Dear FMCSA:
Hi. Forgive me for using your initials. It’s just that your name is so-o-o long.
OK, so most of the time, you folks do a good job and get no thanks for it. In fact, you get blasted whenever one of you shows up at an event, especially during a Q&A. I’ve peppered you a few times myself. For the record, though, I appreciate what you do and respect your important safety mission.
But this isn’t a love letter. Let’s face it: No one loves regulatory agencies. It’s just a fact of life. And right now, I’m concerned about a couple of things. One is something I’m afraid you might do. The other is something you probably won’t.
The first is broker transparency. The rules say brokers are supposed to make shipment records available for review. Each record should show what the shipper paid the broker and what the broker paid the carrier. The margin in between, of course, covers the broker’s costs and profit. The rule has been in place for 40 years, but it is simply ignored.
Even though some brokers shortchange truckers day-to-day, the issue is often overlooked until times are tough and rates are low.
Then, carriers are hyper-aware of brokers taking advantage, charging shippers far more than they’re paying carriers. That’s what happened at the start of the COVID pandemic when the economy cratered overnight. Truckers demonstrated in D.C. and other cities demanding, among other things, that those broker records be made available as the rule requires.
OOIDA, among others, appealed to you to make that happen, suggesting parties to transactions be notified electronically. You said you would look into it, but nothing happened. OOIDA raised the subject again last year, and again you said you would look into it. In fact, you said it with some conviction. I thought it just might happen. It didn’t.
A week or so ago, Land Line’s Mark Schremmer reported you’ve delayed a proposal on broker transparency until next October. Now, I’m worried about what that proposal will be. I suspect the broker community is putting up quite a stink.
No surprise there. During the decades they’ve steadfastly refused to obey the rules, an enormous brokerage industry has grown up around those secret margins. The success of many brokerages totally depends on non-compliance. If their margins were known to their carriers and shippers, they would have few of either.
Then there are the big guys, the corporate brokers with nice suits, slick newsletters and legions of lobbyists – and of course, the Transportation Intermediaries Association, or TIA.
Remember during the trucker protests when you said you would look into the issue? TIA blew up like an old steam engine sending boiler shards and hot air in all directions. Its people virtually went crazy. Although actually, there was nothing virtual about it. They were bonkers, literally out of their minds at the very idea of revealing their margins. Every crazy press release and over-the-top statement simply provided more evidence of systemic overcharging and underpaying.
Well, I don’t really know what’s happening now at TIA, in congressional offices around the country or on your floor at 1200 New Jersey Ave. in D.C. But I have a suspicion.
I’m guessing TIA and its big-time members came to their senses after the 2020 meltdown. They’re more sophisticated in 2023, better organized and focused. I have a feeling their pressure on the rules issue is quieter now but more effective. Like stealth bombers, you can’t tell they’re coming, but there’s no mistaking the bombs when they arrive.
After all, we’re talking about billions of dollars going into brokers’ pockets that would vanish if carriers and shippers knew those broker margins. Carriers would steer clear of rate-gouging brokers, and lazy shippers would bring logistics in-house to buy transportation for themselves. The result would be a healthier, leaner freight industry.
The freight brokerage industry won’t stand for that. It wants to eliminate the transparency rule altogether. But even if a legitimate broker’s profit doesn’t depend on transparency, non-disclosure still can boost net revenue and profit.
No one has a precise figure for the number of freight brokers in the U.S., never mind how much revenue they bring in. But it could be more than 20,000 brokers and between $50 billion and $100 billion a year. That’s a lot of money. Just a tiny portion of it buys a lot of political pressure.
I suspect you’re feeling it, FMCSA. I suspect you get it from visitors, emails, phone calls and snail-mail. I’ll bet it comes at you from brokers, lobbyists, associations and politicos of both parties, some of them quite powerful.
Hell, it’s getting hard to breathe just thinking about it.
To be blunt, I’m afraid you will cave under the weight of it all. I’m afraid you will do precisely the wrong thing for the health of the transportation economy and for the rule of law. Spiking the disclosure rule would simply reward defiance of the law. Regulations do have the force of law, after all.
Please, don’t let that happen. Like any other agency acting on behalf of another business – public relations or advertising of law, for example – brokers should itemize their bills and note their markups. Shippers and carriers should know the details of their broker transactions as OOIA has proposed. It’s that simple.
Thanks for reading, FMCSA. And while I have your eyeballs, allow me to ask a question: Why haven’t you taken up the subject of driver turnover? Why haven’t you studied it? Why haven’t you at least tried to establish its impact on safety?
If big corporate truckload has 90% turnover, we’re talking about thousands and thousands of new drivers spewed onto the highways every year. How can that not affect safety?
Truckload’s massive turnover is simply monstrous in every sense of the word. It represents a failure of our market economy to raise driver pay, as it clearly should, and it disrupts countless lives. It’s a gaping wound on the body of freight transportation and a national disgrace.
No biggie, says big trucking. It’s just a matter of churn, just a bunch of job-hopping truckers. That would be one enormous bunch of job-hoppers, but let’s find out for sure.
For starters, how about a notice of proposed rulemaking that would require carriers of a certain size to report accurate driver turnover numbers?
Oh dear. I can hear ATA shrieking from here.
Yeah, I know. It would be hard. But you folks are resourceful, and considering what you deal with on a daily basis, you’re tough too.
You can do it.
With my best regards,
John Bendel
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