Brokers association lashes out after OOIDA’s push for more transparency
May 18, 2020
In response to the Owner-Operator Independent Drivers Association’s push for more transparency with brokers, the Transportation Intermediaries Association is warning its members of an increase in inquiries to review information.
In a letter obtained by Freight Broker Live, TIA is telling its members how to respond to inquiries from owner-operators and small carriers regarding CFR 371.3. That regulation states 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.
TIA is telling its members to “be very courteous to the carriers” when explaining their policies. However, the association is instructing members to essentially threaten inquiring carriers with fewer loads.
“Please have your sales and other representatives be very courteous to the carriers, take time to explain that if they do this, that you will be unable to load them with any shipper freight requiring confidentiality, and that represents ‘X’ percent of your available loads,” the letter states.
In a letter to Congress sent on May 6, OOIDA addressed that very same issue. OOIDA informed Congress that brokers are skirting transparency regulations by waiving those requirements in contracts. In fact, OOIDA told Congress that if a carrier attempts to exert its right to review, many brokers will choose to never contract with that carrier again.
Included with the letter to members is a draft response letter for brokers to send to inquiring owner-operators.
“Our company fully complies with the regulations and makes the information available in our office during normal business hours,” the draft letter states. “Unfortunately, you are not a party to the transaction. While you may have hauled the load, the parties to the transaction are the shipper that hired us and the motor carrier that we hired.”
However, language in a draft letter to motor carriers is different.
“Please feel free to make arrangements to come to our office during our regular business hours to review these records,” the draft letter states. “When you come to our office we will show you the records pertaining to Federal Regulation 49 CFR Part 371.3, which include the amount of compensation we received for the brokerage service, the name of the payer, the amount of any freight charges collected and the date we paid you, the carrier.”
In regards to the first part of that statement, OOIDA warned Congress that one way brokers avoid giving out information is to make it available only at the office during normal business hours. Essentially, that makes access to information virtually impossible for most owner-operators and small carriers.
Referring to the movie “Groundhog Day,” TIA President and CEO Robert Voltmann states in the letter that the association has addressed the issue previously in 2005 and 2010. In the 2005 letter, Voltmann emphasized the strategy of releasing information.
“In addition, nothing in the statute or regulation requires you to send the information,” the 2005 letter states. “You are only required to make the records available for review. This means that you can make the information available in your office during normal business hours.”
The letter also undermined OOIDA’s push for more transparency.
At the same time, TIA hyperbolized truckers’ dependence on brokers:
“Maybe we have been transported to some communist country where rates and profits are controlled. No, we relegated communism to backwater countries like Cuba. So maybe the owner-operators have their own sales force to find shipper freight to fill their trucks and, therefore, do not really need brokers but use you because they like you. No, they need brokers to be their sales force to keep their trucks full and stay in business, because they cannot do it without you. So the reason that they want to know this information is either that they’re seeking some regulation over rates and margins or they’ve got some other mischievous purpose in mind.”
On May 1, OOIDA sent out an informational letter to its members regarding “unscrupulous” brokers.
“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.”
Since then, truckers have been protesting at the nation’s capital, calling for more transparency in broker transactions. Those protests did not go unnoticed. Not only did President Donald Trump acknowledge the truckers, representatives from his administration met some of the drivers.
On May 12, OOIDA sent a Call to Action to its members regarding transparency with brokers.
“OOIDA has long fought for transparency in transactions with brokers, but the issue has finally caught the attention of the nation’s top lawmakers,” the Call to Action states. “On Friday, President Trump recognized truckers have been ‘price gouged’ by brokers during the crisis. Last week, Congress got the message that the next COVID-19 emergency bill must prevent brokers from continuing to skirt federal transparency requirements. And, yes, even FMCSA is taking notice that they should start enforcing their own regulations for brokers the same way they do for drivers.”
Voltmann did not respond to a request for comment.
Editor’s note: On Monday and Tuesday, May 18-19, Land Line Now will air a four-part debate over broker transparency between OOIDA’s former President Jim Johnston and TIA’s Bob Voltmann. The debate originally aired in August 2005, one of the time frames the battle over transparency Voltmann referenced in his recent correspondence to the TIA membership. You can listen to the debate via Land Line Now’s podcast after the debate airs each night.