FMCSA Is Deciding Broker Roles And Freight Dispatcher Roles
Broker transparency a must, OOIDA says FMCSA attempts to define brokers and bona fide agents.
As the Federal Motor Carrier Safety Administration works toward providing better guidance regarding brokers, OOIDA told the agency it needs to start enforcing regulations already on the books.
“For years, small-business truckers have expressed frustration that regulations designed to provide fairness and transparency between motor carries and brokers have been routinely evaded by brokers or simply not enforced by FMCSA,” the Owner-Operator Independent Drivers Association wrote in comments filed on July 11. “As the agency gathers information to direct upcoming guidance on the definitions of ‘broker’ and ‘bona fide agents,’ we believe many of the underlying issues could be solved through better compliance and enforcement of current regulations as well as finally implementing legislative provisions enacted years ago to prohibit dishonest brokers from conducting business within the trucking industry.”
OOIDA was referencing 49 CFR 371.3, which was intended to ensure that motor carriers have access to transactional information. The Association previously petitioned FMCSA. “We encourage the agency to grant OOIDA’s petition that would require brokers to automatically share transaction records electronically after the contractual service has been completed and would prohibit brokers from including provisions in their contracts that force a carrier to waive their rights to transaction records,” the Association wrote. “Improving and enforcing transparency will help motor carriers differentiate between good brokers and unscrupulous ones.”
Regarding the notice, FMCSA’s guidance must examine the role of a dispatch service in the transportation industry. It also must examine the extent to which dispatch services could be considered brokers or bona fide agents and clarify the level of financial penalties for unauthorized brokerage activities under 49 U.S.C. 14916, applicable to a dispatch service. “Over the past decade, FMCSA has received numerous inquiries and several petitions related to the definition of a broker,” the agency wrote. “FMCSA is aware that there is significant stakeholder interest in FMCSA’s unauthorized brokerage enforcement.” However, OOIDA said the definition of a broker isn’t the source of the problem. “In our opinion, the current definition provides sufficient clarity to distinguish between brokers, bona fide agents, and dispatch services,” OOIDA wrote. “It is not the definition of a broker that constitutes potential problems but rather how the business itself operates.” OOIDA said that one of the problems is that brokers often work too much in the interest of shippers.
“Brokers are supposed to represent both the shipper and the carrier as an impartial intermediator to arrange transportation,” OOIDA wrote. “Unfortunately, some brokers are far more likely to favor the shipper in their contracts. The most egregious broker-carrier contracts have a right-of-setoff clause on claims.” Set-off clauses give the broker the right to seize funds for debts.
The Association also spoke out against the practice of double brokering. “Double brokering is another egregious practice utilized by motor carriers who are dually acting as brokers,” OOIDA wrote. “The term ‘double brokering’ is often confused with ‘co-brokering.’ While it is not illegal for a load to be brokered multiple times with multiple brokers getting paid a percentage of the load (co-brokering), it is unlawful when a carrier accepts a load from a shipper and the shipper believes that the carrier will haul the load and then the carrier brokers the load to another carrier without the shipper’s knowledge.” FMCSA’s comment period regarding the definitions of brokers ended July 11. The Association said it will continue to work with the agency to improve broker compliance. “OOIDA stands ready to work with FMCSA in rulemaking to determine the best solutions to improve routine broker compliance, ensuring the goals of the agency and Congress to support the economic stability of the motor carrier industry and, thereby, secure a safe, robust, and reliable transportation system for our country.”