Readers react on broker regulation, rates, GPS, truck loans

| October 24, 2012

Dispatch from the home front
“I love the smell of diesel fuel in the morning.”
Billy Richardson, posting on our Facebook page

Broker regulation
Following Todd Dills’ posts to the Channel 19 blog marking something of  a back and forth between freight-middlemen associations regarding the boost in broker and freight forwarder minimum surety bond requirements mandated in the MAP-21 highway bill, conversation ensued between owner-operators, brokers and others. Following find a few of the highlights, and you can join the ongoing conversation below the last post here. 

Cap the percentage brokers can take with regulation
Brokers have made it almost impossible for a small-time truck owner-operator to even be able to speak directly with shippers/receivers to negotiate hauling for them directly. I am sure there are many small-timers that would agree with me that if we could do without the brokers, we definitely would.

Are you aware that each of the bigger broker companies calculate their rates differently? Some follow the produce season and offer us rates according to this, while others look at how many trucks hauling for them are going to be delivering in a certain area and offer us rates according to that, etc.

There are many customers that the larger broker companies create yearly contracts with for a “fixed rate,” but they do not pay carriers a fixed rate. For example, [a shipper] contracts with [a broker] to haul product for $3 a mile from a Virginia location to Jacksonville, Fla., all year long. Then the rates paid to the carrier should be the same, but they are not.

[For produce], certain times of the year we may get $2.40 a mile (which in all reality you would be offered $2 a mile if lucky) and other times be offered $1.20 a mile.

Another example is Florida freight, generally. During produce season down there, you can get $2 and more a mile…. Right now you cannot even get $1 a mile. Do you think this is fair when the shipper/receiver is paying the same price all year long? I don’t.

Everyone is out to make a living, but since it does not look like brokers will be going away any time soon, I do believe that more rules and regulations should be put on the brokers to include a “cap” put on the amount they can take off the top of a load when offered to the carrier.

In my younger years, the rule of thumb was the carrier was paid per mile what the fuel charge was per gallon. Example: if fuel was 70 cents per gallon, you were paid 70 cents per mile. Do you know of anyone that will pay $4.25 per mile to a carrier to haul a load of dry freight?

My point is brokers big and small should be regulated on their ways of conducting business and with that be required to show the rate the customer is paying the broker for the load to the carrier when they receive their rate confirmation sheet for that load. There should be government auditors that spot-check both the broker and the customer’s files to try and keep fraud from taking place.

I feel that if this were to take place, a brokers’ bond limit would not be such an issue and probably not need to be increased.
Patricia Shoemaker, commenting on discussion of the broker bond increase here

Bond increase unfair
I am a member of [the Association of Independent Property Brokers and Agents] and I own a small freight brokerage. I have been contacting members of Congress, TIA [the Transportation Intermediaries Associations] and OOIDA repeatedly over the last couple of years regarding the broker bond increase.  In most cases, I hear from no one (congressional members), or I receive emails or letters telling me that this bond increase is a good thing. My company is just more than four years old, and we have built a company that values and takes care of its trucking partners and customers. I still do not understand why current legislation cannot take care of fraudulent and dishonest brokers.   Why is it that all brokers must suffer an increase in the bond of this magnitude?  Why can’t existing reputable brokers be grandfathered in at the existing 10K bond, or see an increase to something like 25K?

I really believe this is a move to eliminate small brokerages.  I started receiving phone calls from large brokerages months ago regarding us joining as agents “since this bond increase looked like it was going to happen.”  TIA even said they’d help us find a brokerage to go to work for. I said thanks but no thanks.  I’m no longer a member of TIA.

I am hoping someone will do a survey of small brokerages to see how many will be able to survive.  This just feels like an assault on another segment of small business.  I believe that Congress doesn’t know what it really voted on and the impact this bond increase is going to have.
Debbie McCoy, broker, North America Transport Systems   

Just say no
The majority of the issues we face stem from the rising number of brokers that want to pay less than even a dollar a mile on some loads, and the idiots who then agree to take it. Then the broker starts to think that’s OK. If you take a dollar a mile, that’s minus $4 a gallon to a truck that moves 5.5 miles to a gallon. Then subtract driver pay, truck maintenance and insurance expenses and what are you left with? Nothing – exactly. It’s almost cheaper to park the truck than to run it. So you want to know where all the drivers have gone? Soon you’ll be asking where all the carriers have gone and who’s going to move your shipments. Then it will be too late. Pay fair for everyone, including carriers!
Krystal Torres of Torres Trucking in Amherst, Va., commenting as part of a discussion on a story about second-quarter 2012 turnover numbers, well up for truckload carriers from the first quarter as well as last year

Negative capability: What a GPS unit is not
A GPS unit is not connected to the truck’s steering system or the accelerator or the braking system. A GPS is not a “drive by wire” system…. A GPS is an information-only unit and does not in any way control the vehicle. Far too many drivers allow it to control them, however. What is needed is a GPS and cellphone that has a button to press to TEST FOR COMMON SENSE.
Owner-operator Gordon Alkire, commenting on news of Senator Chuck Shumer’s call for regulation of GPS units to avoid bridge strikes. Join the conversation.

