For the past five years, broker transparency has been a hot topic in the trucking industry. There have been protests, petitions and a proposed rule from the Federal Motor Carrier Safety Administration.
But some may still be wondering why truckers have been so focused on the issue. In two recent email dispatches, the OOIDA Foundation breaks down why broker transparency matters and how the lack of it can negatively affect owner-operators and small-business trucking companies.
What is broker transparency?
Regulation 371.3 requires brokers to keep records of each transaction. Even more, each party to an individual transaction has the right to review the record.
However, many brokers get around the regulation by requiring carriers to waive that right. The Transportation Intermediaries Association called FMCSA’s proposal to strengthen existing broker transparency regulations “un-American.”
Why is it important?
According to analysis from the OOIDA Foundation, broker transparency is about much more than just seeing the quoted rate on a load.
“It’s about hidden charges, fines and claims brokers impose without proper documentation,” the OOIDA Foundation wrote. “Small carriers rarely take the time – or have the luxury – to scrutinize every clause of dense broker-carrier agreements.”
The lack of transparency becomes apparent when brokers submit claims for freight loss without evidence.
“Small carriers frequently enter contracts under economic pressure, unaware of provisions stacked against them,” the Foundation wrote. “By the time they realize the imbalance, it’s often too late to avoid serious financial harm.”
According to the OOIDA Foundation, truckers should:
- Read broker-carrier agreements thoroughly and refuse clauses that eliminate broker transparency.
- Support advocacy efforts pushing for stronger enforcement of existing transparency regulations.
- Demand clear documentation before accepting deductions or responsibility for “Over, Short and Damaged” claims.
These steps are important because there are often “hidden risks” contained in broker contracts, the Foundation said. For instance, some broker contracts may require carriers to waive rights granted under the Carmack Amendment – a federal law providing standard protections for cargo loss and damage.
“Cargo insurance policies may not cover liability that goes beyond federal standards, leaving carriers exposed to unexpected financial risks,” the Foundation wrote.
Another real-world scenario highlighted by the Foundation is when a carrier has a breakdown from an unexpected equipment issue. A broker could declare breach of contract, repower the load and bill the original carrier for costs. A lopsided contract could mean that the carrier goes unpaid for the miles driven, while also being placed on the hook for additional expenses.
What’s being done about it?
In response to a petition from the Owner-Operator Independent Drivers Association, FMCSA issued a notice of proposed rulemaking in November 2024. The proposal generated 6,900 comments from the public, including thousands from truck drivers.
“Ignoring 371.3 regulations has directly led to an asymmetry of information between carriers, shippers and brokers,” OOIDA wrote in its comments. “An asymmetry of information not only creates an inequitable playing field between carriers and brokers but jeopardizes carriers’ ability to know if they are hauling fair-value loads.”
OOIDA Executive Vice President Lewie Pugh relayed the problem to a Senate committee in July.
“Unfortunately, brokers have a long history of deliberately and blatantly circumventing transparency requirements,” Pugh wrote in his submitted testimony. “In order to protect against fraud and scams, we tell our members that they should closely examine documentation and verify that all information is legitimate. If brokers are allowed to continue evading federal transparency regulations, it makes it difficult for carriers to determine who is adhering to the rules or who may be trying to scam them. In short, practices that undermine trust and transparency will make it harder to determine who is a bad actor.”
In late June, the U.S. Department of Transportation announced that it would “address unlawful brokering” as part of its Pro-Trucker initiative. It is unclear whether that effort will include moving forward with FMCSA’s broker transparency proposal. We should have a better idea when the DOT’s next regulatory agenda is released.
Andrew King, director of the OOIDA Foundation, said that fair broker practices are crucial to the wellness of the nation’s supply chain.
“The trucking industry relies heavily on small carriers and owner-operators,” King said. “Ending exploitative broker practices is not just fair – it’s essential for the health and sustainability of the entire supply chain. To do so, we first need to raise awareness of these unfair practices, while simultaneously warning carriers to read the fine print before signing any contract.” LL
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