OOIDA officially petitions U.S. DOT for more transparency with brokers
May 19, 2020
The Owner-Operator Independent Drivers Association has officially sent a petition to the U.S. Department of Transportation to begin the rulemaking process for more transparency in transactions with brokers.
On Tuesday, May 19, OOIDA sent a petition to Transportation Secretary Elaine Chao and Jim Mullen, the Federal Motor Carrier Safety Administration acting administrator, regarding transparency with transactions between brokers and owner-operators. The petition proposes the following:
- Require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed.
- Explicitly prohibit brokers from including any provision that requires a carrier to waive their rights to access the transaction records.
CFR 371.3 states that 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 what their cut is of the full rate that the shipper paid the broker.
However, the Transportation Intermediaries Association, which represents brokers, informed its members in a recent letter that the regulation does not necessarily apply to owner-operators.
A draft response letter for TIA members states that an owner-operator is “not a party to the transaction.” The letter goes on to explain that parties include only the shipper that hired the broker and the motor carrier the broker hired.
Another tactic used by brokers is to make records available only at its physical office during normal business hours. Essentially, that makes access to information virtually impossible for most owner-operators and small carriers. The 48-hour requirement for electronic records proposed by OOIDA effectively blocks that loophole.
“With freight rates reaching historic lows, small-business truckers are struggling,” OOIDA President and CEO Todd Spencer states in the letter. “Many have expressed frustration about the lack of transparency between brokers and motor carriers. The problem is that the regulations designed to provide transparency are routinely evaded by brokers or simply not enforced by DOT.”
Regarding enforcement, OODIA is also request the following to be added to the regulations:
(a) A broker shall keep a record of each transaction. For purposes of this section, brokers may keep master lists of consignors and the address and registration number of the carrier, rather than repeating this information for each transaction. The record shall show:
- The name and address of the consignor;
- The name, address, and registration number of the originating motor carrier;
- The bill of lading or freight bill number;
- The amount of compensation received by the broker for the brokerage service performed and the name of the payer;
- A description of any non-brokerage service performed in connection with each shipment or other activity, the amount of compensation received for the service, and the name of the payer; and
- The amount of any freight charges collected by the broker and the date of payment to the carrier.
(b) Brokers shall keep the records required by this section for a period of three years.
(c) Each party to a brokered transaction has the right to review the record of the transaction required to be kept by these rules.
Furthermore, OOIDA wants FMCSA to levy and enforce a structured fine system for noncompliant brokers.
Additionally, FMCSA must suspend or revoke the authority of unscrupulous brokers that consistently break the rules.
“OOIDA has long pushed for greater transparency in transactions with brokers,” the petition states. “With rates on the decline, many truckers are concerned they’re the only ones feeling the pain – or at least feeling a disproportionate share of the pain. This will not change until federal regulators enhance and enforce the broker transparency regulations listed in 49 CFR §371.3. OOIDA strongly encourages FMCSA to promulgate and enforce measures that will prevent brokers from continuing to circumvent these requirements.”
Proposed changes will also prevent brokers from retaliating against carriers that request information.
In its letter to members, TIA explicitly tells members to threaten those seeking information by denying them future 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,” TIA’s letter states.
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.
Editor’s note: On Tuesday, May 19, Land Line Now will air the debate finale 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.