Two groups representing small-business truckers should know by early next year whether federal regulators will grant their requests for more transparency in freight transactions involving brokers.
Petitions by the Owner Operator Independent Drivers Association and the Small Business in Trucking Coalition (SBTC) seeking more oversight of broker transaction records were published in August 2020 by the Federal Motor Carrier Safety Administration, seeking comment on the two requests.
OOIDA sent a letter to FMCSA in September pointing out that it has been over two years since the group submitted its original petition. “We believe an update is warranted on where the agency stands on our outstanding petition and related comments from motor carriers,” stated OOIDA President and CEO Todd Spencer.
FMCSA “has been considering the issues raised by OOIDA’s petition for rulemaking and based on that work is targeting early 2023 to issue a decision,” the agency stated when asked to comment on the groups’ rulemaking request.
“When assessing possible broker transparency rulemaking, FMCSA’s role is to remain within the bounds of our statutory authorities and also takes into account whether and how additional rulemaking will effectively and efficiently resolve the issues identified,” FMCSA added.
Specifically, OOIDA requested that regulations on broker records (49 CFR 371.3) be amended to require brokers to provide an electronic copy of each transaction record automatically within 48 hours after the contractual service has been completed. It also requested that FMCSA prohibit brokers from including contract provisions requiring carriers to waive their rights to access their transaction records.
“OOIDA’s recommendations to enhance compliance … are not attempts to control rates or impose burdensome requirements, but would simply ensure that motor carriers have access to documents they have the right to view,” Spencer stated.
Such documents are supposed to include the amount the broker received for its service and the name of the payer, as well as the amount of any freight charge collected by the broker and the date it was paid to the carrier.
SBTC’s petition similarly asks that FMCSA prohibit brokers “from coercing or otherwise requiring parties to brokers’ transactions to waive their right to review the record of the transaction as a condition for doing business,” FMCSA stated in the petition notice.
Months after FMCSA’s comment request on OOIDA and SBTC’s petitions, the agency issued a notice and comment period for an opposing petition by the Transportation Intermediaries Association (TIA) — which represents truck brokers — asking that FMCSA repeal the current provision in the regulations that gives carriers the right to review the broker transaction record.
“TIA believes that 49 CFR 371.3(2) should be eliminated because it hinders supply chain functionality as well as a free, open, and competitive marketplace,” a TIA spokesperson told FreightWaves. “The regulation is outdated, unnecessary and will continue to be used as a tool to try to re-regulate the industry, which runs contrary to the intent of the Interstate Commerce Commission’s rules back when they were enacted in 1980.”
FMCSA confirmed it is still considering the issues raised in TIA’s petition, with a target date of early 2023 for a decision on whether to publish a rulemaking on their request as well.
OOIDA and SBTC filed their petitions at the beginning of the COVID-19 pandemic amid accusations that brokers were colluding on prices. The allegations were repeated by then-President Donald Trump but were rejected by Robert Voltmann, TIA’s president at the time, who stated that there was simply not enough freight to support the amount of truck capacity in the market.
Accusations of wrongdoing receded as freight rates and demand for capacity surged over the past two years, but that could change as capacity loosens and spot rates continue to trend down.
“As conditions in the trucking industry change, and more carriers face challenges, we can assure you that FMCSA and others in the federal government will continue to hear about the lack of broker transparency from small-business truckers,” Spencer stated in his letter to FMCSA.
Matt
I don’t believe the customer rate should be transparent for a few reasons. The main one is back soliciting. If these carriers know what brokers charge then they can easily undercut them and get the contracts. The last time I checked we live in a capitalist economy and not a socialist one. No one is forcing drivers to take low paying loads. IT is simple supply and demand like any other industry. Will restaurants and manufacturers have to disclose the cost of products before selling them at 1000% mark up no? Would these carriers like to disclose the rates they were charging and how much they were making during the height of COVID when capacity was tight? This is a cyclical industry. When capacity is loose rates are cheap and when capacity is tight rates are high. Some people have a very hard time understanding simple supply and demand. What a lot of these carriers dont understand is that they need brokers. Brokers can pay the load out in the next day or two while the customer doeant pay the broker for 30-60-90 days. These smaller carriers cannot keep their business running without getting paid for 30-60-90 days. Brokers are not hurting the economy, the trucking companies that rate gouge drive prices and inflation up.
