Trucking Groups Take Different Routes to Same Destination… BROKER TRANSPARENCY
Washington D.C. – Trucking groups are taking action along multiple routes to require freight brokers to provide more transparency in the shipper/broker/carrier relationship.
Frustration among thousands of independent contractors over plummeting rates being offered by freight brokers amid the COVID-19 recession has reached a tipping point in recent weeks.
The issue has spurred thousands of truckers to demonstrate in cities around the nation as part of May 1st’s “MayDay” rallies.
Click HERE to check out TNN’s complete MayDay coverage.
While some allege freight brokers are using overcapacity in the market to take advantage of small business truckers, others argue the sudden drop in rates is a natural result of the laws of supply and demand in a free market economy.
Without transparency in the process, is it really possible to know which side is correct?
The answer to that question is a major reason for 49 CFR 371.3.
Pursuant to 49 CFR 371.3, freight brokers must keep master lists of consignors along with the address and registration number of the carrier for up to three (3) years.
“Each party to a brokered transaction has the right to review the record of the transaction required to be kept by these rules,” the regulation states.
Simply put, the broker must provide this information to you on each load you have hauled in the past three (3) years, IF you request it.
However, some brokers have adopted the practice of requiring carriers to either waive its right to request the transaction record, or refrain from using the information found in the transaction record in any future third party negotiations.
Last week, Transportation Nation Network (TNN) published an article about this entitled, “What Every Price Gouging Freight Broker Hopes Truckers Won’t Ask.”
The response has been overwhelming.
Trucking Groups Demand Action to Require Broker Transparency
On Wednesday, the Small Business in Transportation Coalition (SBTC) and the Owner Operator Independent Driver’s Association (OOIDA) began efforts, along two different routes, to require brokers to provide transparency to carriers.
The SBTC filed a rulemaking petition with the Federal Motor Carrier Safety Administration (FMCSA) to add a new requirement to federal regulations involving brokers.
The SBTC seeks a new provision to state:
Brokers may not coerce or otherwise require parties to the transaction to waive their right to review the record of the transaction as a condition for doing business. No stipulation or clause in any contract shall exempt any broker from having to comply with this rule, upon demand, by a party to the transaction.
“While the SBTC does not seek to return to economic regulation to limit the amounts or percentages brokers earn and believe this should be left to the free market — much like we wouldn’t want carriers’ revenue to suddenly be limited, transparency is essential in making sure market forces operate ethically and fairly,” the petition says. “We believe FMCSA should enforce its rule and act to terminate this abuse by big brokers in the marketplace.”
Additionally, the SBTC is currently working with the United States Department of Justice (DOJ) after calling for an investigation into alleged illegal practices deployed by some brokers.
Click HERE to get the latest on the possible DOJ investigation.
OOIDA is appealing to the United States Congress to intervene on behalf of small business truckers.
In a letter sent to Congress, Todd Spencer, OOIDA president, urges lawmakers to legislate “two simple solutions.”
1) Require brokers to immediately provide an electronic copy of each transaction record as required by 49 CFR 371.3 once the contractual service has been completed. No exceptions. This would allow carriers to identify brokers who truly are taking advantage of them during the crisis, as well as after it.
2) Explicitly prohibit brokers from including any provision in their contracts that requires a carrier to waive their rights to access the transaction records as required by 49 CFR 371.3.
“OOIDA has long pushed for greater transparency in transactions with brokers, but COVID-19 has made this an even more pressing matter,” Spencer wrote. “This will not change until Congress addresses the widespread evasion of 49 CFR 371.3.”
Spencer says OOIDA is pushing for such provisions to be included in the next COVID-19 relief bill currently being debated by lawmakers.
“Congress must include measures to prevent brokers from continuing to circumvent existing federal transparency requirements,” Spencer demanded.
TNN will be watching this issue closely in the coming days and weeks and will bring you the latest, so make sure to stay logged on to TransportationNation.com.