How trucking groups responded to FMCSA’s broker transparency proposal

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During a 60-day comment period that concluded Jan. 21, the Federal Motor Carrier Safety Administration received more than 4,800 comments on its proposal to require more transparency from brokers in freight transactions.

Some comments from individuals were highlighted in Overdrive prior to the comment period closing, as well as comments from the Owner-Operator Independent Drivers Association -- details of which can be read here.

A flurry of comments were filed in the final days of the comment period, including from a number of trucking industry organizations. Below, find summaries of comments filed by some of trucking’s largest trade groups.

[Related: OOIDA to FMCSA: Don't let brokers win the transparency fight]

American Trucking Associations

The ATA noted that in 2020, when OOIDA and the Small Business in Transportation Coalition (SBTC) filed their petitions for rulemaking with FMCSA seeking action on broker transparency, ATA urged FMCSA to deny the requests to require brokers to provide carriers with electronic copies of transaction records within 48 hours automatically, and to prohibit brokers from including in their contracts provisions waiving a carrier’s right to access transaction records.

ATA acknowledged that FMCSA’s proposal didn’t grant the petitions verbatim. There is no requirement for brokers to provide electronic records of a transaction automatically, and the proposal didn't expressly prohibit a contracted waiver. Yet “FMCSA’s proposal would attempt to enforce that brokers have a regulatory obligation to provide transaction records to the transacting parties on request and impose unrealistic time expectations,” ATA said.

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The group “once again opposes these changes and urges FMCSA to reconsider such regulatory amendments to avoid compromising the ongoing competitiveness of the supply chain industry and overreaching beyond the agency’s purview.”

ATA claimed that the proposed requirements “would place an undue strain on brokers who are an integral part of the supply chain, upon which many manufacturers, distributors, and other shippers rely. Additionally, ATA asserts that the justification for which FMCSA proposes to adopt these changes is unfounded.”

ATA went on to call the proposed changes “anti-competitive," saying they "would impose a burdensome layer of economic regulation inconsistent with the Congressional policy of deregulation of the trucking industry.” The group added that it believes the proposed changes are beyond FMCSA’s authority to promulgate.

Ultimately, ATA said it “believes these changes will not result in a tangible benefit in how brokers and carriers currently conduct transaction disclosure negotiations, and the ubiquitous practice of waiving disclosure regulations outlined in Section 371.3 would likely continue regardless of a change in regulatory language.”

[Related: Broker transparency: 8 in 10 owner-operators predict positive impacts for rates]

Truckload Carriers Association

Like ATA, TCA expressed opposition to FMCSA’s proposal. TCA noted that as a result of deregulation, TCA members have been able to “expand their operations by incorporating freight brokerage services into their business models.”

TCA added that it supports maintaining the current operational model in trucking of separate transactions between shippers and brokers, and brokers and carriers. The group also emphasized “the importance of preserving the confidentiality of business agreements as a cornerstone of trust and efficiency within the industry.”

Keeping the transactions separate, TCA noted, allow businesses to “maintain their proprietary information, negotiate competitively, and ensure fair compensation for services rendered.”

“Antitrust guidelines also play a crucial role in preventing price fixing and other anti-competitive practices,” TCA said. “By adhering to antitrust laws, the freight industry ensures that all negotiations and transactions are conducted fairly, promoting a healthy market environment.”

TCA concluded that it believes the proposal is “counterproductive,” as the current marketplace “has fostered innovation, growth and collaboration within the trucking industry.”

[Related: Transparency enforcement 'bad for shippers, brokers and carriers': DAT's Ken Adamo]

Transportation Intermediaries Association

As expected, TIA’s comments highlight the group’s strong opposition to the proposal, calling it a “solution in search of a problem.”

TIA said that requiring broker transparency as outlined in the proposal “undermines competition and market efficiency, exposing confidential business data and associated strategies that drive innovation.”

The group said that, instead, “FMCSA should focus its efforts on addressing highway safety, and addressing the proliferating fraud pandemic in the supply chain, which is costing the U.S. economy over $1 billion annually.”

Finally, TIA argues that FMCSA doesn’t have the authority to promulgate the rule in the first place.

TIA said application of the regulation in question -- 49 CFR 371.3(c) -- “is in direct conflict of the [Interstate Commerce Commission]" when it formalized the requirements in 49 CFR 371.3(c) "to ensure that ‘all unnecessary restrictions which might impede the free operation of the marketplace’ are removed.”

