WASHINGTON — Rampant fraud in trucking has become an $800 million problem and the Federal Motor Carrier Safety Administration is not addressing the problem, according to the lobby representing 3PLs and brokerage firms.
“There’s a surge of malicious actors engaging in illegal activity, registering with FMCSA as carriers and perpetrating fraud, theft and holding freight hostage in situations without any legal consequences,” said Jeffrey Tucker, testifying on behalf of the Transportation Intermediaries Association at a hearing before the U.S. House Transportation and Infrastructure Committee on Wednesday.
“While this is obviously an economic problem, hurting consumers and businesses alike, it also raises safety and security concerns. Unfortunately, FMCSA is failing to enforce the law or investigate the tens of thousands of fraud complaints lodged with it.”
Asked during the hearing the types of fraud he sees being committed, Tucker, who is also CEO of Tucker Company Worldwide, a New Jersey-based freight brokerage, said the problem is criminals masquerading as brokers as well as trucking companies.
“It shouldn’t be seen as either carrier fraud or broker fraud. These are just criminals,” Tucker said.
He pointed to similar cases of fraud involving dispatch services that are often based in another country but are not required by FMCSA to obtain a license or registration, as is the case with U.S.-based services.
“FMCSA must stop dabbling in non-safety commercial considerations like what dollar amount a performance bond should be or what commercial terms are included inside a private contract between two parties. Until there are effective measures to address and enforce solutions for this issue, the continued dysfunctionality of the supply chain and its adverse impact on the broader economy will persist.”
Driver shortage?
In addition to freight fraud, Tucker addressed the contention made by sectors within the trucking industry as well as within the Biden administration that there is a driver shortage.
“There is no driver shortage nor has there been one,” Tucker testified. “That is a false narrative that may lead to unintended consolidation in the industry and to weakening America’s supply chain. A more than doubling of American carriers and an increase of 1 million drivers has occurred over the last 10 years. We must have a more nuanced conversation about this.”
U.S. Rep. Mike Bost, R-Ill., a former trucking company owner, challenged Tucker.
“If you’re out there dealing with it every day, there is” a driver shortage, Bost said, adding that the increasing legalization of marijuana among individual states is exacerbating the problem.
“You may have a lot of people who may be good drivers, but they prefer to smoke dope on the weekend and they can’t get clean by Monday. It’s not like having a beer on Sunday during a football game.”
Red Sea supply chain costs
Lawmakers were also concerned about the recent attacks on cargo vessels in the Red Sea by Houthi rebels and the ripple effect on the global supply chain.
“The initial impact is the delay of vessels arriving both in Asia and coming back to the United States,” testified Stephen Edwards, CEO of the Virginia Port Authority.
“So ocean carriers are rescheduling all of those ships and detouring around Africa” instead of going through the Suez Canal, he said, which will settle into a pattern of ships bound for the U.S. East Coast taking an extra seven days in transit.
“You can take the view … that the extra seven days could be offset by the loss of the Suez Canal fees. But that is not true for [vessels moving from] Asia to the Mediterranean or Asia to North Europe.”
Tucker added that another concern is special fees related to the disruption and delays that the U.S. Federal Maritime Commission is allowing ocean carriers to charge their customers.
“There is concern that maybe those fees are not applicable to the situation, and shippers would like to see more oversight on it,” Tucker said.
Mike Rathbone
I got out of the truck because the govt was “mothering” trucking to death. Constant harassment by law enforcement, pathological lying dispatchers and the nonsense you get at shippers/receivers along with basically being trapped in the truck with skimpy home time convinced me it was a horrible lifestyle.
I don’t miss it at all.
Greg
congressman saying weed legalization is exacerbating a driver shortage would be laughably pathetic, if not for this being a perfect illustration of just how out of touch and maybe flat out stupid some of our representatives are, god help our country
Joyce Brenny
As the owner of a trucking company and logistics company, combat this fraud by only allowing asset based carriers to obtain a brokerage authority! This will make sure all involved have skin in the game! There are TOO many “just brokers” sucking the life out of the trucking industry. Asset based carriers, with brokerage authority care about their reputation, and typically they only broker out overflow freight. For Gods sake reign in these “just brokers!” Also, so I have the same $75,000 brokerage bond as the mega brokers???? They should have to pay on their gross profit receipts. How is a $75,000 bond protecting carriers when some brokers do $75,000 in 10min. of work???? Talk about no skin in the game! Its a messed up situation that needs to be re-done!
eltee
I would reply to Troy:
So you disapprove of having a broker quote a shipper $4000?
Why don’t YOU quote the shipper? Oh you don’t know who it is?
Who is making you cruise the loadboards for broker freight?
Oh, it’s voluntary on your part.
I appreciate the frustration, but brokers can give you a “sales department” that can range far and wide
And just because they show up on a load board doesn’t make them legit…the DATs and Truckstops can do better
and will as they recognize once the loadboards are tarred, it hurts them most.
Your Friend and Brother in Freight
@Troy — Please stop with the spewing of this nonsensical verbal diarrhea. Ya know the healthy margin for a brokerage is 8%? Eight. Percent. If you ever get the opportunity to see how most brokerages operate you’ll be happy you’re on the road and not abusing substances and jumping out of windows (but, hey, that happens with drivers too… speaks to a large problem).
All brokers aren’t criminals much like all truck drivers aren’t criminals. Fraud exists, but this finger-pointing blanket nonsense is tiresome.
Ya want to talk about low wages? Look into wealth disparity in America and you’ll start to glimpse the real problem.
Troy
The brokers ARE the real criminals, when shippers are told it’ll cost so much to get a load delivered to customer and the trucking company gets 50% or less of that freight cost to cover the freight?! I seen it on one of my last loads $4000usd freight charge….I was paid less then $1000usd to move it and I eat all the costs involved?! So no the brokers are the criminals and now it seems government and brokers are colluding….
John Hann
Is there an example of this criminal activity? I feel I and my carrier may have run into it before.
Isaac Polen
It seems like they sit around in think of ways to make more rules in more of some type of payments out of your pockets