We should all thank the Federal Motor Carrier Safety Administration.
The agency finally acted on the issue of broker transparency with a notice of proposed rulemaking in November. Unfortunately, unscrupulous brokers will always try to find ways around the rule. But we should thank the FMCSA anyway.
That’s because FMCSA did not cave to the brokers and eliminate transparency altogether.
Maybe that was never a real possibility. I don’t know. But I’m a natural-born worrier, and that’s one less thing I worry about now.
The proposal is the long-awaited result of a 2020 petition by OOIDA and another business organization to tighten the transparency rule that says at the request of a carrier or shipper, brokers must reveal what the shipper paid for an individual shipment and what the broker paid the carrier. Carriers and shippers could then see brokers’ margins.
That was apparently too much for brokers, who famously have withheld that information pretty much since 1980, when the transparency rule was issued. Before 1980, when trucking was considered a public utility and heavily regulated, freight rates had to be approved by the Interstate Commerce Commission and published. Everybody knew what everybody else’s rates were.
To restore at least something like the stability provided by that old-time transparency, OOIDA proposed that brokers provide carriers with documents proactively, without the need for a specific request. A broker would have to send an electronic copy of each shipment record within 48 hours of delivery. OODA also asked FMCSA to bar brokers from making carriers waive their right to see shipment records – a favorite broker trick.
The notice of proposed rulemaking said no to the automatic disclosure idea, claiming it is “unnecessary at this time and could be excessively burdensome to brokers.” We’ll come back to that.
But FMCSA did take a step – make that a stride – in the right direction. The agency proposed that references to a carrier’s right to see documents be changed to a broker’s obligation to disclose them. The intent is the same – to make shipping documents available for all parties involved. But the proposed language clearly places responsibility on the broker to provide the documents. There would be no point in making carriers waive a right that is no longer relevant.
To make the change easier, the proposal would require those records to be kept in digital format. Brokers could no longer claim they can only be shown on paper at the broker’s home office or some other inconvenient place. Digital records can easily be emailed or texted to carriers for review.
According to the proposal, “The agency believes that brokers already provide information and documents, e.g., rate confirmation documents, to motor carriers. The agency believes that these current practices can be adjusted, at relatively low cost, to provide broker transparency information within 48 hours of request.”
That makes sense, especially since all the brokerage software providers will quickly build that into their products. For small and medium-sized brokers, it will show up as an add-on for their current system or maybe integrated into their next software update. Big brokers with their own IT departments will be able to set it up quickly too. All the necessary names and numbers are already in the system.
So why, I wonder, does FMCSA believe a rule requiring information to be sent automatically – as proposed by OOIDA – be “excessively burdensome to brokers?” It’s the same information extracted from a database and plugged into a digital form. OK, issuing that information after every delivery is more work than providing it on request (unless everyone requests it at once, of course). But brokers would have to set it up only once.
I refuse to stink up the room by repeating specific broker claims that setting up such a system would cost anywhere from $2,500 per carrier in a smaller broker’s system to $50 million for a brokerage with 5,000 carriers. You could buy a few brokerages and maybe a carrier or two for that kind of money. In exemplary restraint, the proposal correctly refers to these preposterous claims as “overestimated.”
So, the proposal would only oblige brokers to provide information on request and specifically within 48 hours. That’s still good news for truckers. Unfortunately, the need for a request leaves the door ajar for brokers and their lawyers to possibly develop brand new ways of subverting the intent of the regulation or simply blackballing carriers who ask for the information. We’ll see how that plays out.
Meanwhile, we should remember the reason we need transparency in the first place. According to FMCSA in various notices, it is to “ensure that brokers were acting honestly and fairly.”
On the rulemaking docket, Downeast Shipping, an 18-truck carrier, expressed the anxiety and distrust that pervades the industry without transparency. “For many of us, it’s not about having an effect on the rates themselves,” wrote Downeast’s Jason Putney. “It’s about the feeling of not knowing if it’s a severely lopsided transaction every single time you haul a load. It’s the feeling of being lied to every single day … Over time, this lie wears you down. Or maybe it’s not a lie. But we’ll never know.”
That anxiety and distrust abound, particularly in the truckload spot market. Stress and high employee turnover are only part of the cost.
There’s another reason to enforce broker transparency: the unhealthy growth of freight brokerage. In 2000, brokers handled 6% of U.S. freight. In 2024, the figure was 20%. A large portion of that increase is on the seedy end of the broker spectrum, where quick-buck artists set up shop. They gouge when they can, double-broker when it pays and generally drag down the ethics and trust essential for the machinery of business to function efficiently. From that perspective, the enormous growth in brokerage comes to look less like a burgeoning business service than a cancer. There are too many brokers skimming too much money from the shipper dollars that should be buying fuel and paying drivers.
Hopefully, transparency would help squeeze bad guys out of the business and keep everyone else in the zone of reasonableness.
Of course, a notice of proposed rulemaking is just one step in establishing a regulation. It’s only a proposal. We don’t know how it might be changed by comments or politics. For example, we don’t yet know how the incoming Trump administration will regard a proposal developed under the Biden administration. And even if it is approved, will it be enforced? Will FMCSA have the will and resources to make broker transparency work?
Meanwhile, it’s in the interest of all truckers that this proposal be adopted, and every comment in support will help establish the need. By all means, go to go to Regulations.gov and enter Docket No. FMCSA-2023-0257-0001 or go to OOIDA’s website. Follow the online instructions for submitting comments and help bring feral freight brokerage under control. LL
Read more by John Bendel here.
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