Broker Transparency Faces Potential New Rules From The FMCSA
The proposition comes years after the initial complaints from owner-operators regarding transparency concerns were issued.
The Federal Motor Carrier Safety Administration has finally taken action against allegations of fraud against truck brokers.
In May 2020, two groups petitioned the FMCSA to improve broker transparency. This came after the truck brokers were accused of fraud in the rate-making process when doing business with owner-operators. The two groups in question are the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition.
What is a Broker in the Trucking Industry?
A broker in the trucking industry acts as an intermediary between shippers (companies that need to transport goods) and carriers (trucking companies or independent drivers) to help goods move smoothly and efficiently. Brokers are responsible for finding available carriers to haul loads, negotiating rates, and ensuring that shipments are delivered on time and in good condition. They use industry networks, load boards, and transportation management systems to match shippers’ needs with carriers’ availability. In addition to coordinating logistics, brokers handle administrative tasks such as processing payments, managing contracts, and ensuring compliance with industry regulations.
The Initial Demands For Broker Transparency
The petition from the two groups asks for a few changes regarding broker transparency.
It first asks brokers to automatically provide transaction information within 48 hours of contract completion with a carrier. In addition, they made demands to forbid brokers from creating contracts that would force carriers to waive their rights to access the record of their transactions.
The SBTC also called for laws prohibiting brokers from complying with transparency requirements by stating it in a contract with a carrier.
Response From The FMCSA
The FMCSA’s proposition aims to strengthen broker transparency, but not to the extent owner-operators have requested. The agency made this statement about the situation:
“Though the proposed rule is responsive to the petitions in reinforcing the broker transparency requirement, the proposed provisions differ from those requested by OOIDA and SBTC,” the agency stated in a notice published on Tuesday.
“The proposed rule would revise the regulatory text to make clear that brokers have a regulatory obligation to provide transaction records to the transacting parties on request. The proposal would also make changes to the format and content of the records.”
The FMCSA proposed four major changes take place.
- Brokers must keep records in electronic format.
- They must revise the contents of the broker’s records, including itemizing fees.
- Brokers must provide records upon request.
- Records must be provided within 48 hours of request.
Response From Owner Operators
While this is a step in the right direction for owner-operators, groups like SBTC and TIA (the Transportation, Intermediaries Association) aren’t fully pleased.
James Lamb, Executive Director of the SBTC, said to FreightWaves,
“(It’s) too little too late,” and “(It) has gutted our request while at the same trying to make an appearance of strengthening the rule.”
OOIDA President Todd Spencer said as follows:
“As FMCSA noted in its proposal, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment. We look forward to responding to FMCSA’s request for feedback, and most importantly, will continue to press the agency, lawmakers, and other regulators to make all resources available to enforce these regulations and ensure that brokers finally play by the rules.”
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