Largest Freight Broker Group Pushes Back Against New Proposals to Increase Transparency

Washington D.C. – The largest association representing third party logistics (3PL) companies is pushing back against two new proposals which would require more transparency in transactions.

On Wednesday, the Federal Motor Carrier Safety (FMCSA) published into the Federal Register recently filed petitions by the Owner Operator Independent Driver’s Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) calling for new measures to ensure small business truckers have access to each transaction record.




 

The petitions stem from concerns that freight brokers are not complying with, or are circumventing 49 CFR 371.3 which requires brokers to provide a copy of the transaction record to carriers, at the carriers request, upon delivery of the load.

Reform measures called for in the petitions include: requiring brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed, and disallowing brokers from including any stipulation in its contracts which exempt them from having to comply with 49 CFR 371.3.

Click HERE to read more details in the petitions.

 

In response, Chris Burroughs, vice president of government affairs with the Transportation Intermediaries Association (TIA), said the proposed reform measures are unnecessary.

“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,” Burroughs argued in an exclusive statement to Transportation Nation Network (TNN).

Issues surrounding broker transparency came under intense scrutiny earlier this year during the height of the COVID-19 recession.




 

As spot market freight rates plummeted, small business truckers felt the squeeze leading to an historic three-week protest in Washington D.C. back in May.

At the time, then-CEO of TIA, Robert Voltmann, went on the record with TNN in an unforgettable and explosive two-part interview.


WANT MORE? GET MORE!

PART 1: Head of Largest Broker Group Weighs in on DOJ Investigation, “They Won’t Find Anything”

PART 2: Broker Group CEO Warns Full Transparency Will Put 3PLs & Owner Operators Out of Business


Voltmann asserted the depressed rate environment was a “supply and demand” issue and would likely soon shift.

Burroughs says TIA members are now experiencing that shift and it is costing them.

“We stand firm that the downturn in the truck rates was a marketplace condition because of COVID-19 and the marketplace is completely flipped 180 since then, with truck rates through the roof and our members losing money on many loads,” Burroughs told TNN.




 

Further, in Part II of TNN’s interview with Voltmann, he warned if brokers are forced to comply with the transparency rule, it will be devastating to small business truckers.

“Most shipper contracts today have strict confidentiality rules in them. So, the reason the broker asks the carrier to waive that is because if they don’t waive that right they can’t move that shipper’s freight,” he explained. “If Congress were to come in and say 371 is now mandatory, shippers will stop using brokers. That means all those owner operators are going to have to field their own salesforce. We’ll go out of business. If the brokerage part of the industry disappears, so will the owner operators.”


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Shortly following the interview series, Mr. Voltmann stepped down from his position with TIA.




 

As for the petitions, the public has 60 days from Wednesday to file comments and responses to eight questions posed by the Agency.

Burroughs said TIA will file a public comment to the docket in the coming days.

To comment, simply visit www.regulations.gov and reference Docket No. FMCSA-2020-0150.

TransportationNation.com will have more on this story soon, so stay logged on.

 


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Comment (4)

  1. The regulation under the Federal Motor Carriers Safety Regulations (FMCSR) 371.3 has been in place for many years. The practice of the brokers entering into contracts with their customers (the shippers) that violate the regulations is what is at issue. The TIA is saying that the brokers’ business model would fail if they (the brokers) are required to follow the regs. Is this not the tail wagging the dog? The Feds should be enforcing the regulations and not allowing the brokers to write contracts that sidestep the regulations.
    The FMCSR has regulations under 370 for processing of claims for loss, damage, injury, or delay to property transported or accepted for transportation, in interstate or foreign commerce, by each motor carrier, water carrier, and freight forwarder (hereinafter called carrier), subject to 49 U.S.C. subtitle IV, part B.
    Yet once again the brokers write contracts that sidestep the Feds regulations and place all the liability for the claims on the carrier. READ THE CONTRACTS THAT MANY OF THE LARGEST BROKERS REQUIRE CARRIERS TO SIGN.
    These contracts are full of clauses that remove the Feds regulations and replace them with verbiage in favor of the broker and the shipper and place the carrier in a very unfavorable position.
    There is a regulation that would remedy most issues if it was only enforced.
    § 371.10 – Duties and obligations of brokers. Where the broker acts on behalf of a person bound by law or the FMCSA regulation as to the transmittal of bills or payments, the broker must also abide by the law or regulations which apply to that person.
    So the broker, through the contract, requires the carrier to allow the broker to bill the shipper, so per 371.10 the broker is also required to be bound by the same rules as the carrier.

  2. I was on a private load board the other day, dry van freight, one load was going from Auburn IN to Tulsa OK, paid $3500, or at least that is what one broker listed it as… Just below that, the same load, $2000 to $2500… I wonder what the load really paid? And yes, I did call to confirm the pricing. I was told the load went for $2700. Yes, I would like some transparency.

  3. Yea it would be about time to run a lot of them brokers out of business. They’re just sitting in there offices taking loads of load boards and brokering them out.

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