Ovidio crespo
If the president, salary can be publish,why not the broker…
A
I believe this is a terrible regulation with some points outlined below:
Much like being a carrier, there is a lot of associated costs that go into running a brokerage than just what the linehaul pays for.
Much like the trucking market, the broker market is oversaturated. Not everyone is entitled to make it.
You are probably overestimating how much brokers make off a load. Of course there will always be outliers in everything.
Brokers have just as bad experiences with carriers as the other way around.
And mainly:
As an owner-operated/small fleet owner, you are not forced to haul any load for a broker. You have the freedom to say no, and should say no to bad paying loads that are not in your best interest. It doesn’t matter what the broker makes off the load, the carrier is agreeing to a rate that they don’t need to agree to.
D B Transport LLC
Wow that can’t any clearer that what Nicholas committed just a level playing field is all we are asking for.
Amjad
I’m owner operator and what surprises me that shipping cost directly related to cost of fuel. If Freightwaves interview some mid size shippers they will let you know how much shipping costs is up in last 12 months. But on the other hand we ( truckers ) stuck with an average of $2.00 per mile. Minimum fuel cost is 80 cents per mile. Dispatch fee, insurance and other expenses… crunch the number. Diesel is still $5.00 or up. Please help to make freight brokerage more transparent. Why not they mentioned their percentage on rate con. After all they are intermediary.
Jeff ayres
That all sound good. But the carrier goes and looks the the broker will black ball the carrier from ever hauling anymore loads for that broker. So let that be known. It should be included in the load tender as too how much the broker is getting and how much the carrier is getting before the load is getting pick up. That way if the broker is taking too much of the load pay the carrier can decline the load. This is a fair way of doing business.
Keith White
It is painfully obvious as to how much money certain brokers keep off of the top,,unfortunately more times than not we are at the mercy of the brokers,,, we are a small trucking buisiness and this affects us on a huge level,, we pray that the FMCSA is able to do something,,, thank you
Nicholas
There should be more regulation over brokers than what is current. More and more you are seeing this free market being taken advantage of because of the nature of how freight deals are done on the “spot”.
1. Carriers are forced to take unwanted demands because a load may fit it’s geographic needs. (Not speaking to rates but to language within master contracts)
Ex. Had a load that had maybe $300-$400 of damaged product. In the master contract it allowed the broker to withhold payment for up to 1 year if there was a potential claim. I referenced the current regulations to be able to see the details regarding the load and to see if they had been paid for the load and was not even denied but the broker wouldn’t even acknowledge my right to view this information. It was around a $1000 load. That’s a $1000 that my business couldn’t earn interest or put to work. After the time period was up I had to call back and they finally released the funds with no claim made.
2. Consumers are NEVER rewarded by the dips in demand for trucks but are always holding the bill for the high freight rates when the market demands. Broker transparency could ultimately put more control in shippers hands and reduce cost of goods.
Ex. Had a total loss of cargo $90,000 claim. Broker wish to submit a separate freight claim for $6,000 the load paid approx. $1200-$1400 to the carrier. The rate on the lane was appropriate at the rate I agreed to. This is still being litigated.
These are just 2 recent events within my company and I’m sure I can drum up more stories over my 15 years. I am a 36 truck company and also own a separate brokerage. The “go to” talk is regulations cost and they will add cost is a scare tactic. Brokers operate with nearly no regulation and it’s time for that to change.
Brokers are suppose to be intermediaries.
Definition of intermediary – a person who acts as a link between people in order to try to bring about an agreement.
Links typically go both ways. Imagine a mediator in a lawsuit he leaves the plaintiff (carrier) with a settlement offer of $900k. The offer is presented to the defense (shipper) for the amount of $1mil. Mediator keeps the extra $100k. Never any obligation to disclose to plaintiff/carrier or defense/shipper but he has control of the room. I’m not a lawyer but I’m sure there are proper controls to prevent this but the trucking industry has been used and abused for too long.
Trucking industry needs this but ultimately Consumers deserve this!