In opening the door to comments on possibly strengthening broker disclosure requirements, the Federal Motor Carrier Safety Administration (FMCSA) spells out several questions about its authority that it believes it will need to have answered before coming to a conclusion.
At issue is whether a requirement that a driver or other counterparty to a broker-managed transaction can get documentation on the deal from the broker — which is the current law — can be turned into a rule that the counterparties must get that documentation.
The request to require disclosure came in a pair of petitions from the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC). FMCSA’s opening up a comment period on the request is a significant win, at least for now, for the two organizations.
FMCSA spelled out areas of interest it would like to see addressed by commenters responding to the opening of the agency’s inbox.
The agency, in its Federal Register notice announcing the opening of the comment period, discusses what it can and cannot do under the law. The first question posed by FMCSA is how the requests made by OOIDA/SBTC align with the powers granted to the agency under the provisions of laws passed alongside the 1980 deregulation of trucking. “What measures could FMCSA take to ensure that regulatory action in this area is an appropriate exercise of the Agency’s authority?” is one way that FMCSA poses the question.
Another FMCSA question: If it’s just a question of the bigger brokers who should be required to disclose documentation of transactions — and that question is unanswered — what size would be the cutoff between big broker and small broker?
At the heart of the request by OOIDA/SBTC is that electronic documents of transactions be disclosed to carriers in a timely manner. Such documents are available now, by law, but the carrier — whether a big truckload company or an independent owner-operator — needs to request the documentation.
The broker can put requirements on how they can see it, demanding that it be viewed in person at a broker’s office. Fears have long been expressed that making such a request would mark a driver as somebody a broker would prefer not to work with. A mandate to supply all documentation electronically would replace that current patchwork.
“Many brokers implement hurdles they know will prevent a carrier from ever seeing [transaction records],” is how FMCSA sums up OOIDA’s complaint.
OOIDA put out a statement applauding FMCSA’s action. “Brokers have been skirting federal regulations for decades,” the trade association said. “While many regulations are ambiguous, this one isn’t. It requires brokers to provide certain information to carriers, but they either make it impossible to access that information or they claim a nondisclosure agreement with a shipper precludes them from complying with it. In other words, they’re exempting themselves from a federal regulation.”
OOIDA said the onus is on FMCSA. If the federal agency does not act, OOIDA said, ” they would effectively be saying that regulated entities can exempt themselves from the agency’s regulations, some of which are mandated by Congress. I doubt that’s a road FMCSA wants to go down but we’ll find out soon enough.”
FMCSA already is asking about the specifics of what a new system might look like. “Should each broker have, for example, a stand-alone system with motor carriers receiving an email from the broker after the contractual service has been completed, or should brokers be allowed to satisfy the request with partnerships or network through which registered brokers would upload transaction information which would then be automatically transmitted via the network to the registered carrier associated with the transaction?” was what FMCSA wrote to describe the choices it may face.
The FMCSA list of questions it would like to see explored through the comments also involves cost estimates for implementation, other costs to brokers and the economic benefits to carriers if the rule is put in place.
The opening date of the comment period was not specified in the Federal Register notice.
The OOIDA/SBTC requests to FMCSA came at a time when freight rates had fallen sharply in the wake of a significant drop in freight rates, and brokers were getting pilloried on social media, and in street protests, as the cause.
Rates have since rebounded significantly, but the FMCSA document refers to the “historic lows” as having spurred the OOIDA/SBTC requests. “Most carriers have expressed frustration about the lack of transparency between brokers and motor carriers,” FMCSA writes in the notice, summing up the OOIDA view. “OOIDA believes the problem is that the regulations designed to provide transparency are routinely evaded by brokers or simply not enforced by FMCSA.”
Chris Burroughs, the vice president of governmental affairs at the Transportation Intermediates Association, the trade association for brokers, said TIA will be submitting comments to the FMCSA request.
“We stand firm that the downturn in the truck rates was a marketplace condition and the marketplace is completely flipped 180 since then, with truck rates through the roof and our members losing money on many loads,” Burroughs said in an email to FreightWaves. “The reality is the market will continue to ebb and flow through supply and demand, and we do not need government regulation and further transparency with shippers’ and brokers’ proprietary information in an already extremely transparent marketplace.”
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I.P
1.Brokers should be obligated by FMSCA to show the real cost of transportation in the RATE CONFIRMATION. Carrier should have option to accept or reject broker’s offer before signing the RC. For example in first lane transportation cost in the second lane broker offer.
2. Broker must obligated to email transaction report to carrier within 30 days after load was dropped. The cost of transportation should much the cost indicated in RC.
In this case of transparency all involved parties will agree prices before they signing rate confirmation.
Lenny
The FMSCA should stay out of the earnings of all involved in the motor freight cargo business. If your a carrier and or owner operator who is not happy you should just get out of the industry all together!
TeekedOff
Your 1st item was extremely ridiculous. Commercial transactions are commercial. If a motor carrier does not like the rate(s) offer than don’t take it. Brokers are in business for a good reason, not for being a “sales person” for a motor carrier. Brokers real cost absolutely has nothing to do with carriers. If carriers want to earn more, get your own clients without relying on brokers!!
Yogs
I think this entire conversation is so so stupid. Everbody (Shippers, Broker and Motor Carriers) is in the business for money
Shipper Pay Broker (After Mutual Agreement)
Broker Pay Motor Carrier (After Mutual Agreement)
Nobody is forcing brokers to accept load from the shipper and same goes with the carriers. If brokers are not asking Motor carriers how much you’re paying your owner-operators then why motor carriers are asking questions about what a broker makes?
Life is simple – If you have got a problem solve it. If you’re angry about brokers making all the money then give 10 hours of your life everyday making 100+ cold calls.
Steven J
I believe they should pass a law preventing language in contracts that removes protections from the Carmack ammendment, and other laws that have been enacted by the government. That is the one area brokers abuse carriers.
In addition there should be some way to compel brokers to pay late fees. All we can do is report them as late pays and try to avoid taking loads from them in the future.