In frenzied fear, the TIA attacks owner-operators
May 21, 2020
In a ferocious, ethically dubious, and sometimes goofy campaign against business transparency, the Transportation Intermediaries Association, a freight brokers group, is showing just how necessary transparency is.
Claiming to be fighting for free markets, freedom from regulation, and freedom itself, the TIA has declared war on owner-operators.
It began with beleaguered owner-operators asking troublesome questions during peaceful and respectful demonstrations in Washington, D.C. and other cities. Low rates during the current economic collapse had brought many of them to the brink of bankruptcy. They wanted to know what shippers paid brokers for the loads they hauled. How much of the freight revenue were they getting?
This clearly panicked the TIA.
Brokers are already required to make transaction details available to all parties, shipper and carrier alike. The rules have been in place for a long time, and for just as long brokers have found ways around them. More often, brokers simply ignore them. To avoid trouble and keep loads flowing, we didn’t complain. Relatively few of us were even aware of our rights.
But these are dire times. In the COVID-19 economic disaster, the demonstrators spotlighted the issue. Now, many truckers reasonably want to know for certain whether or not they are being gouged by brokers.
The TIA vehemently denies brokers are gouging carriers. No way. No how. Would the brokers prove that by living up to their transparency obligations? Same answer. No way. No how.
The TIA’s president made a YouTube video with an ill-chosen wide-angle lens that made him look like an annoyed teacher dressing down a 12-year-old. “Brokers don’t set the rates, and shippers don’t set the rates,” he explained with weary disdain.
So who does set the going rate?
“Like it or not, it’s the motor carriers who accept it,” he said.
In other words, it’s your fault, drivers.
On behalf of all owner-operators, OOIDA sent letters to members of Congress pointing out that brokers have avoided required disclosure for decades by restricting access to transaction records. Worse, they inserted odious clauses in freight documents – sign for a load and you also forfeit your right to see transaction records.
OOIDA suggested a simple solution to lawmakers: make brokers obey the rules. Forbid the forfeiture of your right and require brokers to specifically reveal their margins in the paperwork after each load. OOIDA has since made a formal appeal to the FMCSA to use the enforcement power they already have.
It all sent the TIA to DEFCON 1. In obvious fear, TIA released whatever reasons they could conjure against transparency, whether the reasons made sense or not. My favorite is the frothing contention that forcing brokers to simply obey the rules will mean total economic re-regulation. Talk about hyperbole.
It was greedy brokers who brought on regulation in the first place, and I’m willing to bet those regs were initially demanded, less by truckers than by shippers.
Veteran brokers love to talk about the golden days after deregulation in 1980. Until then, freight rates had been subject to regulatory approval, published, and applied to everyone. Then suddenly the rigid structure was gone. Virtually every shipment could be negotiated. In the resulting confusion, exasperated shippers turned to brokers for help.
Shippers, especially small and midsized companies, often had no idea what their brokers paid carriers. New carriers could charge substantially less than the hulking, unionized LTLs the shippers were used to. In some cases brokers could pay a new carrier half or even less than they billed a shipper.
Of course, shippers caught on and began making the case for transparency. In the marketplace that evolved, brokers found it easier to push carrier rates down than shipper charges up.
Now, more than 30 years later in a marketplace the TIA chief describes as “huge, fractured, and incredibly transparent,” the issue is once again on fire. This time around, carriers are stoking the flames.
So why would an otherwise responsible organization like the TIA strap on Kevlar and open fire on the owner-operators who haul so much of its members’ freight?
Money. What else?
That money can only be in one place – the margins between what shippers pay brokers and what brokers pay carriers, margins the TIA desperately wants us not to see. It reminds me of the famous tapes Richard Nixon fought long and hard to keep from investigators. He knew what was in them – proof of his impeachable behavior.
Given the TIA’s similar, frantic effort to suppress access to broker margins – even urging brokers to withhold business from carriers who dare to raise the subject – can anyone doubt they have something to hide?