Check Call: The battle is over

Inside this edition: The battle over broker transparency might finally be over; carrier retention helps in the long term; and the claim for TravelCenters of America gets another player.

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.

Inside this edition: The battle over broker transparency might finally be over; carrier retention helps in the long term; and the claim for TravelCenters of America gets another player.

2020 was a big year for the supply chain, not just because of the pandemic but also because the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition made a request to the Federal Motor Carrier Safety Administration that brokers should be prohibited from denying carriers the ability to access transaction records between brokers and shippers. Basically they wanted brokers to automatically provide electronic copies of each transaction record within 48 hours of completion and prohibit freight brokers from including any provisions in a contract that would require a carrier to waive its rights to these records.

Naturally the Transportation Intermediaries Association filed a petition to not have to make this a requirement of freight brokers. After the appropriate public comment period and some discussions with all organizations, the FMCSA has denied the TIA’s petition. There is still concern about what carriers will do with these records, with the No. 1 concern being shippers’ proprietary information. OOIDA is looking to have the FMCSA include more regulatory oversight to “protect carriers.”

As stated in FreightWaves’ John Gallager’s article: “FMCSA believes that elimination of the records disclosure provision would be contrary to the stated transportation policy goals in 49 USC 13101, including promotion of fairness and efficiency in the transportation industry. … Therefore, FMCSA is denying TIA’s petition for rulemaking.”

As of now, no official ruling has been handed down, but the rulemaking process has begun.

Carrier retention is king. At the heart of every successful 3PL is a reliable network of carriers. Drivers are the backbone of any operation. However, 80% of carriers in a 3PL network are one and done, meaning they haul one load and they don’t come back for another. Everyone always wonders what’s the magic to get carriers to stay. Carrier retention is something everyone works for but so few do effectively.

It is essential for 3PL providers to establish and maintain regular communication channels with their carriers to ensure they understand their needs and expectations. This includes providing clear instructions, timely updates and feedback on performance. By building a strong relationship based on mutual trust and respect, 3PL providers can create a positive working environment that encourages carriers to remain loyal and committed. High communication combined with fast days to pay is one surefire way to get to the top of their list.

Market conditions have not bounced back like anticipated, so working to find creative solutions with carrier partners will be key to keeping them and servicing customers consistently.

TRAC Tuesday. This week’s TRAC lane of the week is a quick little day trip from Atlanta to Jacksonville, Florida. Capacity in Atlanta has leveled off. Rejections have had little change week over week and volumes have tapered off after a slight increase in the middle of the month, whereas in Jacksonville, both outbound tender rejections and volumes are leveling out after decreasing from last week. Overall spot rates are pretty stable on this lane as there is little change from the last month. Rates are still slightly elevated from the National Truckload Index, though. Long story short, an all-in offer of $1,008 before margin should do nicely to secure this load.

Who’s with whom? A true David and Goliath story, Arko made an offer to outbid BP to acquire TravelCenters of America for $92 per share; BP’s offer was $86. Arko’s market capitalization is roughly $996 million, whereas BP’s market cap is a casual $112 billion. Had TA considered the Arko offer, it would have more than doubled the size of the company. The main hesitation for the deal was that the Arko deal would have a financing component, while the BP deal is an all-cash offer, and now that TA and BP have entered into an agreement, for either party to walk away there would be a $90.9 million termination fee.

According to FreightWaves’ John Kingston’s article, “Suggesting the TA directors at least speak with Arko, the statement said TA should ‘seriously consider Arko’s superior proposal to acquire TravelCenters of America. Arko believes it is riskless to TravelCenters’ stockholders for TravelCenters’ board to engage with Arko, and that doing so could reasonably be expected to lead to a superior proposal.’”