Staying ahead of the game

For many drivers and owner-operators, dealing with a freight broker is a necessary evil.

“It is rare that I speak to small carriers that are actively seeking direct shipper freight,” said Tom Crowley, a compliance and regulatory expert with OOIDA’s Business Services Department. “The first thing a new carrier is looking for seems to be brokers and a factor. Hauling direct or waiting on the funds are not even a consideration these days.”

While there may be plenty of horror stories when it comes to dealing with brokers, there are also plenty who maintain an amicable and profitable partnership. Drivers can help to avoid some of the pitfalls by doing a little research and being aware of the early signs of trouble.

Picking the right broker

The first step in avoiding issues with your broker is quite simple: make sure you pick the right one to begin with.

For those looking for a broker, Crowley offers the following tips:

• Be leery of new brokers.
• Check the Federal Motor Carrier Safety Administration’s website to make sure they are licensed and bonded.
• Do additional due diligence to vet the broker.

Crowley says that doing a little bit of legwork in the beginning can go a long way toward avoiding problems down the road.

Double brokering

When it comes to problems carriers have with brokers, the issue of double brokering consistently tops the list.

Double brokering is when a load originally given to one freight broker is then given to a different broker without the knowledge or consent of the shipper. On top of a possible loss of revenue for the carrier, double brokering also puts the original broker and shipper at significant risk of any liability, loss or claim that could occur due to lack of insurance on the load.

One way to avoid falling victim to double brokering is to do business with a reputable broker.

With over 85,000 carriers in their network, C.H. Robinson operates one of the world’s largest logistics platforms, moving around $28 billion worth of freight annually. Bruce Johnson is the director of capacity development for the Eden Prairie, Minn.-based logistics firm. He says that the company’s contract prohibits double-brokering, and they exercise a zero-tolerance policy.

“We take a hard stance of that violation of the contract,” Johnson said, “and if we ever find somebody that’s double brokering, they’re out of our system.”

Despite the company’s hardline stance, Johnson says double brokering still happens from “time to time.” However, he says there are warning signs to look out for, which start with knowing the market.

“What we see often is that the deals are too good to be true,” he said. “It may give the carrier pause. ‘Why is this load paying $3,000 when everybody else in the market’s at $2,500?’ That’s definitely a red flag.”

Johnson adds that identifying problems early can go a long way to avoiding issues – like nonpayment to the carrier – later down the road. Something as simple as verifying paperwork, which will often list the name of the freight broker, can help to ensure a load hasn’t been double brokered.

“We want to make sure that the person out there doing the hard work gets what they deserve,” he said. “So the earlier we know about these things, the better … if you think something’s wrong, start taking that path early to figure out if that’s true or not.”

Crowley says that while the Association attempts to help members who have fallen victim to double-brokering, the fact is that little can be done to recover the money and time lost to this unscrupulous practice.

Making the deal more equitable

Another issue facing drivers is being paid a fair rate. When you consider the investment in equipment, operating costs and liability, carriers often feel that their slice of that pie simply isn’t enough.

Jason Craig, director of government affairs at C.H. Robinson, says that the easiest way for carriers to ensure a fairer payday is to know the rates in the marketplace and the current state of the market.

“Carriers should develop two, three, four different avenues to double-check to see what the market is so they know where they are and what they should be paid,” Craig said. “This is a tremendously competitive industry. If we aren’t paying market rates, we’re not going to attract capacity. And we know that.”

On the surface, striving to keep carriers happy by paying competitive market rates just makes sense. However, this is clearly easier said than done, especially when money is involved. Crowley, on the other hand, is decidedly less optimistic when it comes to other brokers abiding by this policy.

Crowley says that drivers should never accept the listed load board rate and always ask for more money, adding that carriers need to keep in mind the “freight that hits the load board is the freight that the brokers regular carriers wouldn’t take.”

“If you don’t ask for more, you won’t get it,” he said.

Increasing broker transparency

The Owner-Operator Independent Drivers Association says that many of the issues that carriers experience with brokers could be remedied by brokers putting all their cards on the table. In 2020, the Association petitioned FMCSA to begin the rulemaking process for more transparency in transactions with brokers.

The petition asks the agency:

• To require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed.
• To explicitly prohibit brokers from including any provision that requires a carrier to waive their rights to access the transaction records.

Current regulations already require brokers to keep records of each transaction with a carrier and that each party to the transaction has a right to view these records.

While C.H. Robinson and OOIDA may align on some best practices, broker transparency is one of the areas where that alignment ends.

Craig says his company does not support the Association’s petition.

He explains that there is a difference of opinion between OOIDA and C.H. Robinson as to what the definition of a “transaction” actually is. C.H. Robinson contends that business agreements between shippers and brokers are independent of agreements between motor carriers and brokers.

“If the motor carrier is compensated by the broker based on a commission, certainly there needs to be transparency. But it’s completely independent of what the transaction with the shipper is,” Craig said.

OOIDA patently disagrees.

“The broker is a middleman, period. Full transparency will eliminate so many problems in the brokerage industry – like eliminating the ability to double broker loads. And, it will help truckers find reputable brokers willing to work in a partnership with small motor carriers, and not just keeping rates artificially low,” OOIDA Executive Vice President Lewie Pugh said.

FMCSA Administrator Robin Hutcheson told Land Line in October the agency plans to address OOIDA’s petition in 2023. LL