Bob Voltmann, the longtime president and CEO of the Transportation Intermediaries Association (TIA) has stepped down.
Voltmann led the association for almost 23 years but the last few months have probably thrust him in the public eye more than at any other time, as drivers facing low pandemic-driven rates increasingly blamed their problems on brokers.
TIA is the trade association representing the third-party logistics (3PL) industry, with more than 1,800 companies as members. “The industry is in great shape,” Voltmann said in an interview with FreightWaves. “It has weathered the economic downturn because that’s what these guys do. They arbitrage imbalances.”
TIA has advocated on behalf of its members and has been active in industrywide issues, including electronic logging devices and hours of service, and annually recognizes industry leaders at its events.
Prior to taking over TIA in June 1997, Voltmann was the director of policy at the National Industrial Transportation League. He served on the U.S. Interstate Commerce Commission from November 1989 through November 1992 under the George H.W. Bush administration.
Voltmann is also the current secretary general of the International Federation of Freight Forwarders Associations, which represents more than 115 associations around the world and has more than 40,000 member companies.
An unusual video in the middle of a storm
Voltmann is exiting after a somewhat controversial few months during which time freight rate plunged as a result of the COVID-19 pandemic. As drivers descended on Washington and the Owner-Operators Independent Drivers Association (OOIDA) issued statements demanding transparency from brokers under current law, Voltmann issued an impassioned defense of the 3PL industry.
In a three-and-a-half-minute video, Voltmann said that “brokers don’t set prices; the market does,” noting that as large segments of the U.S. economy shut down, rates plummeted.
“Nobody is getting pre-virus rates,” he said.
Voltmann added that rates are set in a market that he said is “huge, fractured and incredibly transparent.”
“Shippers, like all buyers, want to get the lowest price possible,” Voltmann said in the video. “They know there is not enough freight to fill all the trucks. Shippers and brokers offer rates to probe the market. Shippers do it to brokers, and brokers do it to carriers.”
Driver anger at brokers led to demonstrations in the streets of Washington, a meeting between driver representatives and staff from the White House, and a tweet from President Donald Trump saying drivers were getting “gouged.” Given that most owner-operators get the bulk of their business through brokers, there was only one possible interpretation: brokers were doing the gouging.
Trump comments a stunner
“Yes, I was stunned,” Voltmann told FreightWaves. “There is no sugar coating that or putting spin on it, so we worked to try to correct that image.”
The Trump administration “let them down,” Voltmann said of the brokers. “They wanted to get attention so they lashed out at the brokers when they should have been lashing out at the Small Business Administration and Congress.” Their message, he added, should have been that “you bailed out the cruise ships, the airlines and the hotels but you did nothing for us and yet you’re expecting us to drive into a New York City hot zone.”
Voltmann said brokers and owner-operators have a “co-dependent relationship.” “Both need each other,” he said.
As an example of an outreach effort that TIA has undertaken, Voltmann said a message that has been communicated to shippers is that even at times like this, with lots of capacity available, don’t forget the noncontracted sources of freight movement that you’ll need in better times.
“When you start entering a recession, the rote response from shippers is, ‘We have to protect our asset-based players,’” Voltmann said.
But he added that TIA is trying to get the message across to shippers to “think strategically, and that they need to protect all their asset capacity, both direct and the indirect.” It’s that latter group that provides the swing capacity when markets get tight, he added.
TIA released a report on broker margins in May, saying that margins declined in the first three months of this year. For instance, in the truckload segment, the TIA report said gross margins for truckload activity managed by 3PLs declined 210 basis points in 1Q2020 compared to a year earlier. Intermodal margins were down 140 basis points while LTL margins dropped 10.
The total truckload business in the TIA report — all 3PLs aggregated — showed the gross 1Q2020 margin declining to 15.1% from 17.2%, though total shipments dropped just 2.7%. The average invoice amount/load declined 8.4%, to $1,628 from $1,778, the lowest point in over two years. Overall total truckload revenue declined 10% in the quarter.
The controversy has not fully died down, and Voltmann faced backlash on social media from drivers.
A long history of success
Inside TIA, though, Voltmann has been credited for growing the organization into a strong force for 3PLs and the logistics industry in general. In accepting the organization’s Heritage Award in 2017, Jimmy DeMatteis, president of Des Moines Truck Brokers, credited Voltmann for building TIA into what it became.
“Twenty years ago, Bob brought in a staff and his staff has just gotten better and better. Ten years ago, I was honored to be put on the board and we’ve had tremendous leadership. We have a lot of challenges ahead, but I believe we will prevail. We’re like-minded people working together to make the industry better,” DeMatteis said, according to a Transport Topics report on the event.
Voltmann’s group is one that futurists are always predicting is going to disappear, disintermediated by technology. He recalls the ’90s, when the prediction was “everything would be digital and perfect, but the dot-com bubble burst. There was no ‘there there.’”
And the current round of similar predictions “isn’t going to happen this time either.”
That isn’t to say there isn’t lots of investment in logistics technology. But Voltmann said shippers are investing in tech “to make their products better, faster and cheaper, not to move their products to market.”
Carriers are investing “to move that equipment better, cheaper, faster. So the only people who are incentivized to invest in the technology process and the information to move someone else’s goods on someone else’s equipment are the 3PLs.
Voltmann did caution that the “first ones out of the box” with new 3PL technology might not necessarily get a significant first-mover advantage. “There will be a limited window where they’re going to have an advantage before the TMS companies say OK, that’s a really good idea, and they replicate it.”
An example of what might be coming down the pike, according to Voltmann: technology at a 3PL that predicts “which three of their carriers are most likely to accept this load, and it could auto-tender out to them, do all the paperwork and off it goes instead of six to 10 phone calls. Maybe one call is made to confirm it.”