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.
Joshua
Anything that starts with the world FEDERAL will be a failing program! Just look at the USA!
Kyle Wood
Simple solution actually! Require all brokers, agents, representatives and other employees be required to be residents of the USA or be shut down.
The fmcsa power ends here in the US. They can’t do anything to someone overseas.
Same goes for carriers.
Kelly V Bauer
The FMCSA issues the regulation for brokers and carriers, alike. Who else is supposed to research, combat, and enforce this maniacal fraud? Asset based carriers sounds pretty good to me…but then who keeps the asset based carriers at bay when most of them are taking 50+% on loads, as it is. And all of them absolutely deny any transparency. Here’s a thought… RateCon”tract” should also be used as BOL. Brokers are not selling loads for less than they did during COVID. If they did, it would make it impossible to just “up the rate” in the future. 8% get the fnck outta here. If brokers only took 8%, they would be complaining.
OR
Why don’t Shippers submit their own request for service…this is the 21st century we have the internet. It ain’t that difficult. Everything that a shipper would communicate to a broker, could also be entered into a computer. Checking FMCSA for Carrier validity is not that difficult. So tell me, again…why the middleman?
$940,800,000,000yearly revenue in trucking divided by 13,860,000 trucks is only $67878.78 in revenue per truck/year. * numbers from ATA.
As an O/O of single truck 25″ CDL hotshot, I did over $120000 (entirely off the spot market)revenue in my first year. I think I paid myself less than $18000 for just over 90,000 miles. Seems like there ain’t enough cheese on this pizza for someone else’s greedy ass lips. Let’s get rid of they broke’r’ asses!
Todd
I have 15 years of truck driving experience with a clean driving record and the last truck driving company that I worked for was paying me mileage while working me local. I was making about $11.00 an hour after a 12 hour shift in California where minimum wage was $15.00 an hour. Federal minimum wage is $8.00 an hour so that interstate company was legally in the right, but if a company is only willing to pay poverty wages why would anyone work there? The trucking industry on the whole has been working very hard in trying to find ways to under pay their drivers. Trucking companies want perfect drivers but they refuse to pay for them and now they are crying the blues because there aren’t enough drivers. Of course they just say that people now a days just don’t want to work, but I say people are tired of being ripped off by a crooked industry. I make more now working for Uber than I did working at my last trucking company. How sad!
Ricky Handley
Who’s addressing the fraud in congress , that’s all government is….
Ron Parker
BROKERS ARE CROOKS BY NATURE LETS NOT GLAMOURIZE THESE PEOPLE. THEY ARE LIARS AND CHEATS
Candace Clough
Sorry , Mr Bost’s experience is from the hiring end. There is NO driver shortage, what he’s talking about is cheap labor. Fleet owners want to continue the glut of new cdl holders to hold down wages.
Conway Phillips
Who is truly worthy to invest into on the stock market as of last week.openimg bell..