Freight brokers oppose FMCSA push to require publishing rates

The Federal Motor Carrier Safety Administration (FMCSA) is overstepping its authority by trying to push more transparency in trucking rates negotiated by freight brokers, a national group representing brokers says.

The decision by the FMCSA to reinstate a 1980s-era regulation requiring brokers to share pricing for each transaction with carriers is taking the trucking industry back in time, all while failing to address a crucial issue – safety.

The rulemaking petition put forth by the Owner-Operator Independent Drivers Association’s (OOIDA) would require electronic submission of internal proprietary rates. But that will not solve the problems that impact everyone in the industry, the brokers say.

Instead, that would impose an unprecedented level of transparency that is unique in the modern American economy by mandating private companies to reveal their internal rates to the public. This regulation does more harm than good and will completely alter the way business is done, not for the best.

The Transportation Intermediaries Association (TIA), which represents freight brokers, said FMCSA should be focusing their efforts on addressing real issues, such as safety. TIA said large truck crashes are up by 10% and 92% of today’s trucking companies are unrated because the agency is using an outdated physical audit system to rate motor carriers.

The FMCSA needs to use their resources and power to make a real difference within the industry, focusing on safety, security, business and lives, TIA said.

Anne Reinke, president and CEO of the Transportation Intermediaries Association, said this would hurt her sector of the industry, telling LM that the issue is not new.

“It’s cropped up before, but this latest iteration popped up in 2020 during the Covid pandemic,” Reinke explained. There was a complete shutdown of freight. During that time when 25% of the marketplace was shut out, rates plummeted. There wasn’t that much freight to move.”

But the owner-operators blamed the brokers for their loss of income and accused the third parties of price gouging.

“That couldn’t be further from the truth,” Reinke told LM.

At that time, OOIDA filed a rulemaking at FMCSA. TIA also filed for a rulemaking. FMCSA recently dismissed the brokers’ petition.

The other side of the coin is the issue owner-operators face. Many of the problems that truckers face regarding brokers could be solved by simply enforcing current regulations, the owner operators told FMCSA.

“For years, small-business truckers have expressed frustration that regulations designed to establish fairness and transparency between motor carriers and brokers have been routinely evaded by brokers or simply not enforced by the FMCSA,” OOIDA President Todd Spencer wrote FMCSA in formal comments.

“We believe many of the underlying issues could be solved through better compliance and enforcement of current regulations, as well as finally implementing legislative provisions enacted years ago to prohibit dishonest brokers from conducting business within the trucking industry,” Spencer added.

OOIDA said lack of broker transparency hurts the industry. OOIDA said the way brokers are defined is not the root of the problem. “If a business or entity is acting in a financial role between both the shipper and the carrier, then this should make them a broker,” OOIDA said,

OOIDA would like FMCSA to require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed. It also wants a prohibition against brokers from including any provision that requires a carrier to waive their rights to access the transaction records.

“The jist of OOIDA’s petition is they are owed something out of what brokers are paid,” Reinke said. “Carriers don’t pay brokers a commission. The customer pays broker and the broker pays the carrier.”

Publishing of rates in an economically deregulated market place is a throwback to the days of regulations under defunct Interstate Commerce Commission, which closed in 1995.

“I assume what they are asking for is the amount the shipper pays the broker, but that is a proprietary situation,” Reinke explained. “When brokers sign contracts, it is assumed it is confidential.”

Besides, Reinke said, today’s freight market place is “very transparent.” One needs only to log onto one’s computer and see the spot rates anywhere in the country, she said.

FMCSA hasn’t filed its notice of proposed rulemaking yet. “Whenever they do, we would make the strongest case possible that it is based on a fundamental misreading of the freight market place. FMCSA doesn’t have the authority for this. Its mission is safety.”

The regulatory process is its own animal.  A decision is not expected anytime soon.

“We’ll continue to meet with FMCSA to make the case as to why this doesn’t make sense,” the TIA’s Reinke said.