The continuing anger on the part of independent owner-operators targeting the broker community for low trucking rates has now led to the owner-operators’ trade group asking Congress to amend a current federal law governing broker-carrier relations.
In a letter sent Wednesday to all 535 members of Congress, Todd Spencer, the president and CEO of the Owner-Operator Independent Drivers Association, asked for what the organization called “two simple solutions” to federal regulations under title 49, section 371.3 of federal law.
At present, 371.3 “require(s) brokers to keep records of transactions with motor carriers,” Spencer said in his letter. And in fact, the title of the section in question is “Records to be kept by brokers.”
In those records, according to the statute, brokers need to keep a long list of information that they would presumably keep even in the absence of federal law: information on the name of the carrier, the bill of lading and so on. But it also requires a detailed list of other financial and service functions, including the compensation paid to the broker, the identity of the payer, and “the amount of any freight charges collected by the broker and the date of payment to the carrier.”
The law also says each party to the transaction has the right to review all the records.
But the reality, according to OOIDA, is that the exchange of information doesn’t happen much. Many of the contracts signed by carriers include a clause waiving the right under 371.3. OOIDA concedes that it discourages its members from signing for that provision, “but the practice is so prevalent that truckers often have no other choice if they want to haul a brokered load.”
OOIDA is not the only entity that agrees information is rarely transferred through a 371.3 request. As one former broker said, “I didn’t even know that was a law.”
From a more formal voice, Bob Voltmann, the president and CEO of the Transportation Intermediaries Association, agreed requests under the law are rare. “I spoke with a member today who said that in 27 years of business that they have never been asked for this information,” he said in an email to FreightWaves.
The OOIDA letter also cites a clause that it says comes from an unidentified broker that it describes as one of the biggest in the country. The clause states that the carrier can’t demand to see commissions.
The broker “shall not be required to disclose the amount of its broker’s commission to Carrier, and Carrier expressly waives its right to receive and review information, including broker’s commission information, pursuant to 49 CFR §371.3,” according to the clause cited by OOIDA.
If a broker does allow the records to be seen, there are plenty of hurdles to that happening, including requirements that they be viewed at a broker’s facility during office hours.
And then there’s the blacklist problem, according to OOIDA: “When a carrier tries to assert his/her right to review this information, the broker is unlikely to contract with them again.”
OOIDA’s “two simple solutions” are that brokers should be required to “immediately” provide an electronic copy of all transactions. “No exceptions,” the letter says. “This would allow carriers to identify brokers who truly are taking advantage of them during the crisis as well as after it,” Spencer adds in the letter.
It also asks for banning brokers putting in their contracts any waiving of drivers’ rights under 371.3.
Carriers are feeling “a disproportionate amount of the pain” in the current market. “This will not change until Congress addresses the widespread evasion of 49 CFR 371.3,” Spencer says.
Asked if OOIDA had brought up these recommendations previously, Norita Taylor, an OOIDA spokeswoman, said the group “[has] a long history of bringing up issues regarding brokers.
We plan to continue pursuing the issue of transparency.”
Voltmann, in his email, pushed back against the idea of carriers needing the information that presumably would be in the data automatically passed on to carriers. “Do you really need to know exactly what the car dealer paid for the car you bought?” he asked. “ Or do you do your homework and buy the car for a price you think is fair? And, secondly, what are they going to do with it? Are they going to highlight the loads in which the broker loses money to keep the shipper happy? No, they are going to look for the examples where the broker made a better than average margin and splash them all over the internet. It will be sensational, but should business men and women deal with others professionally or sensationally?“
Voltmann recently stepped into the growing small carrier vitriol against brokers by posting an unusually blunt video defending his industry.
A recent demonstration in Washington by angry truck drivers did get the attention of President Donald Trump, who tweeted out his general support of the industry.