The continuing anger on the part of independent owner-operators targeting the broker community for low trucking rates has now led to the owner-operators’ trade group asking Congress to amend a current federal law governing broker-carrier relations.
In a letter sent Wednesday to all 535 members of Congress, Todd Spencer, the president and CEO of the Owner-Operator Independent Drivers Association, asked for what the organization called “two simple solutions” to federal regulations under title 49, section 371.3 of federal law.
At present, 371.3 “require(s) brokers to keep records of transactions with motor carriers,” Spencer said in his letter. And in fact, the title of the section in question is “Records to be kept by brokers.”
In those records, according to the statute, brokers need to keep a long list of information that they would presumably keep even in the absence of federal law: information on the name of the carrier, the bill of lading and so on. But it also requires a detailed list of other financial and service functions, including the compensation paid to the broker, the identity of the payer, and “the amount of any freight charges collected by the broker and the date of payment to the carrier.”
The law also says each party to the transaction has the right to review all the records.
But the reality, according to OOIDA, is that the exchange of information doesn’t happen much. Many of the contracts signed by carriers include a clause waiving the right under 371.3. OOIDA concedes that it discourages its members from signing for that provision, “but the practice is so prevalent that truckers often have no other choice if they want to haul a brokered load.”
OOIDA is not the only entity that agrees information is rarely transferred through a 371.3 request. As one former broker said, “I didn’t even know that was a law.”
From a more formal voice, Bob Voltmann, the president and CEO of the Transportation Intermediaries Association, agreed requests under the law are rare. “I spoke with a member today who said that in 27 years of business that they have never been asked for this information,” he said in an email to FreightWaves.
The OOIDA letter also cites a clause that it says comes from an unidentified broker that it describes as one of the biggest in the country. The clause states that the carrier can’t demand to see commissions.
The broker “shall not be required to disclose the amount of its broker’s commission to Carrier, and Carrier expressly waives its right to receive and review information, including broker’s commission information, pursuant to 49 CFR §371.3,” according to the clause cited by OOIDA.
If a broker does allow the records to be seen, there are plenty of hurdles to that happening, including requirements that they be viewed at a broker’s facility during office hours.
And then there’s the blacklist problem, according to OOIDA: “When a carrier tries to assert his/her right to review this information, the broker is unlikely to contract with them again.”
OOIDA’s “two simple solutions” are that brokers should be required to “immediately” provide an electronic copy of all transactions. “No exceptions,” the letter says. “This would allow carriers to identify brokers who truly are taking advantage of them during the crisis as well as after it,” Spencer adds in the letter.
It also asks for banning brokers putting in their contracts any waiving of drivers’ rights under 371.3.
Carriers are feeling “a disproportionate amount of the pain” in the current market. “This will not change until Congress addresses the widespread evasion of 49 CFR 371.3,” Spencer says.
Asked if OOIDA had brought up these recommendations previously, Norita Taylor, an OOIDA spokeswoman, said the group “[has] a long history of bringing up issues regarding brokers.
We plan to continue pursuing the issue of transparency.”
Voltmann, in his email, pushed back against the idea of carriers needing the information that presumably would be in the data automatically passed on to carriers. “Do you really need to know exactly what the car dealer paid for the car you bought?” he asked. “ Or do you do your homework and buy the car for a price you think is fair? And, secondly, what are they going to do with it? Are they going to highlight the loads in which the broker loses money to keep the shipper happy? No, they are going to look for the examples where the broker made a better than average margin and splash them all over the internet. It will be sensational, but should business men and women deal with others professionally or sensationally?“
Voltmann recently stepped into the growing small carrier vitriol against brokers by posting an unusually blunt video defending his industry.
A recent demonstration in Washington by angry truck drivers did get the attention of President Donald Trump, who tweeted out his general support of the industry.
James Bauman dba Kirplopus
If what we carriers think what’s happening, is true (brokers making, say 33% during this downturn)….. I see the #’s like this
Broker receives $1.50 from shipper. At 33% profit; they sell to carrier like me for $1; causing many carriers to go bankrupt (as we’re seeing lots of ; real time).
BrokerS. as a group; pay for this profiteering in long run; however. When enough of us go bankrupt;
1) They don’t have as many trucks to work with for volume
2) We again charge $3/mi dry van; since we had to endure this $1; it’s our turn as carriers
So now brokers can’t compete with contract mega fleets; not on volume nor price; so they may may now face unsustainable rates.
Hmm…. I think broker transparency help reduce these magnitudes; which may actually be better, not just for carriers; but also brokers
James Bauman dba Kirplopus
It’s a vicious cycle; even in the last 10 years; where perhaps “some” government in the form of transparency will actually benefit. Regualated capitalism is better than raw. Raw eats everything…. the planet, us.
