Truck brokers want Congress to denounce illegal shipping
The nation’s biggest advocate for truck brokers is looking to Congress to help clarify regulations in a bid to eliminate illegal shipping – potential changes that have annoyed legitimate operators in that part of the trucking industry.
The Transportation Intermediaries Association (TIA) has previously filed a petition with the Federal Motor Carrier Safety Administration (FMCSA) asking the agency to issue regulations to raise standards for shipping services. The petition, which has generated more than 160 comments since it was filed in November, is still under review, according to the FMCSA.
But as the FMCSA examines whether to publish a proposed rule, the TIA is also âpushing the ideaâ of getting lawmakers to include the changes in the next freeway bill, said Chris Burroughs, vice-president. president of government affairs from TIA to FreightWaves.
“We did not try to bring in the language [infrastructure bills] that were proposed last year, but we see it more of a priority now, which is why we are considering getting Congress to include it this time around, âBurroughs said.
Low interest rates spark debate
Falling freight demand and the corresponding drop in rates in the trucking industry at the onset of the pandemic last year have been particularly difficult for small owner-operators – those most likely to use the services of division.
The tough economic climate led to trucker protests in Washington in late spring 2020, with owner-operators alleging, among other things, that brokers were deceiving them about their rightful share of freight rates paid by shippers. The protests caught the attention of then-President Donald Trump, who claimed independent truckers were being swindled.
Trump’s claim was immediately refuted by TIA, which maintained that the low rates were a consequence of supply and demand. âWe just don’t ship much and there are too many trucks chasing too little cargo,â TIA President and CEO Robert Voltmann said at the time.
As it turns out, freight volumes and fares rebounded almost as quickly as they fell (see SONAR chart). But the extreme volatility has exposed a bubbling controversy affecting brokers, freight dispatchers and small truckers, leading to calls for greater price transparency and changes in the way the industry is being operated. regulated.
Define the problem
In May 2020, in the middle of a roller coaster ride, the Owner-Operator Independent Drivers Association (OOIDA) filed a petition with the FMCSA requesting that the agency require brokers to automatically provide an electronic copy of every record of transaction within 48 hours of service was completed. He also called for a rule prohibiting brokers from requiring carriers to give up their rights to access transaction records.
TIA responded months later with its own petition, which called on the FMCSA to come up with a rule to completely eliminate the old transparency laws that TIA says conflict with the current deregulated market.
However, what has caused much of the concern among the thousands of dispatchers who book freight on behalf of their trucker customers – but who are not subject to the same federal oversight as brokers – is the second part of the petition from TIA. TIA is seeking advice from the FMCSA on what constitutes a “forwarding service” as a means of preventing illegal dispatchers from operating.
âThe shipping service receives a commission from the road carrier for its services, not the model that typically applies to brokers, where the shipper pays the broker for their service and the broker pays the road carrier,â TIA says in his petition. âWe believe there are many illegal shipping services out there that operate illegally as unlicensed brokers. The FMCSA should prohibit these companies from offering such a service without a license. “
Dispatchers contacted by FreightWaves generally agree with the intent of TIA’s petition, which is to eliminate bad players from the market.
But they disagree with the method by which TIA proposes to accomplish this – by allowing dispatchers to be an agent for a single road carrier. âAnything else,â according to TIA’s request, ârequires a brokerage license and compliance with financial responsibility requirements applicable to brokers.â
Nora Spriggs, who runs 3D transportation and dispatch services out of San Antonio, pointed out that legitimate dispatchers work as agents on behalf of one or more small business truckers, while brokers work generally for shippers. For her, getting a broker’s license is child’s play.
âI don’t want to work with multi-million dollar shippers and companies; it’s more rewarding for me to help blue collar truckers who are struggling to educate their kids and help them navigate this freight market, âSpriggs told FreightWaves.
She added that becoming a broker would mean an additional $ 1,500 to $ 2,000 per month in overhead costs that she would have to pass on to her trucker clients.
âIt seems that the reason why TIA is pushing in this direction [one-carrier] The definition is because they are well aware that dispatchers are pushing for higher rates on behalf of their owner-operators, and brokers don’t like that, âSpriggs said. âWe watch the market and make sure our customers get the best price. Unfortunately, this doesn’t always work for brokers, but it is a bargain. “
Edward Sanderson, who submitted comments on TIA’s petition, agreed that such a strict definition of what constitutes legal allocation versus operating as a broker is not necessary.
âIt seems a lot of brokers are being salted about this because they have huge overheads,â Sanderson wrote. âBut it sounds like a personal issue – not something the FMCSA needs to mandate or interfere with. Dispatchers do not need to be regulated / licensed / bonded as long as they have a directive on appropriate business practices. “
TIA and legal dispatchers would both welcome intervention from the FMCSA, insisting that unscrupulous dispatchers give brokers and dispatchers a bad name.
âIt’s a little disheartening to see shipping companies popping up like mushrooms right now. They’re told it’s easy to get in and make a lot of money, âJacob Schmidlapp, president of Freight Girlz, a large trucking forwarding company, told FreightWaves.
âWhat bothers me is that these companies don’t set expectations that they can meet for carriers. They tell the small carriers that they can make $ 12,000 a week, but they fall short and risk the carriers going bankrupt. There are too many gray areas. The FMCSA needs to pony up and figure this out. “
Click for more articles on FreightWaves by John Gallagher.