OOIDA takes aim at unscrupulous brokers

June 2020

Tyson Fisher

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As truck drivers across the nation dealt with ultralow freight rates amid the COVID-19 pandemic, the Owner-Operator Independent Drivers Association implored lawmakers to address the lack of transparency in transactions with brokers.

On May 6, OOIDA sent a letter to members of Congress to address concerns from truckers regarding “feeble rates” and the “utter lack of transparency between brokers and motor carriers.”

Per federal regulation 49 CFR 371.3, brokers must keep records of transactions with motor carriers. One subsection of that regulation gives each party to the transaction, including the carriers, the right to review the record. This provision allows truckers to see exactly what their cut is of the full rate that the shipper paid the broker.

According to OOIDA, brokers are skirting these transparency regulations. In some cases, contracts with brokers waive the requirements set forth in 371.3 regulations.

“OOIDA discourages this, but the practice is so prevalent that truckers often have no other choice if they want to haul a brokered load,” OOIDA President Todd Spencer stated in the letter. “Even many of the most reputable brokers use these clauses to avoid complying with the requirement.”

With brokers that do not waive those requirements, many find other ways to throw roadblocks that make it difficult to acquire those records.

OOIDA said some brokers only allow carriers to access records at the broker’s office during normal business hours. If a carrier attempts to exert its right to review, many brokers will choose to never contract with that carrier again.

Solutions

OOIDA gave Congress two solutions.

First, brokers should be required to immediately provide an electronic copy of each transaction record as required by federal regulations once the contractual service has been completed.

Second, OOIDA said brokers should be explicitly prohibited from including any provision in their contracts that requires a carrier to waive their rights to access the transaction records as required.

“Small-business truckers would never get away with blatantly and deliberately evading federal regulations,” Spencer wrote. “Brokers must be held to the same standard. Unfortunately, rampant evasion is increasingly resulting in carriers assuming – fairly or not – that brokers have something to hide.”

OOIDA’s letter came as freight rates hit historical lows. The national average spot van rate on DAT MembersEdge hovered above $1.50 a mile in early May as pricing continued to freefall. Rates for reefer and flatbed loads hit their lowest points since early 2017.

On May 1, OOIDA sent an informational bulletin to its more than 160,000 members.

The Association advised its members to avoid cheap freight and to be leery of unfamiliar brokers.

No to cheap freight

“We are aware that freight rates are at historic lows,” OOIDA wrote in a letter signed by Executive Vice President Lewie Pugh. “Trucking has often suffered from chronic overcapacity, too many trucks and trailers, and not enough freight. The resulting market conditions are magnified right now. While there is no quick or easy solution, hauling cheap freight is not a viable or sustainable approach, and we strongly advise against it just as we always have.”

OOIDA said it also is continuing to work with the FMCSA and Congress to prevent brokers and shippers from exploiting truckers during the COVID-19 pandemic.

“We also realize some brokers and shippers are exploiting the ongoing crisis,” OOIDA wrote. “While federal regulations require brokers to be transparent about certain rate information, there are far too many loopholes that effectively undermine the regulations. We continue to work with FMCSA and Congress to require additional transparency and close as many loopholes as possible. Unfortunately, this will not provide any immediate relief.”

Beware the predators

The Association urges truck drivers to be cautious before taking loads for brokers they haven’t worked with before.

“Especially during times like this, some unscrupulous brokers have no intention of ever paying carriers and drivers for the services they provide,” OOIDA wrote. “When someone files a claim against the bond, the result is usually a payment of pennies on the dollar or maybe nothing at all. We refer to this issue as ‘broker bond’ and have been trying to get FMCSA and Congress to remedy it for nearly a decade.”

In 2018, OOIDA supported an FMCSA advance notice of proposed rulemaking to update its broker security regulations.

“OOIDA is grateful that FMCSA has taken the initiative to bring long-needed improvements to the broker financial security rules,” the Association wrote in November 2018. “If the final rules produce clear and effective steps for the resolution of motor carrier claims against a bond or trust, then disputes between motor carriers and sureties will be reduced. There will be less need for litigation, and the economic health of the broker/motor carrier component of the transportation industry will be stronger.

“Most importantly, the small-business men and women motor carriers who rely upon brokers will be relieved from so many significant financial claims by both brokers and their bonds or trusts.”

How to file a complaint

OOIDA is encouraging truckers who have issues with a broker to file a complaint with FMCSA’s National Consumer Complaint Database.

“While the NCCDB is far from perfect, we need complaints filed because it helps us show just how broken it is and might hopefully lead to meaningful changes,” OOIDA wrote. “If you do file a complaint, you should also forward a copy to your lawmakers and OOIDA.” LL

Senior Editor Mark Schremmer contributed to this report.

Tyson Fisher

Tyson Fisher joined Land Line Magazine in March 2014. An award-winning journalist and tireless researcher, his news reports, features and blogs bring depth to our editorial content, backed with solid detail. Tyson is a lifelong Kansas Citian.