TIA also reiterated that “shippers naturally do not want their proprietary rate and transportation costs to be made available to their competitors, either directly or through third parties, since doing so puts them at a competitive disadvantage.”

Because of this, “shippers customarily require confidentiality provisions in their contracts with brokers and, thus, brokers can only engage in business with such customers by first ensuring that motor carriers serving those shippers waive their rights to see the transaction documents under 49 CFR §371.3(c). Such a practice is currently permissible as part of the negotiation process with motor carriers.”

TIA claims that the proposal “creates regulatory mischief by misleading motor carriers into believing that gross profit bears a direct relationship to net profit. Gross margins on a load-by-load basis are not in fact indicative of the net profit that brokers and other intermediaries receive.” Because brokers are independent and not agents of shippers or carriers, and “are typically required to pay carriers regardless of (and typically much sooner than) the broker receives payment from the shipper,” TIA said, “brokers take on both significant credit risk of shippers and the cost of carrying the account receivable from the shipper -- even when shippers pay timely according to the credit terms extended.”

TIA also highlighted the necessity of brokers, given that “to secure freight from many mid-market and larger enterprise shippers, brokers must prepare and submit sophisticated requests for proposal ('RFPs') and other bids and commit to long-term pricing in those bids. Pricing models are both sophisticated and extremely competitive to be awarded freight or various traffic lanes from a shipper. One cannot reasonably expect small and medium sized carriers to submit the necessary RFPs to obtain freight from large shippers or to be able to compete for direct award of freight from such shippers.”

TIA argued that “brokers fill this need” and “invest substantially in technology, education and other tools to do so efficiently.”

“Without brokers,” TIA claimed, “small and medium carriers would seldom have freight from medium and large shippers available to them.”

[Related: Transparency enforcement could squeeze brokers' margins: Analyst

National Owner Operators Association

The NOOA expressed support for FMCSA’s proposal, noting that it believes the regulation “is critical for promoting fairness, transparency, and accountability within the transportation industry, particularly in brokered general freight transactions.”

The group called the current broker-carrier relationship “fundamentally imbalanced,” noting that brokers control “access to freight and transactional details. Transparency requirements would address this imbalance by ensuring carriers have the information necessary to negotiate fairly and protect their interests.”

NOOA argues against claims from opponents to the proposal that it would impose administrative burdens on brokers, noting that “brokers are already required to maintain transaction records under existing regulations. Modern transportation management systems can and do streamline recordkeeping and automate disclosure, minimizing compliance costs. Brokers already interact with carriers on every load electronically, as they do shippers as well.”

[Related: Broker transparency: About boosting rates? Or a fight for carrier rights?]

North American Punjabi Trucking Association

NAPTA CEO Raman Dhillon called the proposal “a necessary step toward fairness and accountability in the trucking industry. For too long, motor carriers and owner-operators have operated with limited visibility into brokered transactions, often resulting in disputes over payments and a lack of trust in the system.”

Requiring brokers to disclose transaction records would “create a more level playing field, ensuring that carriers receive fair compensation and can make informed business decisions,” he added. “Transparency will deter unethical practices, improve industry stability, and promote fair competition.”

[Related: FMCSA intends to hold brokers' feet to the fire on transparency -- will it work?]

International Association of Movers

The IAM, whose members serve roles within the household goods transportation industry, expressed concern that if brokers were required “to provide proprietary rate data to motor carriers, it may be leveraged against them in future business negotiations.”

Regarding the proposed requirement that brokers keep records electronically and provide them within 48 hours when requested, IAM said “motor carrier documents and shipper documents may reside in two different IT systems that may not speak directly to one another. This would require additional investment and associated costs not projected in the NPRM for compliance purposes.”

[Related: Brokers plan to fight FMCSA's transparency push]

Intermodal Association of North America

IANA, which represents intermodal providers and customers, expressed concerns with the proposal. The group said the proposal “would impose unnecessary and burdensome requirements on freight brokers” and “would not only disrupt the trust and flexibility essential to freight brokerage, but also set a dangerous precedent for government intrusion into private business operations.”

[Related: Transparency: FMCSA proposes 'regulatory obligation' for brokers]

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