In a 90-minute online listening session Wednesday to have Federal Motor Carrier Safety Administration (FMCSA) leaders hear views about possible changes in current broker transparency regulations, one question regarding a possible rule change with potentially serious repercussions came up repeatedly: what about the shippers?
At issue are the major requests of the two petitioners to FMCSA, owned-operator trade group OOIDA and the Small Business in Transportation Coalition led by James Lamb. There is no proposed rule. But if FMCSA adopted what OOIDA and SBTC want, brokers would be required to automatically send to carriers documentation of the details of a transaction electronically, and to do it quickly.
FMCSA is seeking comments on a list of questions it released in August in response to the OOIDA and SBTC petitions. The listening session was part of the agency’s gathering of information.
Carriers can get information on transactions now under federal law but may need to physically show up at a broker’s office to do so — an effective impossibility.
In a session where several impacts of such a rule were discussed at length, the focus on shipper confidentiality requirements came up several times.
Larry Minor, FMCSA’s associate administrator for policy, asked a question of the listeners and commenters on the session: Given confidentiality agreements in the contracts between brokers and shippers, “are you as brokers in a situation where the contracts you have with shippers state you couldn’t provide information even if you wanted to?”
Jeff Tucker, the CEO of 3PL Tucker Worldwide, said during the comment period that shippers do not want information on what they are getting charged for shipping to “get down to the carrier level, because shippers don’t want their competitors to know what they’re paying for freight.”
A commenter named Justin Olsen said shippers “consistently” require nondisclosure agreements with brokers, and “brokers are bound to honor these requirements and are contractually bound to honor the requirement of nondisclosure.” Olsen said he also believed that the regulations under Section 371.3 of Title 49, which spells out the requirements for broker disclosure now, might be in conflict with other federal laws regarding disclosure.
As one commenter said, the information about what the broker is charging the shipper and other pieces of financial information are “none of the carrier’s business.” If the carriers don’t like it, “they can source their own shippers if they choose.”
But existing law effectively makes it their business, though with a lot of hurdles to get it done. What is at issue is the method of transmission of the information to carriers. The ability of the broker to get that information now, regardless of how difficult it might be, has essentially established that carriers have a right to see it.
The question of the confidentiality agreements could be moot if FMCSA does implement changes and bars such confidentiality agreements between shipper and broker. Instead, a confidentiality clause among all three parties could become part of the new rule, said Lamb, president of the SBTC. “Are you saying carriers can’t keep a secret?” Lamb added.
In the model contract for broker-carrier relationships, confidentiality is required, and he objected to accusations that carriers would “routinely breach this.”
Todd Spencer, the president of OOIDA, responding to Minor’s query, said shippers’ concerns about confidentiality could be “fully satisfied” with nondisclosure and noncompete clauses in broker-carrier contracts.
One of the questions FMCSA has published is what brokers would need to spend to comply: “How much profit reduction on a per-transaction basis would brokers experience, and what percentage of the costs would be passed through to shippers or motor carriers?”
Jason Craig, the director of government affairs at C.H. Robinson, said the cost would be significant and a challenge to calculate accurately. OOIDA and SBTC have not anticipated a “corresponding increase in costs solely in delays to payments the requested remedy will require, due to information required in 371.3a5 for rate accounting of non-brokerage services like fees and detention time.”
Craig said the current law harkens back to a time when carriers often paid a commission to a broker, so that the underlying amount of the load would need to be known for a fair accounting.
But Craig and other commenters noted that is no longer how the market works, and there’s plenty of rate transparency. Tucker said there is “incredible” transparency in the market, and rate information is available down to the granular level of a particular lane.
But he noted rates are also subject to Bell curve-type distributions. And it is at the tail end of those rates that spurred the actions by OOIDA and SBTC, when the historically low rates of April, in the middle of the pandemic, kicked off the protests that led to the groups’ respective petitions.
Chris Burroughs, the vice president of governmental operations at 3PL trade association Transportation Intermediates Association, questioned the need for a radical overhaul brought on by a temporary situation. “If this was a systematic problem, why were there no complaints before COVID-19?” he said.
But the other side of the argument is what one carrier said was the disadvantage that fleets would always face. “When we do not know what the shipper pays the broker, then we do not know how to negotiate the rate and we end up grossly shorted,” the carrier said. And it isn’t just the carrier side of the ledger, she said. “Shippers are grossly overcharged.”
The other complaint, which has spurred part of the petitioners’ requests, is that asking to see the data that is now guaranteed in the law brings negative consequences for carriers. “The brokers are bullies if you ask too many questions,” the unidentified carrier said. “You will be blackballed and put on a ‘do not use’ list.”
