What is the Broker Transparency Petition Submitted by the FMCSA?
The Owner-Operator Independent Drivers Association (OOIDA) recently submitted a letter to the Federal Motor Carrier Safety Administration (FMCSA) asking for an update on the status of a petition submitted in May of 2020 to require freight brokers to provide transaction information to carriers within 48 hours of the completion of contractual services.
Based on Federal regulation 49 CFR 371.3, which states “A broker shall keep a record of each transaction” and that each “party to a rocketed transaction has the right to review the record of the transaction”. Furthermore, the OOIDA states that many brokers include clauses with carriers that could waive this requirement if agreed upon by both parties. The petition made in May of 2020 requested that brokers be prohibited from including these waivers in the contracts.
Given the length of time that has passed since the petition was submitted in 2020, the petition had its Federal Register comment period extended, and the FMCSA had hosted a public listening session on the relationship between brokers and carriers. Furthermore, the Transportation Intermediaries Association (TIA) had issued an additional petition in response to the OOIDA requesting that the requirement for transparency be removed. Bryce Mongeon, director of legislative affairs for OOIDA believes deregulation of trucking or deregulating rates is the opposite of what the OOIDA is set up to do.
There are a number of people who are in favor of the petition as people are concerned that brokers could be price gouging. By not showing the full transaction details as to pay carriers an artificially deflated rate, which would allow brokers to pocket the difference. The low freight rates from brokers was a major concern for truckers, which is how the petition was originally created in 2020. By requiring brokers to be fully transparent and requiring them to provide a full detailed receipt of what was charged for a delivery, this ensures the drivers are not left out in the profits.
For those who are opposed to the petition, they feel the regulations are being followed, and a contract requiring carriers to waive their option to view the transaction in full detail complies with the law. Furthermore, brokers have privacy concerns, as many have confidential agreements for the shippers who do not want information shared with third parties.
Finally, those that oppose the petition feel that making the disclosure compulsory will place an undue administrative burden on the brokers. Many brokers feel if the petition passes, the result could be an increase in labor and technology costs. This is due to larger brokers having to invest in software to automate the process, while the smaller brokers would have to manually send the information through email.
While the petition was proposed in May of 2020, it has been met with a number of people who are both for and against it, which is why it has yet to pass or be shot down. The FMCSA has been considering the issues raised by the OOIDA’s petition for rulemaking, and those who oppose the petition, and will plan on reaching a decision in early 2023. This petition is just another issue that the trucking industry faces on a daily basis, and the FMCSA is looking for solutions to make the industry more efficient and effective.