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Small carriers request increased transparency with brokers

Oct. 4, 2022
Owner-Operator Independent Drivers Association petitions FMCSA to mandate that brokers send freight transaction records to carriers. Critics of the proposal say the regulation is an undue burden on brokers.

The Owner-Operator Independent Drivers Association sent a letter Sept. 28 to the Federal Motor Carrier Safety Administration that asks to know the status of a May 2020 petition to require freight brokers to provide transaction information to carriers within 48 hours of the completion of contractual services.

Federal regulation 49 CFR § 371.3 states, “A broker shall keep a record of each transaction” and that each “party to a brokered transaction has the right to review the record of the transaction.” OOIDA says that many brokers include clauses in their contracts with carriers that, when agreed to by the carrier, waives this federal requirement. The petition requests that brokers be prohibited from including such waivers in these contracts.

The petition for rulemaking had its Federal Register comment period extended, and FMCSA hosted a public listening session on the relationships between brokers and carriers. Additionally, the Transportation Intermediaries Association (TIA) issued a petition in response to OOIDA’s, requesting that the requirement for transparency be removed.

See also: ATA, OOIDA weigh in on FMCSA's plan to mandate speed limiters

Bryce Mongeon, director of legislative affairs for OOIDA, told FleetOwner, “The idea that this is trying to reregulate trucking or reregulate rates, that’s not what we’re trying to do here.” Mongeon said OOIDA is merely trying to ensure that existing regulations are followed.

Mongeon said that brokers place hurdles in the way of seeing transaction records, saying an owner-operator or small carrier operating out of California, for example, could be told by a broker in Ohio that the only way to see the records would be to stop by office in the afternoon, knowing full well that drivers on the road would never be able to make that cross-country trip.

The concern among proponents of the change is that brokers could be price gouging—not showing the full transaction details as to pay carriers an artificially deflated rate, allowing brokers to pocket the difference. Low freight rates from brokers were a concern of truckers who parked by the White House and blared their horns in May 2020 to protest the industry’s economic woes during the pandemic.

“The perception is that brokers are taking a huge markup when they’re brokering a load, keeping rates down while the broker may be making a lot of money through the transaction,” Mongeon said.

He added, “We know that, ideally, this would help to weed out some of those unscrupulous brokers, but at the same time, we know there are times when brokers are struggling, when brokers are not necessarily taking advantage of a carrier.” He continued, saying, “Wouldn’t this be a helpful way to tamp down some of those concerns for carriers?”

Brokers skeptical of need for more FMCSA regulation

Opponents of the proposed change assert that the regulations are already being followed, and that a contract requiring carriers to waive their ability to view transaction details is in compliance with the law. TIA, in its Federal Register comment on the proposed change, argues that the law allows for a broker to draft a contract in which the right to transparency can be waived.

See also: FMCSA cuts UCR fees for fleets of all sizes

Brokers also have privacy concerns. Many enter confidentiality agreements for the sake of shippers, who do not want their information shared with third parties such as carriers. “I have a lot of large shippers that I work with, and I have to sign [nondisclosure agreements] in regards to everything—prices, their names, their logos,” said Nicole Glenn, founder and CEO of freight broker Candor Expedite.

Opponents of the petition are worried that regulating the disclosure of transaction records instead of allowing that decision to be made on a case-by-case basis in broker agreements with carriers will place an undue administrative burden on brokers.

Glenn said that the petitioned change—which does not specify the medium in which these automatic disclosures would take place—could result in increased labor and technology costs. Larger brokers likely would invest in software to automate the process, but smaller brokers would have to manually send the information via email.

Instead of more regulation with the potential to burden the industry with additional red tape, Glenn emphasized that trucking is a relationship-oriented industry and that carriers, brokers, and shippers should be free to “make the choices of what types of companies we want to partner with as our industry gets smaller and smaller with available equipment because of drivers retiring. Look at that and work with companies that are going to help you create a partnership to achieve your goals.”

About the Author

Scott Keith

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