Pitman14
Unfortunately, it comes down to the drivers hauling cheap freight I used to work for a broker and the starting was 35% but the least we where instructed to do was 15% profit from the rate given to the customer. Now days it’s really hard to find an honest broker but there are still a few out there. I no longer work for a broker and when I call on a load some of this brokers tell me this other driver gave me X rate can you beat that. I simply tell them give it to them I can’t even come close to that rate. On other occasions they ask me for my rate I give them a rate and then you see them repost the load for a couple hundred more but less than my quote. Occasionally it happens where they call back and tell me I can’t do your rate but I can do 100 less so depending on other points like weight, destination, time taken to load and unload and appointment time I have to decide yes or no. I understand it’s a business for brokers but OO should also stop taking cheap freight it affects all of us trying to get a descent paying load. I hope Trump does something to help Owner Operators everyone is out to profit from the drivers.
Luis Betances
Brokers hate that when they got something to hide,how many brokers going broke compare to carriers?I never see brokers protest in DC
Mike Colby
So do carriers know how much the dealership buys their truck or trailer for when they are buying it from them? How about that couch in their house, or refrigerator? You buy them for what you can negotiate the price for and both parties think they are worth. So the carriers don’t know how much a dealership is making, or a lot of things in life you don’t know when buying something what the other person paid for it.
So how isn’t fair to get into this situation where a persons profits are questioned or regulated? No other business in this country has its profit margins regulated by the goverement so what makes it right for brokers to have to do it? Are carriers willing to say they will only make a certain amount of profit?
What about dispatching services operating without an authority, insurance, bond at all. They get on shippers load lists and get load board access then they go to posting loadsthe shippers will send them in those lists and booking the loads as they were a broker but have no skin in the game. So when the dispatching service doesn’t pay the carriers bill, then there is no bond to hit, guess who gets the blame brokers do for doing things unprofessional and burning the carrier.
Carriers need to do more research on the brokers and pick and choose the brokers they work with. If a broker doesn’t have a good price then goto the next load. If the broker doesn’t get the load picked up the shipper finds a new broker. Pretty simple business strategy you work with who works well with you and leave the rest alone. Since when has it gotten to where it’s attacks allbroekrs and force them to do business with someone.that is agaisnt everything this country was built on being a free market.
James Bauman dba Kirplopus
Yeah, but like my example; many say that tariffs are not “free market:” and therefore the shouldn’t have tariffs. If we don’t have tariffs, China will OWN us; period. So I’m not for having “free market” or “raw capitalsm” be god above other things. There is a reason, with deregulation; that broker transparency was initiated. It is an excellent compromise between gov’t set lanes / prices and free market. In the case of brokers, it hurts transportation more than it helps; when transparency is absent. Lack of transparency = lower spot rates in todays kind of market; forcing higher # bankruptcies. If rates were $1.15 even; and not 1.00; this would prevent thousands of small carriers; and medium, from collapsing; resulting in shippers (eventually consumers) from dealing with the $3 dry van rates that result from too many carrier bankruptcies. Free market is good; but not god. Transparency is not “rate setting.”
CM Evans
The difference would be the price swings. If new truck prices dropped 50% buyers would time the market. Additionally new equipment would be relative to the contract market where used equipment would be relative to the spot market. Even though the used truck market will no doubt be flooded in the months to come I would not anticipate 50% drops. Equipment owned by the dealership is an asset backed by banks.
James Bauman dba Kirplopus
I don’t know why some many make this mistake of logic: They say transparency is not free market; yet no one is asking the government to regulate prices. No highs , no lows, etc. We just want transparency. Here’s why: The amount of freight can’t be increased; because this is also free market , driven by demand. With the amount of freight down; we carries need as sustainable rates as possible; in order to survive. If brokers are currenty (Covid downturn) getting, say 1.50 but only paying carriers 1.00; this runs carriers out of business.
Carriers out of business ALSO hits shippers when upturn peaks; as we’ve seen dry van rates at 3.00 due to LACK of capacity.
So, if brokers rate con’s reveal that broker is keeping 33% (above example); this will encourage more shippers to go direct to carriers; and these shippers will be more realistic about sustainable rates; they don’t want their capacity to disappear. That’s why Schneider, etc are not being asked by their customers for 80cpm contracts; even though that’s the current market; it’s non sustainable and long term very stupid. For some reason; when we put brokers in the middle; this logic goes out the window; the logic of sustainability. Trust me; shippers would be very in tune with this concept. Robert Voltmann doesn’t care about the carrier side; he reps brokers; and I sense fear about transparency. Why is that? Because when shippers and carriers do see 33% margins now; there will be change.
There is ZERO logic is saying that transparency is “government regulation” since this only allows view of gross and net profit; there is no price setting in this, at all. Transparency is NOT anti-free market.
James Bauman dba Kirplopus
If brokers truly we’re selling at, even the higher side; 18% margin; the majority of freight on DAT would be $1.23 when broker makes $1.50 gross. We can’t stop many carriers from going bankrupt; that’s gonna happen; due to lack of freight. HOWEVER, we can minimize carriers going bankrupt if they earn $1.23 vs $1.00 during next few months. That’s why transparency would help. And this is not anti-capitalism; we’re NOT talking about setting prices; minimums; etc. Nope; we just want mandated transparency; so that no one like me has to ask; and then be avoided due to asking.
