The debate over broker transparency currently raging on the Federal Motor Carrier Safety Administration's Notice of Proposed Rulemaking docket in the Federal Register has become an all-out war between opposing camps.
Recent surveying here shows that, among readers of the "Voice of the American Trucker," though, there's a clear winner: The vast majority of owner-operators feel the agency's proposal would be good for rates and negotiations in general.
The point of view flies in the face of what brokers and freight analysts say: that stiffening the enforcement of 49 CFR 371.3, which gives carriers and shippers the right to review a record of all payments made to and from the broker, wouldn't impact freight rates or might even lower rates. Some owner-ops agree with brokers on that score. In fact, survey results show a diversity of opinion, with the radical sides of each debate strongly represented. "Brokers should be outlawed," commented one respondent on the pro-transparency side.
"Disband FMCSA" said another, who was on the "this will do nothing" side.
"THIS IS DESIGNED TO TAKE ALL CAPITALISM OUT OF FREE TRADE," said another, all-caps commenter voicing a libertarian view in the anti-transparency camp.
The proposed rulemaking probably won't end capitalism, blow up FMCSA or end freight brokerages entirely, but it's clear at least what most owner-operator readers think might happen to freight rates.
Overwhelmingly, owner-operators see the transparency proposal, placing a new regulatory duty on brokers to share records upon request, as a potential boon to business. Straightforwardly, this makes sense -- better access to data could lead to better pricing decision-making, negotiation, and outcomes.
Offering a counterfactual, for instance, "Imagine selling your house with a real estate agent but the agent keeps the money and you have to negotiate with the agent, and you have no visibility on what the house sold for," one commenter said.
Others posited that even if transparency doesn't lift rates around the industry, independent carriers could still see more cash coming in as a result, discouraging hidden chargebacks/deductions to keep "some companies [from] shaving off extra dollars," wrote one commenter.
Greater transparency "certainly could inform decisions about who I do business with in cases of detention and layover pay," wrote another.
Many respondents expressed a large degree of mistrust and dissatisfaction with brokers on the whole. "I believe brokers skim from original amounts and pay percentage from that," wrote one respondent. "They don't like to disclose the real numbers and you can just feel it in your soul."
Rates averages come from settled transactions, that is, already done. But one commenter likely felt the transparency debate in his soul while negotiating a load.
"I called a broker for a $1,000 load and asked if he could at least come up $100. They said they could not come up anymore on the rate. I had to put him on hold for a few minutes to ask my driver if he was OK with the rate. Well, I overheard [the broker] ask his coworker, 'Hey what do we have in this load?' I was shocked at what I heard. The broker said $1,600 and laughed. That's over half over what the load paid my driver. It's not fair to the drivers. Brokers should only be able to take a fee up to 15% of loads. The system is designed to screw over our truckers who are the backbone of America and deserve better rates."
All such comments speak to the answers shown below in green -- the positive expectations for broker transparency.
Brokers generally see transparency as a negative for their own businesses. And at least a few of the respondents to this survey said transparency would hurt rates to owner-operators and other carriers, some among them carriers who operate with their own brokerage authority as well.
"As a both a carrier and freight broker, I will hang up the keys to my brokerage if this passes," one wrote, citing the additional burden of recordkeeping and hassle along with the requirement to produce records within 48 hours of a request. "As will other small brokerages in my cohort. This will consolidate the freight to the large brokerage houses who have the staff and willpower to comply with this nonsense. Consolidation of power will have opposite outcome from the one owner-operators and small fleet owners are hoping for."
Some respondents were cynical about the proposal's potential impact, given they felt FMCSA wouldn't really hold brokers' feet to the fire. One made reference to current common practice of brokerages to "make you sign an agreement to not request the info under current rules," then noting "they will do the same under the new rules. This change does nothing."
Another commenter noted the transparency proposal "would require brokers to reveal rates they are contractually obligated not to reveal." Certainly current practice puts obstacles in the way of transaction data sharing, and respondents didn't miss that in their comments. Yet most among truckers felt their own burdens -- truck payments, insurance, fuel, pure risk -- far outweighed whatever paperwork reshuffling brokers would contend with should the proposal go through.
In the end, many simply doubted much would change even if it did. One in every five respondents felt impacts would be limited -- "dishonest players" would find a loophole through which to drive a truck and avoid complying.
What if, one asked, brokers simply blacklisted everyone who asked for transparency?
[Related: 'Fraud apocalypse': Brokers circling the wagons, shutting carriers out of freight]
FMCSA's comment period on this proposed rule remains open through Tuesday, Jan 21, and FMCSA will consider all comments moving toward a final rule. That is to say that the way we're thinking about broker transparency now might not be the way an actual regulation gets written. One commenter generally supportive of the current proposal hoped FMCSA might well take it even farther: "What a broker can make should be capped at 11%. This will fix the sh*!- rate and greed problem."
Beyond the impact transparency could have on rates, a wider conversation has opened up about carrier rights.
"The regulations are in place to be observed and respected," wrote one of our survey commenters, referencing the fact that 371.3 has been on the books since 1980. "If the brokers don't abide by FMCSA rules 100%, why do we?"
Another owner echoed what's been on the minds of many many for years now with this question: "What is taking FMCSA so long to do its job?"
