirement that freight brokers disclose to carriers transaction records between brokers and shippers.
FMCSA’s denial, published Friday, was issued just a day after the agency agreed to initiate a formal rulemaking by two groups representing small-business truckers – the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition (SBTC) – requesting that brokers be prohibited from denying carriers the ability to access such records.
All three petitions (FMCSA combined the OOIDA and SBTC petitions into a single rulemaking procedure) were filed in 2020.
“After careful consideration, FMCSA has determined that TIA’s petition does not contain adequate justification to initiate rulemaking,” the agency wrote to TIA Vice President of government affairs Chris Burroughs. FMCSA noted that it had reviewed all comments on TIA’s request and held a public listening session on it as well.
“FMCSA believes that elimination of the records disclosure provision would be contrary to the stated transportation policy goals in 49 USC 13101, including promotion of fairness and efficiency in the transportation industry,” FMCSA stated. “Therefore, FMCSA is denying TIA’s petition for rulemaking.”
Asked to comment, Burroughs said TIA is “extremely disappointed the agency is taking this route,” he told FreightWaves.
“We’ve got a situation where hundreds of millions of dollars of freight is being stolen by fraudulent companies in the trucking market, the [National Highway Traffic Safety Administration] is telling us that truck crashes are up 10%, a majority of the trucks on the road go without a [safety] rating – it’s a complete failure by the FMCSA when it comes to safety,” Burroughs said. “Instead, they want to initiate a rulemaking that involves private commercial contract negotiations. We’re kind of dumbfounded.”
At issue, as laid out in the OOIDA and SBTC petitions, is whether a provision requiring a driver or other counterparty to a broker-managed transaction be able to obtain and review documentation on the deal from the broker — which is the current law [49 CFR 371.3(c)] — can be turned into a rule that the counterparties must get that documentation if requested.
Quoting from SBTC’s petition, FMCSA noted that the group explained how freight rates at the time had “dropped drastically and that motor carriers have reported instances of brokers engaging in ‘profiteering, price gouging and low-balling tactics’.”
FMCSA also underscored SBTC’s claims at the time that brokers, in some instances, were receiving commissions of up to 65% on loads due to the sudden freight shortage in the early days of the pandemic, combined with overcapacity in the trucking markets.
“To evade regulations, some brokers have resorted to requiring carriers, as parties to broker transactions, to waive their rights to obtain documents that show the amount the shipper is paying the broker,” FMCSA stated, referring to SBTC’s petition. “SBTC further states that [49 CFR 371.3] should be strengthened to stop this abuse.”
In addition to strengthening the broker transparency provision in the regulation, OOIDA also wants FMCSA to require that brokers provide an electronic copy of each transaction record automatically within 48 hours after the contractual service has been completed.
“Our problem with electronic submission of data from our members is that this is our customers’ information, and we’re not confident this information will be kept confidential,” Burroughs countered.
“Certain brokers have to include contract language so that proprietary shipper information is not disclosed, and these groups want to make it illegal. No one is forcing carriers to sign these contracts or even to work with a broker.”
He added that, whenever there is a downturn as in the current market, “the freight rates are driven down by supply and demand – but our guys always look like the villains.”
On the same day FMCSA agreed to initiate the rulemaking, OOIDA President and CEO Todd Spencer wrote to FMCSA Administrator Robin Hutcheson to emphasize that more regulatory oversight on the issue will not only protect carriers from unscrupulous brokers, “it helps to protect the public by providing a marketplace in which each party behaves in a clear and transparent manner and will also give motor carriers better protections when there are claims or disagreements with brokers,” he asserted.
Alan W Anderson
And again Uncle Sam sides with big Business and the free market-trickle down fairytale. The straight skinny is Brokers and Shippers have a deal. Brokers take as much as they want and leave peanuts for the drivers. Back in the good ole America they use to strike so GOV knew we were serious. But so many of us now work for large carriers that won’t allow shutting down to stand up for ourselves. It’s all just rigged against us
Roger
Brokers take 65%.and shippers like the brokers because 1 stop shop they get every thing.shippers would save 25 %if they just go direct transport.here at state to state they save and trucks get more money.just saying….
Hank Patrick
Third Party market distortions cause market failures- those who price in any market but truly have no skin in the game will wreak havoc on a industry market place. The more there are the more damage is done. You cannot totally eliminate such bad players but the rules need to minimize.
Even if all we had was trucking companies with no brokers or freight forwarders there would sill be a certain number of bad players- Brokers unfortunately have been allowed too much power with the pricing and nothing attached to the real market because they are competing against other brokers with no assets- I have had 5 different brokers call me for the same load as they try to push the price down on the carrier while the shippers freight sits on the shipping floor and their customers wonders where their product is./
I think transparency is good- even freight agents take a maximum of 12%- the problem with the bad brokers is their lack of transparency and honest terms on the negotiations- they don’t pay with in the terms agreed and they are trying to trip you up on some requirement for the load that really don’t want you accomplish so they can discount the price. I just don’t do business with them when they demonstrate their bad business practice- Same with shippers who act this way- Business transactions are always about a win win situation for both buyer and seller.
Shippers / rec collect / prepaid need to understand the risk of the carrier not being paid- A company’s transportation shipping can put them out of business by going with a bad broker who defaults- and has to pat twice.
Joel Alsup
So after the 48 hrs of requesting the broker and shipper agreement, if not met,then who do we file a complaint too.
RanOverTrucking
Outside of hte rate, what else do the transaction documents reveal? Will it tell you the shipper? The point of contact for the shipper too?
As a carrier, I’d love to undermine typical routes we pull for a broker. I know a guy running a sales team overseas that undercuts brokers and dedicates his own lanes. Just goes to auctions, talks to drivers, and He supplies the truck, trailer, and driver. Oh, isn’t that the most challenging part of logistics?? 🙂
Good to see this become a reality. Trucking is on the backs of immigrants who deserve a break.
Troy
It is in the works right now to eliminate all brokered loads. Why is a broker needed again?? I haul lots of freight direct from the shipper, never have seen anything bad come from this arrangement. Not quite sure what the broker does except drive up shipping costs and lower carrier pay. Its time to rethink this method of moving freight.
Flay buchanan
So you telling me that it’s the driver fault I been in this business a long time I started driving in 99 I been my own boss sense 2001 so yes I know where the money going I took a class to be a broker and they train yu to take money from the start shipper pay 3500 broker post for 2200 and then they wanna quick pay in 7 day’s for a% so yes it’s a bad apple in da game and its the brokerage and no it’s not ur fault the driver have to keep his business going can’t just sit so we move that doesn’t make it right but if they only gets 10-15 % and if they get more it should be a criminal law they have broken we need help or we all going to lose pay attention on wats going on I wish we had a union so we can park at da pumps and don’t move flood the truck stops when they see trucks from the off ramps to the highway I bet dis will make news in a few hours it want take long to get da attention of shipper and they will be in touch with broker trying to see when they load going to be picked up or dropped off but hey we can’t do dat because it’s crazy how some of us drivers just don’t care wat they load up and when they keep doing it they will go out of business we pay to much overhead I feel like we don’t need a broker shippers can post ther own loads