A sneak attack on broker transparency

Jeff Tucker wants the Federal Motor Carrier Safety Administration to enforce its rules – just not all of them.

But you can’t say something like that out loud at a House Transportation and Infrastructure Committee hearing, so Tucker did what any politician would do. He dissembled.

No, dissemble doesn’t mean tearing down an old truck for spare parts. According to Dictionary.com, it means “to give a false or misleading appearance to; conceal the truth or real nature of.” And when it came to the one FMCSA rule he definitely did not want enforced, Tucker didn’t lie – but he sure as hell dissembled.

The hearing

At a committee hearing in Washington, D.C., last week titled, “The State of Transportation,” Tucker testified on behalf of the Transportation Intermediaries Association. A former TIA board chair, Tucker is CEO of Tucker Company Worldwide, a respected, 60-plus-year-old freight broker based in the New Jersey suburbs of Philadelphia.

“I am here primarily representing freight brokers who focus on surface transportation within North America,” Tucker said, bragging on brokers so lavishly you might think they were the entire transportation industry. Or that they “make the world go ‘round,” as he put it.

For example, during the depth of the COVID crisis in 2020, brokers “kept America fed and critical supplies flowing,” Tucker said.

Tucker Company Worldwide came in for special, historic praise.

“In the aftermath of 9/11, our company provided trucking services at Ground Zero,” Tucker told the committee. “We supported FEMA during countless disasters and moved radioactive containment structures during the Three Mile Island partial meltdown.”

People who didn’t know better might think freight brokers drove trucks into the toxic air around the wreckage of the World Trade Center after 9/11 and into the danger zone around Three Mile Island when no one was sure what was going to happen there.

But I get it. Tucker isn’t the first guy to overstate his case before a congressional committee. And Tucker did not overstate statistics about the size of the freight broker industry, which has been growing like an aggressive tumor. He didn’t have to. They’re impressive enough. And scary.

Tucker pointed out the size of the $232 billion logistics industry, which he said accounts for “approximately one in four freight dollars spent.”

He added that there are 350,000 trucking companies with 3.5 million drivers, also noting, “Today, there are more than twice as many trucking companies as a decade ago.”

What he did not say was that during the same time, the number of freight brokers more than doubled from 7,500 in 2009 to more than 16,000 in 2018.

“Looking ahead, projections indicate a substantial uptick in the role of brokers, with estimates suggesting that by 2045, brokers will handle nearly 45% of the freight in the supply chain – a significant increase from the current approximate share of 30%,” Tucker said.

With the committee presumably in awe of all those freight brokers, Tucker turned to the industry’s troubles, including fraud.

“The industry is witnessing a surge in malicious actors engaging in illegal activity, registering with FMCSA as carriers using numerous motor carrier numbers and perpetrating fraud, theft and freight hostage situations without facing legal consequences,” he said.

(I’ll bet far more fraudsters register as brokers than as carriers. But I digress.)

“FMCSA is falling short in enforcing the law or investigating the tens of thousands of fraud complaints lodged with the agency,” Tucker said.

The rest of the story

Then came his other, under-the-radar issue – the requirement that brokers make transaction details available to carriers, what we call broker transparency.

Brokers have been ignoring the rule for decades without consequences. But Tucker didn’t want that salient fact on the record, so he talked adroitly around FMCSA’s transparency rule, as though it didn’t exist. He made it sound as though FMCSA was about to unleash a brand new regulatory monster.

“I am genuinely concerned with (FMCSA) and their willingness to become involved in commercial aspects of the transportation system,” he said.

Those “commercial aspects?” Broker transparency, of course.

FMCSA, Tucker said, keeps “wasting years of funding and taxpayer support focusing on commercial considerations like performance bonds and what is contained in contracts regarding pricing between private parties, neither of which have any relevance to safety.”

Those “contracts regarding pricing between private parties?” Again, broker transparency.

Safety is what FMCSA should be all about, Tucker said. “Yet they persistently avoid that responsibility every minute that they focus on commercial interests between private entities. FMCSA must be held accountable to focus exclusively on safety matters and stay out of regulating agreements between companies.”

I don’t have to tell you what “agreements between companies” means.

Tucker is a smart, articulate industry leader, no doubt. And you have to hand it to the guy. He managed to put broker transparency on the record without referring to it directly or in the context of brokers’ decades-long disregard for the rule. He made FMCSA’s current consideration of the rule sound like agency cops were about to tap his phone calls to Grandma.

But Tucker’s talk did suffer from at least one lapse in logic. He said FMCSA should deal exclusively with matters of safety. The fraud he is rightly concerned about, however, is no more a safety issue than broker transparency is.

Good brokers – and I’m sure Tucker’s company is one – provide a necessary service. And according to Tucker, more than 2,000 are members of the TIA. There are many more who aren’t, though, including some who are not licensed. No one knows for sure how many brokers, legal and not, there are now. But according to a number of sources, 20,000 is a reasonable guess.

A good many of those brokers are in business only because they can hide their margins. If the transparency rule were enforced, they would wither and die. And if the rule were removed, those brokers and many more to come would drain ever more resources for people who arrange for transportation from the truckers who actually provide it.

Brokerage in North America is out of control, and Jeff Tucker isn’t helping. LL