Straight into battle with a large piece of the trucking world goes Mr. Paul Todd, an Augusta, Ga.-based owner-operator dispatching service provider and the subject of my February Exit Only column “Surrounding the Middleman” in Truckers News (follow that link for the story). Todd’s the author of the Industry of Thieves book. Released last year, Todd’s book makes the case for excessive truck brokerage charges adding hundreds in costs yearly to consumers’ balance sheets, and proposes a pretty particular bit of regulation of interstate freight brokerages, whether from the federal government side or via industry self-regulation.
In addition to transaction transparency akin to what happens in real estate sales where brokers and agents are involved (in which buyers and sellers know exactly the broker/agent’s “take” before they sign), Todd proposes what essentially amounts to a contract addendum that shippers and/or trucking companies can demand of brokers stating that they will receive no more than 10 percent of the total pay for moving the load, and that rates will be known to transactional parties.
“Capping a middleman is nothing new,” Todd says, pointing to mortgage brokers’ situation, SEC caps on what hedge fund brokers can make and the like.
He’s lately seen some success in getting the ears of a congressional candidate or two. Jerry Coon, running as an independent in Arkansas’ 3rd Congressional District, offers this proposal, inspired, he says, by Industry of Thieves, at his website:
5. Todd/Consumer/Transporters Relief Act. This is a bill I would like to sponsor and help write. It is an original idea put forth by Paul Todd, Author of Industry of Thieves, and I feel it is relevant and proposes to help remove some of the layers of “power and control” costs that burdens our so called “Free Market” within the transportation and logistics markets that has a big influence on consumer prices.
I will sponsor a bill that will enforce anti-trust laws and introduce a standard contract between shippers of goods, Brokers/Freight Agents/Lease Companies and Carriers. This contract will disclose the cost of doing business by indicating the “cost per mile,” fuel surcharge/FSC, the percentage + 1% of commission to Brokers/Freight Agents/Lease Companies, and commission by Carrier. It will include designating a percentage of costs for lumpers and pallets and assign fuel surcharges and FSC to the carrier/lease Company or for whoever actually pays for the fuel. Certain vital contract information be transmitted via a “automated interface”, built by government ISD, for transmission to both DOT and IRS for compliance. This bill will be written with the intention of providing a common sense profit for the transportation parties concerned and cut consumer costs and promote a healthy economy. The 1% designated in the Broker/Freight Agent commission will be broken down as follows .10% for the “Automated System” fees, .25 paying federal deficit and or surplas for small business startups, .25 Social Security Fund, .20 DOT, .10 IRS and .10 Small Business Administration.
Coon also proposes a new tax for auto users to go to interstate roadways called the “Heavy Highway Use Tax Re-Alignment Act.” You can check out all of his bill proposals here.
As a dispatcher of about 20 owner-operators (his company is called T&G Dispatchers), Todd is something of a freight middleman himself and as such spends a fair amount of time dealing with brokers directly, too. He offered some tips for succeeding on the call with them as part of my feature on broker-negotiation strategies in the January edition of Overdrive. Find them in the sidebar on this page.