18 percent on a truck loan! Are you kidding?
With 35 years behind the wheel and 19 years as an owner-operator, I will tell anyone who asks that you have to be out of your mind to buy a truck! Twelve, 15, 18 percent interest: Are you nuts? Who in their right mind would latch on to that? What’s left out of the article [“Qualifying for lending: Used truck market — Part 2”] is the 800-lb. gorilla in the room: rates. I go through scads of loads to find one — one! — that will show me a profit.
Tom Puckett, commenting on Facebook about James Jaillet’s used-truck-market roundup

Keep the voices coming!

  • Marty Marsh

    I try not to read this stuff anymore,anyone that has been in the trucking industry for five minutes can see the scams that are going on. Everyone is trying to get that last Dollar while the guy and gal going up and down the road is being left out in the cold.
    The trucking industry and the people that regulate it,SUCKS.

  • Ranger

    I dont’ think we need to know what brokers have negoiated with shippers or put a cap on them. However we do need to know how many brokers have a piece of the load and what is their %. Then it is up to the carrier to decide if they want to take that load knowing that the broker or brokers have taken so much off the the table.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    Brokers have always been thieves and crooks…skimming every penny off the top for themselves….the O/O has no chance…and are treated like scum..while the wealthy broker steals to his hearts content…..Trucking is Dominated by Government now…and these “brokers” should be flushed down the toilet.

  • john

    There needs to be a law in place that requires brokers to disclose the actual value of the load.[ what the load is really paying,,actual dollar value, to the broker] Many of these brokers are the biggest [BS] artists.Todays expences average a dollar a mile to run your truck,give or take a penny or two. TOO MANY fools are hauling RETURN loads at their own costs,or are just breaking even..NOT GOOD BUSINESS…By inforcing disclosure laws,Operators would be able to make better and wiser choices. Maybe even start making a living.

  • John Doe

    It’s a 2-way street. If you, the owner operator, doesn’t like that that brokers’ rates fluctuate up and down during the season then maybe the owner operator shouldn’t hold out and demand for $3/mile for outbound FL during produce season. The brokers rates are locked in, they would love it if their lives were more simple and they could maintain the same pay to the carrier year-round. The carriers/owner operators are the one’s driving the market pricing, the broker just has to react by bidding on year-round freight according to what they anticipate the carrier to charge them throughout the entire year. It’s supply and demand, fewer trucks/more freight, customer pays more. More trucks/less freight customer pays less. This isn’t rocket science you can’t regulate that, it’s economics 101. As an owner operator, do yourself a favor and take advantage of the market throughout the year. Too many drivers are stuck in their ways running the exact same lane year-round, switch it up, attack the areas that pay the best that week/month/season.

  • Lawyers

    Records to be Kept by Brokers, 49 CFR §371.3

    All brokers must keep records of all transactions and all shipments for which they arrange transportation. To eliminate redundancy and to save time and effort, the regulation allows you to organize these records into master lists, containing your consignors and the motor carriers that transported their shipments.

    Each record of a transaction (or master list of transactions) must contain the following information:

    Records to be Kept by Brokers, 49 CFR §371.3

    All brokers must keep records of all transactions and all shipments for which they arrange transportation. To eliminate redundancy and to save time and effort, the regulation allows you to organize these records into master lists, containing your consignors and the motor carriers that transported their shipments.

    Each record of a transaction (or master list of transactions) must contain the following information:

    All brokers must keep records of all transactions and all shipments for which they arrange transportation. To eliminate redundancy and to save time and effort, the regulation allows you to organize these records into master lists, containing your consignors and the motor carriers that transported their shipments.

    Each record of a transaction (or master list of transactions) must contain the following information:

    The name and address of the consignor;

    The name, address, and registration or USDOT number of the originating motor carrier;

    Bill of lading or freight bill number;

    The amount of compensation received by you for the brokerage service you performed and the name of the person who paid;

    Description of any non-brokerage service you performed regarding the shipment, and the amount of compensation paid to you and the name of the person who paid; and

    The amount of any freight charges collected by you and the date of payment to the motor carrier handling the shipment.

    As long as this information is properly recorded, you have flexibility how to organize it to maximize your productivity. You

    As long as this information is properly recorded, you have flexibility how to organize it to maximize your productivity. You

    must keep these records for 3 years.

    The regulation gives all parties to your brokered transactions the right to review the records of transactions that involve them. Therefore, you must allow shippers and motor carriers involved in your brokered transactions to review records pertinent to them.

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