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.
Jackson Wallace
Seems like there are issues on both sides of this. Many brokerages pay around 5% of their income/load to be able to pay carriers on a timely basis due to factoring companies. This fee is passed along. Now, if carriers want to wait their 32 to 36 days for payment when shippers get around to paying the brokers, that would be great!! , brokers could eliminate the 5% factoring expense.
Douglas
ok so I love the comment that truckers think their job is harder than the brokers, honestly it is not about whose work is harder but whether someone deserves to work for free or not. The expenses for 1 broker vs just one truck out weigh the broker by 10 fold or more. Yes it is mentally hard to be a broker and yes it is mentally hard to be driver BUT if the driver fails to complete a load he makes no money vs if the brokers 1 out of 10 fails he still has the the 9 loads revenue to make up for it. It is not rocket science people, it is just simple math. Bottom line is get your own customers at all costs, if you do not like your pay…change what you are doing
David’s dwinell
Late fees are driver coercion AS DEFINED IN A 1936 statute, the following Law which is a felony according to 49 USC 14103 . Sec. B “Coercion of. Drivers” is prohibited. Broker, consignors, and consignees can be fined up to $10,000 and be jailed for up to 10 years for coercing drivers. If lates fees are charged by any player in interstate commerce are subject. Consult LoadTraining.com. David g Dwinell Sun city AZ
Marco
It’s funny that all these drivers get so upset when the market tanks because there is a shortage of freight but are happy to bend brokers over when there is a shortage of trucks. They had it bad for four-five months of the lockdowns then ran the show for two years. If you have a problem with how much money a broker is paying you get your own customers.
Honest Broker
So after reading all these comments from O/O’s and they should Cap what brokers make. Lets see you sit in front of a phone or PC screen making 300-400 calls and emails a day being told we are good or to get the opportunity to land 1 load to put on a board spend weeks or months cultivating a relationship with a shipper to get business only to be undercut by another broker and lose the Customer.
Brokers are in the business to make money. We have costs as well we have to pay for our authority we have to maintain our bond and our insurance as well.
The difference is we aren’t sitting in a semi we are stuck in an office or tied to our phone 24-7 365 not just dealing with your problem but the other issues drivers call us with at the consignee’s, shippers while you have 1 load we have several. On my best day I had 64 loads picking up with 25 delivering 75% had issues at some point along the route from pick to delivery.
Lets not discuss the “creative” issues drivers have because they oversleep or don’t want to drive that day.
If we are all honest the issue is bigger that Brokers or Drivers but the larger issue is everyone thinks they have the hardest part of the job when we all have a hard job just in different ways.
Also we all want to make money.
Josh Brock
Unfortunately, there are lanes in which carriers can not fill with their own customer base. This forces even established carriers to us broker freight to fill the gap.
The real abuse here is the latest rollout of late fees, missed apt charges, charges for not complying to (enter name of tracking software), late fees for not turning in a proof of delivery within a 24 hour time period….and so on. Brokers are making their margins off of these charges and it’s truly theft.
I have found the only way to combat the theft is to file on a broker’s surety bond. Most of the time this will get the job done but unfortunately it burns that bridge. I would argue the bridge was burnt when. The broker attempted to steal from me.
Freddy Arias
Brokers are doing whatever they like as usual when a society run by a government careless practice or the neglect efficiency from department of transportation.
Right now the more insane broker in the Market “TOTAL QUALITY LOGISTICS” DENIED to pay my factoring company OTR Solutions a load that was delivered from my company to their costumer this load was contracted for almost 4,000.00, money that I had to pay back to OTR Solutions and TQL dropped the phone on me every time I called to inquire about my payment. There’s not authorities in this Country.
Heathen
Shippers work with brokers because they don’t want to deal with multiple OO’s. Brokers quote lane rates like it’s the stock market, and end up sending the dregs of the industry to pick up Freight, simply to keep a larger percentage.
Meanwhile, brokers are negotiating shipping costs based on fuel prices, mileage, dock times, tolls, washout requirements, securement, and all of our expenses. Then they turn around and tell us, “this lane runs for $1.70 every day. We can’t pay $2,” after they negotiate $3 because fuel is at $5.
Incidentally, the lower rates go, the worse safety gets, due to lack of maintenance, and drivers pushing as hard as they can to make money. Give the drivers 80%, and those issues are largely rectified.
I’ve never had a problem with brokers keeping a percentage, as it’s their relationship with the customer, and their reputation, that keeps those contracts. My problem is the brokers that charge for our expenses, then refuse to pass any of that on. They run us out of business, create shortages by not moving freight, push inflation, and offer no service to offset their liability to the industry.