Why do owner-operators and small fleets seek changes in broker transparency regulations? What modifications has the Federal Motor Carrier Safety Administration suggested?
The Federal Motor Carrier Safety Administration (FMCSA) has released a long-anticipated proposal focused on broker transparency, which would mandate brokers to maintain electronic records.
This proposal stems from requests made over four years ago by the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition.
The 2020 petitions urged the FMCSA to amend regulations so that brokers would have to disclose, when requested by carriers, details such as the amounts shippers pay brokers for shipments.
In August 2020, the FMCSA invited public feedback on these petitions to enhance understanding of broker rates.
Why Are Changes to Broker Transparency Necessary?
Critics argue that, despite existing regulations, motor carriers lack insight into the true payments shippers make to brokers.
OOIDA claims that brokers frequently evade federal mandates that require them to keep and share transaction records. Often, contracts signed by motor carriers, including owner-operators, waive these transparency requirements, leaving truckers with little choice if they want to carry a brokered load.
Additionally, brokers sometimes compel carriers to visit their offices for record viewing, which is impractical for those located far away.
OOIDA President Todd Spencer expressed appreciation for the FMCSA’s recent Notice of Proposed Rulemaking, emphasizing the necessity of broker transparency for fairness and efficiency in the transportation system.
The Brokers’ Perspective
Conversely, brokers oppose the proposed changes. The Transportation Intermediaries Association (TIA) has criticized the proposal as focusing on outmoded regulations while neglecting urgent concerns like freight fraud.
The TIA labeled current broker transparency rules as outdated, arguing they originated from trucking deregulation in the 1980s and are unsuited for today’s market. They highlighted that during the COVID-19 pandemic, while broker transparency was debated, 80,000 complaints regarding freight fraud emerged, yet none concerned broker transparency.
Furthermore, much of the data owner-operator groups are asking for is proprietary information that shippers prefer to keep confidential. Legal experts note that the proposal could significantly disrupt the confidentiality of economic relationships among shippers, brokers, and carriers.
FMCSA’s Proposed Broker Transparency Changes
The proposed rule would require brokers to maintain electronic records for easier accessibility, revise the content mandates for broker records to include charges, payments, and claims, and impose a 48-hour timeline for brokers to provide requested records.
Some motor carriers believe heightened broker transparency could influence freight rates. However, the FMCSA posits that other market factors are likely more influential in determining these rates.
The agency is inviting feedback on specific queries, including the potential impact of the proposal on freight rates and the feasibility of the 48-hour record provision.
FMCSA will accept comments on its proposed broker transparency rule, which is expected to be published in the Federal Register on November 20, for a 60-day review period.
