Check Call: All in favor of the broker

Inside this edition: Appeals court rules in favor of Landstar

Mary O'Connell

2 years ago

people gathered around a desk of computers. Check Call news and analysis for 3pls and brokers

Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.

A man walks into a courtroom. Not really but an important ruling came out of a courtroom in the past week. Aspen American Insurance Co. had sued Landstar, claiming it was negligent under Florida law in its selection of the carrier for a shipment. Landstar was found not negligent in the cargo theft case, which is great for Landstar but why does it matter legally? Great question. I’d love to tell you.

But first some context, as relayed in John Kingston’s article: “Landstar received a call from someone named ‘James’ claiming to represent L&P [Transportation, the carrier] and attempting to collect the scheduled shipment. Despite noticing discrepancies between the company information provided by ‘James’ and that listed for L&P in Landstar’s system, Landstar dispatched Tessco’s shipment to James. Unsurprisingly, James was a fraud, and he stole Tessco’s cargo.”

A double-brokering moment for the ages as this issue continues to run rampant through the industry. Turns out the Federal Aviation Administration Authorization Act, commonly referred to as F4A, is the saving grace here for Landstar. The act “bars state-law claims related to a price, route, or service of any motor carrier …, broker, or freight forwarder with respect to the transportation of property” — as found in the appeals court ruling.

Landstar not being found at fault is a strong legal precedent that claims cannot be brought against a broker for cargo theft under F4A.

If reading about this doesn’t make sense, watch Bill Priestley and Matthew Leffler break it down in this RoundTable. At the end of the day, follow internal company protocols to avoid getting caught up in fraud.

Everyone has an opinion. The freight market has been one of the hottest topics lately. “Have we hit the bottom? When are volumes returning? When will spot rates actually be good again?” You know, the age-old questions we’ve been asking since the end of last year. Well the FreightWaves second-quarter Sentiment Index has been released and it’s not all bad.

The short-term sentiment for carriers is honestly not that great. Carriers are expecting Q2 to be less profitable than Q1, but this time next year is looking much more promising. On the flip side, broker sentiment rose by almost 2.5 points overall, painting a good picture for profitability in the near and long term. Shippers seem to have threaded the needle. Shippers hold the leverage for pricing but have concerns on inventory levels as the Federal Reserve continues to raise interest rates and consumers look to be more stingy with spending.

TRAC Tuesday. This week’s TRAC lane is Green Bay, Wisconsin, to Chicago. The short 200-mile trip is more than likely covered by a shipper’s dedicated carrier, but if it’s a low-volume shipper or a shipper that doesn’t maintain a dedicated carrier pool, then breathe a sigh of relief, as getting this lane covered shouldn’t be too terrible. Rates are still down despite tightening in the Green Bay market. That could bring the spot rate up over the next few days, though not enough to compete with rates at the beginning of the month. An all-in rate of $633, before margin, should get this load covered with minimal issues.

Who’s with Whom? More like who’s not with whom as the once-unicorn of 2021 has fallen into a “toxic dumpster fire.” Flock Freight, a shared truckload company that specializes in combining shipments, has taken to aggressive layoffs with seemingly no reason. For a tech-forward company, its downfall appeared to be technology that failed to work as promised. Shared truckload is supposed to be just that: shippers sharing a truckload, with origins and destinations close together to cut down on transportation costs and carbon emissions. However, in reality the freight volumes weren’t there for all markets, causing some shipments to go with a half-full truck. For anyone looking for some highly qualified logistics professionals, it looks like former Flockers might be available.

Clarissa Hawes’ article quotes an anonymous employee: “[Co-founder Zalansky] came to us in the all-hands meetings and said we’re failing as a company because we were failing to profit and things of that nature. We basically had to ship partials as full truckloads so often to keep our sustainability promise to the customer.”