The Federal Motor Carriers Safety Association is taking some feedback, both positive and negative, regarding a rulemaking proposal.
The 78-page document garnered some negativity in some circles.
The Transportation Intermediaries Association (TIA) issued a press release on Tuesday stating in part that it is “deeply disappointed by the FMCSA’s decision to release a Notice of Proposed Rulemaking (NPRM) on broker transparency.”
TIA stated that FMCSA’s priority should have been what it called “a far more pressing issue” of freight fraud.
The release pointed out that freight fraud costs the U.S. supply chain more than $1 billion annually.
“This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA’s release stated.
“TIA has consistently maintained that the broker transparency regulation, rooted in the 1980s, is obsolete and un-American,” the release added.
“Originally implemented in an era following trucking deregulation when brokers acted as commissioned sales agents for motor carriers, this rule has no place in today’s highly transparent marketplace. Any attempts to expand or enhance these outdated provisions should be shelved, and the FMCSA should redirect its attention to fulfilling its primary mission—ensuring safety on our highways and addressing rampant freight fraud.”
It was also pointed out as notable that during the COVID-19 pandemic there were zero complaints registered to the National Consumer Complaint Database.
“In stark contrast, there were more than 80,000 complaints related to freight fraud and unlawful brokerage activities,” TIA stated. “This stark disparity highlights the misaligned priorities of the FMCSA under the current administration.”
“TIA opposes this NPRM and any attempt by the Biden administration to overreach into commercial business activities,” the release stated. “Regulations like these threaten to erode the foundations of American capitalism, stifling innovation and efficiency. FMCSA must abandon this regulatory overreach and focus instead on its core mission: improving safety and addressing the rampant freight fraud plaguing the transportation industry.”
There were more responses to TIA’s decision as well.
Small Business in Transportation Coalition Director James Lamb called the FMCSA “misguided.”
“The move toward rate transparency being a ‘duty’ of broker means nothing unless FMCSA also says brokers cannot waive their new regulatory duty without such a waiver constituting ‘evasion of regulation’ in furtherance of ‘unreasonable restraint of trade’ in violation of the Sherman Antitrust Act,” said Small Business in Transportation Coalition Director James Lamb. “Without expressly prohibiting such contractual waivers, FMCSA is allowing brokers to continue to evade regulation and deregulate themselves. The status quo remains. While Congress has explicitly allowed shippers and carriers to agree to waive certain requirements, Congress has not passed a law allowing the same for brokers. FMCSA already knows this and they have determined brokers are NOT shippers. FMCSA is therefore misguided in their logic and has this backwards. There does not have to be a law specifically prohibiting brokers from waiving because there already is a general law called Evasion of Regul ation. There would need to be a law allowing brokers to waive, and no such law exists.”
OOIDA president Todd Spencer came out in favor of the FMCSA’s announcement.
“Four years ago we asked FMCSA to improve broker transparency and we welcome this overdue Notice of Proposed Rulemaking. We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations.” Spencer said. “As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment. We look forward to responding to FMCSA’s request for feedback, and most importantly, will continue to press the agency, lawmakers, and other regulators to make all resources available to enforce these regulations and ensure that brokers finally play by the rules.”
Bruce Guthrie is an award-winning journalist who has lived in three states including Arkansas, Missouri and Georgia. During his nearly 20-year career, Bruce has served as managing editor and sports editor for numerous publications. He and his wife, Dana, who is also a journalist, are based in Carrollton, Georgia.
let me qualify my experience by saying I have 25 years in transportation. Driver,
Fleet Manager, Dispatcher, licensed Freight broker – as a carrier we tend to look at things in singular one load one paycheck, as brokers, the reality is one customer
multiple paychecks. The carrier they may have just made a 35% margin with doesn’t necessarily need to understand that I made 35%. what they need to understand is their cost of doing business and the current market conditions.
Here’s why the carrier does not need to know the broker made 35%. Brokers tend to look long-term and regularly bid quarterly, semi-annual and annual Freight Lane contracts. If I am working on an annual contract, and I understand my customer wants consistency of rates throughout the year so they can better plan their freight spend, while averaging the rates through the shipping seasons, I may at some point show larger profits or margins while taking a loss on other portions due to volume and shipping constraints. So The single 35% margin made on one load May average out to be a 10% – 15% margin for the entire contract. This is why many shippers choose to use brokers because it gives them a more predictable Freight spend. A carrier demanding transparency on the load that they just transported does nothing to the overall transparency as it is confined to one transaction. Real transparency would require me to open my entire book of work transactions for carriers to review. I don’t know of any business that would be willing to do this! The fact that Walmart pays $0.12 for something it charges $10 for. should we be able to demand for them to show their margins?
Carriers are not forced to use brokers! Every carrier is free to pursue customers on their own, and negotiate their own terms.
Many point to other industries where brokerages commissions are disclosed up front. I would point out one key difference, these brokers are not financially responsible or bank rolling the transactions! Your real estate broker is not obligated to pay the bank, financial broker takes a fee regardless of whether the transaction yields you gains or losses. They are responsible for neither. There is no other brokerage model in business where the broker is financially responsible and must guarantee payment to the end service provider regardless of their own payment collection.
TIA is out of its mind
this is where your wrong brokers are buying trucking companeys to get around contracts and use there brokage to get the loads and screw the drivers out of contract pay.
both need to be addressed. but broker theft is every bit as big as freight fraud. there needs to be a cap on what brokers % is and rate cons with what they are getting needs to be put out there. the freight offers need to be addressed as well. freight for .99 a mile that’s totally ridiculous and stupid people taking that is driving to rates into the sewers
I feel that brokers are getting rich off the backs of truck owners mainly O/O and small Trucking companies. By the time all brokerage fees are takin out the guy who has the majority of the expense the TRUCK OWNER gets less than half of the freight bill. Most brokers don’t even have a 800 # so every expense right down to the phone call is on the truck owner. Then you have these bigger Trucking companies having their own brokerage company so thet can skim more money off the top before it gets to the truck owner.. When you have Trucking companies like LandStar who will pay there lease operators $4500 to haul a load but only want to pay an O/O that’s not leased to them $2500 there’s a problem. They are already making money off that load but because you’re not leased with them they want to take another big chunk is BS. My honest opinion with the internet the technology we have today we don’t even need brokers if you have a load you post it what it is what you’re paying and what credentials you need from the truck owner and shipper and driver work it out and do away with brokers all together but there should at least be a cap put on all freight for brokers and no freight should be allowed to be brokers more than once
Brokers are thieves stealing their money from O/O. The truck owner eats all of the cost of the business while Brokers line their pockets with cash. FMCSA needs to put a cap on what Brokers make. As for freight fraud that problem exists because all of the people that have a hand in a truckers pocket. And most of the fraud is coming from foreigners. That statement comes from my own experience with freight fraud.