Broker Group CEO Blasts Critics, Says Rates Will Go Up When Carriers Reject Low Offers
Alexandria, VA – The head of the largest association for third party logistics (3PL) companies is blasting critics and mounting a matter-of-fact defense against allegations that some freight brokers are taking advantage of small carriers during this time of national emergency.
On Thursday, Bob Voltmann, CEO of the Transportation Intermediaries Association (TIA), spoke publicly about the growing firestorm in a more than 3-minute video.
As freight volumes have tanked and load rates have plummeted amid the COVID-19 recession, 3PL companies have come under intense scrutiny.
In recent weeks, freight brokers have been taking a public relations beating as small business truckers have hit the streets in cities across the nation to protest what many believe are exploitative business practices.
In fact, multiple protests and demonstrations are planned for Friday, May 1 in cities such as Chicago, IL and Washington D.C.
Earlier this week, the 15,000-member Small Business in Transportation Coalition (SBTC) called on the United States Department of Justice (DOJ) to immediately launch an investigation into “large third party intermediaries” for possible “antitrust activity and/or illegal price-fixing.”
“We believe, these large third-party logistics entities have engaged in a scheme to profiteer by price gouging their shipper clients (charging them pre-Coronavirus rates), especially in the ‘spot market,’ yet paying carriers substandard rates, targeting the most desperate of truckers willing to accept rates that barely cover the cost of fuel,” an SBTC letter states.
Read the full story HERE.
Choosing to stand up for TIA’s more than 1,800 member companies, Voltmann delivered a rebuke to critics such as the SBTC and grassroots trucking groups organizing and participating in the rallies.
“There’s a lot being said about truck rates and brokers these days. Most of it isn’t true,” Voltmann exclaimed. “No one is getting pre-virus rates like some snake oil salesman would have you believe.”
He calmly stated, “When there are too many trucks chasing too few loads, rates go down, and since mid-March, rates have plummeted.”
Voltmann argued that shippers and brokers simply “probe” the market with rate offerings.
“Like it or not, it’s the motor carriers that accept it” that actually set the market pricing.
“If carriers don’t accept a rate, both shippers and brokers will offer a higher rate until the load is accepted. That’s the free market economy,” Voltmann professorially explained.
Voltmann didn’t specifically address any one broker’s margins during the pandemic.
Instead, he offered a more blanket defense advising that, according to the latest TIA Market Report, the average margins brokers are fetching is 16 percent.
Further, he forecasted what he expects will happen as we approach the third and fourth quarters.
“When the economy rebounds later this year, the same economy will result in rates skyrocketing and it will be the shippers complaining.”
He concluded by making the case that both carrier and brokers need each other in order to keep the economy moving.
“There’s a yin and a yang between brokers and the carriers. Neither can survive without the other,” he declared.
Voltmann’s video will likely do little to quell the growing animosity between small carriers and brokers.
James Lamb, president of the SBTC, has already shot back at Voltmann’s “snake oil salesman” dig.
“Once we remember the old adage ‘accuse the other side of that which you yourself are guilty,’ then we can guess who is actually selling snake oil,” Lamb said.
This battle doesn’t appear to be going away any time soon and TransportationNation.com will be here to bring you the latest each step of the way.
WATCH Voltmann’s entire statement below.