Jun 28, 2023

FMCSA to Consider Broker-Shipper Transparency

The Federal trucking regulatory authorities have officially acknowledged their intention to give due consideration to a contentious petition put forward by the Owner-Operator Independent Drivers Association. The petition seeks a rulemaking process that would mandate the sharing of broker-shipper pricing documents with truckers responsible for transporting the cargo.

With that, the Federal Motor Carrier Safety Administration (FMCSA) is set to delve into the complex issue of broker-shipper transparency in the trucking industry. As an agency responsible for regulating and ensuring the safety of commercial motor vehicles, the FMCSA recognizes the importance of transparent business practices between brokers and shippers. The upcoming consideration marks a significant step towards addressing concerns surrounding fair dealings, pricing practices, and overall accountability within this vital sector.

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With potential implications for both brokers and shippers alike, this article explores the significance and potential impact of increased transparency measures on the trucking industry as a whole.

A Publication by FMCSA

In a publication on the broker and bona fide agent definitions dated June 16, the Federal Motor Carrier Safety Administration (FMCSA) announced its intention to address the matter of OOIDA's 2020 transparency petition in due course. The agency has committed to examining the request, which seeks the automatic provision of an electronic transaction record within 48 hours of the completion of contractual services.

The Transportation Intermediaries Association is actively engaged in opposing the OOIDA petition, asserting that the aforementioned documents constitute confidential transactions.

In a subsequent correspondence to FMCSA Administrator Robin Hutcheson on September 22, OOIDA CEO Todd Spencer underscored the persistent efforts made by the association to safeguard the rights of our esteemed members in accessing contractual documentation, as mandated by federal regulations. The provision of such documents not only serves to shield carriers from unscrupulous brokers but also cultivates a marketplace where all parties operate with clarity and transparency, thereby ensuring the safety and well-being of the public at large.

It has been more than two years since OOIDA first submitted its initial petition, followed by the closure of a comment period on broker transparency-related dockets nearly 20 months ago. In light of this, we find it imperative to request an update regarding the agency's position on our ongoing petition and the extensive feedback received from numerous motor carriers. This update is essential to ensure transparency and address the concerns raised by industry stakeholders.

An Interview with Spencer

During the interview, Spencer expressed his earnest anticipation for the agency's expeditious consideration of OOIDA's petition. He emphasized that the enactment of a regulatory framework mandating transparency has the potential to substantially alleviate financial burdens for consumers.

According to Spencer, individuals involved in truck operations tend to believe that brokers intentionally refrain from disclosing information, as it benefits their current position. It is evident that carriers, who have transported the goods, have a legitimate right to access this information. The lack of transparency raises concerns about potential hidden aspects that brokers might be concealing.

TIA President Anne Reinke Disagrees

The perspective of TIA President Anne Reinke contrasts with that of OOIDA, as she believes that OOIDA's objective is to obtain the pricing details exchanged between shippers and brokers to enhance their own pricing tactics. However, Reinke asserts that the information regarding the pricing discussions between brokers and shippers should remain confidential.

According to Reinke, their approach involves employing a regulatory strategy to gain advantageous negotiating power. This approach does not align with our principles, as we are uncertain about the specific interests they believe we are safeguarding. While there are indications that the FMCSA might take action on the OOIDA petition, it remains unclear whether they have already formed a predetermined stance on the matter.

According to Reinke, amidst the COVID-19 pandemic, shipping rates experienced a substantial decline, with brokers being held accountable for their role in driving down prices and capitalizing on the global health crisis.

“Nothing could be further from the truth,” she added. Since then, carrier rates have “gone through the roof,” because people have been ordering things “out the ying-yang.”

In December, TIA explicitly expressed its opposition to OOIDA's petition, which seeks to eliminate a long-standing regulation that the organization contends no longer corresponds with the current landscape of brokerage services.

The federal rulebook encompasses the regulation, namely 49 CFR 371.3. As per the insight provided by Chris Burroughs, the Vice President of Government Affairs at TIA, this particular legislation, established in 1980, hails from a distinctly dissimilar era in the realm of brokerage operations.

According to the speaker, in the past, motor carriers used to compensate brokers with a commission. However, concern arose within the Interstate Commerce Commission regarding the possibility of rebating and double-dipping in profits when brokers and shippers had common ownership. Presently, the marketplace operates in a significantly transformed manner, characterized by two distinct business transactions between the broker-shipper and the broker-carrier.

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Conclusion: Summary of the Potential Impact and Importance of Broker-Shipper Transparency

In conclusion, the potential impact and importance of broker-shipper transparency cannot be understated. By requiring brokers to provide more information about shipment rates and the parties involved, it enables shippers to make more informed decisions about their transportation providers. This increased transparency can lead to fairer pricing practices, as shippers can compare rates from different brokers and negotiate better deals.

Furthermore, broker-shipper transparency promotes a more competitive marketplace. When shippers have access to comprehensive information about brokers' services and track records, they are better equipped to choose the most reliable and efficient ones. This incentivizes brokers to improve their operations and customer service in order to attract more business.

Overall, implementing broker-shipper transparency measures has the potential to benefit both shippers and brokers alike. Shippers will have greater visibility into the market, allowing them to make smarter decisions that align with their business goals. At the same time, brokers will need to focus on providing quality services at competitive prices in order to remain competitive in an increasingly transparent industry.

As a DOT Consortium, we have a vast network of broker-shipper, broker carriers, freight brokers, truck drivers, and even small-business truckers.

Stay updated with the latest news and updates in the trucking and transportation industry. Connect with us at Labworks USA today. 

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