The Owner-Operator Independent Drivers Association on Tuesday filed a comment on the Federal Motor Carrier Safety Administration's notice of proposed rulemaking on the broker transparency front, and while the association mostly applauded the effort, it warned of a potential loophole that could defeat agency efforts to strengthen transparency regulations.
OOIDA's comment comes to light on the last day of the comment period for the broker transparency rule. Overdrive polling on the topic found 79% of readers thought the rule stood the chance of boosting rates for truckers, while reporting on broker attitudes toward increased transparency enforcement showed most hate the idea.
OOIDA's comment displayed an awareness of the same kind of dynamic at play.
"For decades, small-business truckers have expressed frustration that 49 CFR 371.3 (371.3) regulations designed to provide transparency are routinely evaded by brokers or simply not enforced by the Federal Motor Carrier Safety Administration," OOIDA wrote.
FMCSA's rule proposal stated its intended effect "to enable efficient outcomes in the transportation industry by providing material information necessary for the transacting parties to make informed business decisions," which OOIDA said it agreed with. Note that neither FMCSA nor OOIDA really take a position on whether transparency enforcement would boost rates, or if that even matters for their cause.
"Over the last few years, motor carriers have been increasingly victimized by freight fraud, unpaid claims, dubious charges, unpaid loads, double brokered loads, and load phishing schemes," OOIDA continued. "The absence of legitimate broker transparency limits carriers’ ability to combat these problems."
Indeed FMCSA's proposal focuses on fraud fighting measures and ensuring carriers get the proper payments in cases with chargebacks, claims, fuel surcharges or detention pay. The freight fraud problem, as OOIDA pointed out, has only gotten worse in the last few years. Brokers have responded by using "carrier vetting" software and/or online platforms that often make mistakes and messes and that have spawned an entire "carrier reputation management" industry.
[Related: OOIDA calls out Carrier411 enabling brokers 'blackballing motor carriers on hearsay']
Commenting on the fraud problem and freight tech's non-solutions, OOIDA wrote that "brokers today have an unprecedented level of insight into a carrier’s operations. Brokers can track carriers through electronic logging devices or smartphone apps, but that doesn’t necessarily stop them from checking in on drivers trying to rest in the middle of the night. ...
"More and more, brokers rely on carrier monitoring and vetting services that punish small businesses because they do not receive enough inspections even if they have millions of miles of safe driving history under their belts." With such deck stacked "against carriers in numerous ways," still, "truckers persevere and deliver for the American people. It’s time to level the playing field. It’s time to restore fairness in the freight market. It’s time to give small-business truckers a leg up. It’s time for broker transparency."
FMCSA's proposed rule includes four provisions, most of which OOIDA agreed with -- the proposal followed a 2020 petition from the association itself.
On Provision 1, stipulating that "Brokers Must Keep Records in an Electronic Format," OOIDA competely agreed.
Provision 2, pertaining to "Revisions to the Required Contents of Brokers’ Records," requires brokers to include, for each shipment in the transaction, all charges and payments connected to the shipment, including a description, amount, and date. OOIDA almost completely agreed but requested more "comprehensive" records. For example, since brokers often pay a month or more after a load delivers, when can a carrier request transparency documentation?
"The Agency should further clarify when a 'shipment' begins and ends. This would eliminate uncertainty about the contents of the records and the timing of when claims connected to the “shipment” are covered," OOIDA wrote.
Next, Provision 3 says "Brokers Must Provide Records on Request." Carriers already have a right to broker transparency, but most brokers make carriers waive that right away to haul freight. FMCSA's new rule would strengthen the language around transparency, asserting it's a "duty" and "obligation" for brokers to provide transparency, rather than simply a "right" of carriers to request it.
"We are cautiously optimistic the updated regulatory text will incentivize brokers to comply with transparency requirements rather than employ evasive practices to skirt the intent of 371.3," OOIDA wrote. OOIDA further cited the proposed language, “Brokers must provide, upon request by any party to a brokered transaction, a copy of the record of the transaction required to be kept by this section,” as leaving "no question" that brokers "must" comply.
But FMCSA specifically denied OOIDA's request in its 2020 petition to forbid contract waivers, and the association felt that was a mistake.
"We are less sure that the amended language will dissuade brokers from using contractual waivers to evade transparency rights," OOIDA wrote. "If brokers can continue manipulating these types of waivers, then that defeats the well-established purpose of the NPRM."
OOIDA goes on to argue that given all the problems caused by a lack of broker transparency, which FMCSA acknowledges, the agency should see itself as clearly having the authority to forbid practices that could defeat their efforts here. Bolstering its case, OOIDA made note that President Donald Trump, who just took office on Monday, had in 2020 voiced support for transparency in freight, saying truckers were getting "price gouged" and tweeting in support of truckers demonstrating around the transparency issue at the time.
[Related: D.C. protest reached an apex inside the White House]
If the entire five-year transparency push from OOIDA and thousands of motor carriers amounts to brokers simply updating their contracts with a new type of waiver, then the brokers have essentially once again won the hottest battle in freight.
With Provision 4, that "Records Must Be Provided Within 48 Hours of Request," OOIDA mostly agreed, but said the regulatory text needs to be clear that the 48-hour clock starts ticking when a carrier or shipper makes a request: "Given the documented history of brokers intentionally evading 371.3 regulations, we are concerned that the proposed timeframe will be obstructed if the 48 hours begins at the broker’s discretion."
Finally, the association felt FMCSA should go the route requested in its original petition and require automatic disclosure after every transaction to "prevent selective retaliation" against those who do ask for transaction records. "We disagree with the Agency’s position that an automatic disclosure provision is unnecessary and could be excessively burdensome to brokers," OOIDA noted. "Requiring automatic disclosures would prevent brokers from putting carriers on a 'Do Not Use' list for simply exercising their rights. If the Agency does not make disclosures automatic, then brokers will continue singling out individual carriers just for requesting records."
If brokers can simply blacklist their way out of providing transparency, OOIDA suggests, the regulatory effort will have failed. OOIDA's full comment can be found at the federal register docket page for the transparency proposal. If Overdrive readers have any further comment, they should submit it before the end of Tuesday, January 21, for consideration.
[Related: Broker transparency: Last call for comments]