The docket for taking comments on the FMCSA questions is open through Nov. 18.
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Edward Zaretsky
Why do we even need brockers? Shippers should be able to deal directly with carriers. This way shippers can save a lot by cutting middleman- freeloader.
Warren
Once again it looks like the national transportation agency has nothing better to do with there time other than over regulate the trucking industry and I bet not one of them has a class A license
Fred
Some Brokers are very unfair soon you have disagreement they will wait for the delivery to be completed then you get short paid. Some will not pay Truck not in use. I have several incident where we were denied TONU. The broker said customer did not pay we called the customer and TONU was paid ASAP broker trying not to pay us. We really need transparency. I go to the store and good are very expensive cause the transportation as a carrier or drive my pay rate does not change
David bell
I have an owner Operator and have over 30 year experience. I have experienced on several occasions where I found out the actual rate of the load that I was hauling was more than 2x what I was getting paid . I have had upper management at some places I have picked give me a good idea of what they were paying to have the load hauled and comment they couldn’t understand why the truckers were having a hard time making it.
The brokers don’t want transparency because they know they are screwing the shippers and truckers . If they weren’t they would have no problem letting everyone see the rates. If you have nothing to hide you don’t keep secrets. They are as corrupt as the communist Democrat party.
Brent Hall
It makes no sense that a broker should be required to divulge their rate to a carrier. We live in a free market economy. Here’s a key thought: Are carrier’s required to tell their direct customers what a particular run is going to cost them, then the customer able to negotiate what they’ll pay? Absolutely not. Same difference between the broker and the carrier.
Toñito S
Brent Hall
Lol
free market
Broker job is a sham..
Broker job is like taking care of his prostitutes at the truck stop..wtf
While all the while all your John’s are guilty for taking their/your services..wtf you PIG..
Wtf Brent hall.
You know about truck repair cost
And lost time??
Larry Douglass
I have a complaint about the brokers and I’m a company driver but I think the brokers has gotten a little bit too far messing with the company drivers telling the drivers that they need to use their their own personal cell phone to communicate with the driver as a tracking device there’s been plenty of times I had that macro point has been used and it has ate up data on my cell phone and other cell phones I have gotten to the point where I just put spam for the macro point why do they need to speak to the company drivers when the company has the technology to get to know where the driver is and where the truck is parked at I don’t understand that
Charles L Jewell
There is no reason a broker needs to charge more than 10 percent and I know some that are charging 25 percent and if you are an agent if that company it’s mandatory you charge 25 percent I as a broker of 7 years did it on 10 percent profit margin and did fine paid all my bills and still did fine I believe in doing it in volume if I make 50.00 profit off each load and move 20 loads I’ve made a 1000.00 that day ya I could have charged more but I didn’t and I didn’t have to look for trucks I had repeat carriers
Last Broker
Most definitely! Company I work for is greedy and complained about my “performance” during covid because I was paying “more” than average market rate. Well, we were getting our contracted rate, so unless customer takes some money back, there’s no point of cutting from driver’s pay. That’s why even today I move over 90 loads a week with normal rates and posting maybe 10% of my loads because my carriers are paying me back for my loyalty during hard time. I’ve always said it. America is a great country and this industry is huge. Pay the workers/drivers well to get the job done right. If customer leaves you over $25 today, so be it. Move on to a better customer that wants their products on shelves!
Ilie Armas
Ok people, here’s a situation, I was picking up a timber load few ears back, from Adrian ,MI, going to Morton, WA, broker paid $5000 , the shipper accidentally disclosed to me what they paid the broker, it appears broker got paid $10000 for . My question is, why the broker gets to keep 50% of the shipment, when we’re supporting all of the expenses, make them to be transparent on the spot, before the rate is agreed on, thank you!!
Toñito S
Why are brokers In the equation??I want to deal straight up with the shipper..
Toñito S
Ilie Armas
Broker job is a sham..
Broker job is like taking care of his prostitutes at the truck stop..wtf
While all the while all your John’s are guilty for taking their/your services..wtf you PIG broker
Wtf you pig broker, what
You know about truck repair cost
And lost time??
Brokers are not needed
Let’s deal straight up with shippers
It’s a free market
Dont be sheep, and get laid(by the porker,broker) , by someone behind a computer..
get paid straight up..
Us trucker’s move the economy .
We truckers have 50 000/yr in truck repairs..while these pimp as$ brokers have 1000bucks/yr In internet cost a yr
I’m pretty sure most of you teuckers ,
wont agree with this equation,
a big fat pimp behind a computer is making alot more more money,
Than the guy moving the truck and freight
Is your conscious free of guilt (you freaking freight broker)??? Freight brokers are all PIGs