James Bauman dba Kirplopus MC 895097. Charlotte, NC
James Bauman dba Kirplopus
Voltmann is intentionally trying to confuse transparency with regulation of prices. The majority of us are NOT asking for price controls; because we don’t want those either; we want to be able to charge $3.00 to those brokers now selling for .80; that’s exactly what I do. I remember who’s who. Transparency is NOT gov’t price fixing. (Transparency will temper severe margins though). Robert Voltmann is an industry pimp; on the side of brokers. Think: Robert is also on US Chamber . Chamber didn’t want tariffs on “made in China” But any working class (manufacturing here) DOES. want tariffs on China; forever. The good energy here is that Trump gave the US Chamber the middle finger; and proceeded with tariffs. Now that Double Coin moved to Thailand, btw, I want those Thai tires tariffed too; due to lack of labor rights; just like China.
Matt
Reguardless of what happens or doesn’t, they will just find new ways of scapegoating those laws or regulations put in place. We are the only industry where we provide a service and are not allowed to set our rate to perform that duty… That is set for us by those who are getting rich off not doing any of the actual work, or have any of the actual costs of performing said service.. With a constant increase in pricing for insurance, maintenance, and equipment when do we get to make a profit? We literally operate on margins of 2-6% at maximum and right now or -6% but are still running necessary loads for those in our nation. But we are told that we are the problem in most cases and treated as if all we are is cheap labor. Things have to change for us soon or the American people are going to start to feel it in the stores, see on the shelves and wonder why although we have been voicing that for many years only to be told to shut up and stay in your lane. I speak to you not as a driver any longer, but a small company owner scared for the future of trucking and the future of my company and those who have ties to it.
Aj
HELLO TRIED TO POST A COMMENT BUT IT WOULDNT LET ME SO I GUESS I CAN VOICE MY OPINION THIS WAY. I AM IN THE TRANSPORTATION BUSINESS AND HAVE BEEN FOR ALMOST 20 YEARS NOT EASY AS YOU KNOW. WE HAVE BROKERS IN OUR BUSINESS AS WELL AND WHEN I FOUND OUT HOW MUCH THEY CHARGE AND THE PAY US I STOPPED WORKING FOR BROKERS. I DONT WORK FOR BROKERS AND WHEN MY PHONE RINGS AND ITS A NEW CLIENT ONE OF MY VERY 1ST QUESTIONS IS ARE YOU A BROKER IF THE REPLY YES I LET THEM KNOW I DONT WORK FOR BROKERS UNLESS I CAN SET MY OWN PRICE AND THE GO FIND SOMEONE ELSE WHICH IS OKAY WITH ME. BUT COMPANIES THAT WORK FOR BROKERS ARE EITHER STRUGGLING OR OUT OF BUSINESS. I HAVE BEEN BLESSED TO GET A COUPLE ACCOUNTS AND I BROKER WORK AND THE MOST ILL MAKE FOR COMMISSION is 3% IF THAT. I AM SITTING STILL HAVENT MOVED ANYBOF MY BUSES SINCE MID MARCH. MY POINT IS THATVWE NEED TO GET THE BROKERS OUT OF THE BUSINESS BY NOT WORKING FOR THEM AT ALL THEN COMPANIES HAVE NOTHING MORE TO DO BUT TO CALL DIRECT. FOR YOU GUYS IT WOULD ONLY TAKE ABOUT 3-5 DAYS OF NOT ACCEPTING WORK FROM BROKERS B4 YOUR PHONE STARTS RINGING AND YOU THEN CAN SET YOUR OWN RATE LET IT BE TO HIGH OR TO LOW YOUR RUNNING YOUR BUSINESS THE WAY YOU WANT BUT THESE BROKERS WITH NO FUEL COST NO RISING INSURANCE COST NO WORKERS COMP NO TRUCK NOTES NO REPAIRS NO MAINTENANCE BILLS THAT NEEDS TO STOP. LET THEM CARRY THOSE CHEAP LOADS IN THERE PERSONAL CARS.
Mike Colby
A lot of shippers don’t want to calm carriers and ha e to male multiple calls or emails daily. They have other things to D that is why they hire brokers been that way for 30± years. They offer the shipper a service of being a baby sister of their freight.
James Bauman dba Kirplopus
May be true; but I’m bringing loads with rates posted on DAT to shippers; and explain that brokers are selling below sustainability; which is gonna cause $3 dry van rates again. Think shippers want that? At some point, the babysitting’s worth the money saved; maybe wasn’t “then” but this may be blessing in disguise, if used by us carriers, smartly.
Luis Betances
Agree 100%
Ben
First thought after wondering why you are yelling comes from the classic SNL skit.
Jane, you ignorant slut!
Dave
Not gonna change. Never does. It’s a capitalist society we live in.
Mike
Not holding my breath…