Check Call the Show. News and Analysis for 3PLs and Freight Brokers.
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Back in mid-November, the Federal Motor Carrier Safety Administration, at the request of the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition, proposed a new broker transparency rule. The rule, naturally, has been met with polarized feelings.
As written, it would require all brokers, on request, to submit any records that have to do with a load within 48 hours of the request. These records must be kept electronically and can be viewed remotely, whereas current rules require carriers to appear in person to go through any request.
The biggest thing is that the rule would “Require that the records contain, for each shipment in the transaction, all charges and payments connected to the shipment, including a description, amount, and date,” along with any claims connected to the shipment, such as a shipper’s claims for damage or delay. “This amendment would ensure the parties have full visibility into the payments, fees, and charges associated with the transaction so they can resolve issues and disputes among themselves without resorting to costlier remedies.”
The proposed rule is now in a required 60-day comment period. Those in favor or against the rule are urged to make their case to the FMCSA, where, following the 60-day review period, a decision will eventually be made. If you do make a case, make sure to say a little more than “I don’t agree with this” or “I’m in favor of this.” Say why it matters to you and how it will impact your business.
As it stands now, commenters’ views tilt heavily in favor of the proposed rule. I haven’t read all 2,083 responses, but from following the comments from November and a few hundred more, there is a loud echo chamber of carriers and proponents of the proposed rule.
Some of the most compelling arguments against the rule are:
“The assertion that the rule will correct imbalances in negotiating power fails to account for the fact that shippers and carriers inherently possess a higher level of negotiating power since they own the assets involved in the transaction — freight and trucks — and can choose their partners freely. There are no contractual obligations for a carrier to accept a load from a broker, and shippers are only contractually bound to tender a load to a broker if they have specifically signed a ‘contractually’ bearing agreement to do so, (ex. outsource) which is rare.”
“This proposed rule makes no sense. Will all companies have to show their actual cost and profit? If not, why is that necessary in transportation? Rates are negotiated, and rate confirmations are signed to ensure full disclosure to rates, fees and fines. Unfair to brokers!”
And let’s not forget this banger that is fully thought out with bullet points, specifically calling out the FMCSA for focusing on this issue instead of more pressing urgent matters.
Some of those who are in favor say:
“To not require broker rate transparency weakens the trucking industry resulting in a loss of truck capacity as it is forcing small trucking companies to go out of business. The amendments to these rules should include a requirement for rate transparency for every load booked thru a broker automatically. To not require this is negligent.”
“As a truck driver who owns a truck, transparency is completely necessary. We have to do the work, maintain the truck, fuel it up, insure it, take the risk of being on the road etc. And yet, we get the lesser piece of the pie. Too many trucking companies are going out of business due to these discrepancies and abuse on the brokers behalf, something [has] to be done.”
Regardless of where you stand on the rule, if you have thoughts, leave them for the FMCSA. It looks like every comment will matter in the final tally.
SONAR Key Market Insights: Laredo, Texas
Market Check. Mexico is the top trading partner with the U.S., and Laredo, Texas, has therefore become one of the largest markets for freight headed into and out of Mexico. Following the holiday spike, Laredo hasn’t yet settled at levels that are on trend with the end of the year. Outbound tender rejections are still elevated, and outbound tender volumes haven’t bounced back to where they were before the holidays.
As a result, capacity is still tight in Laredo. For a top 11 freight market, capacity isn’t as readily available as it is in other markets, but it’s unlikely that spot rates will be exorbitant. Rates will be better than the peak holiday time but elevated compared to mid-December. The good news for any carrier that gets sent there: It shouldn’t be too difficult to find an outbound load.
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Who’s with whom. It’s a big day for corn and those who ship corn between the U.S. and Mexico. After five long years, the ban on genetically modified corn grown in the U.S. has ended. The final ruling came from a U.S.-Mexico-Canada Agreement (USMCA) panel. The panel “Agreed with the U.S. on all seven legal claims, issuing its finding on Dec. 20 that Mexico’s GM corn ban is not based on science and prohibits market access that Mexico agreed to provide as part of the trade agreement,” according to an article by FreightWaves’ Noi Mahoney.
American Farm Bureau President Zippy Duvall said the panel’s decision will help U.S. farmers. “If left in place, Mexico’s restrictions would have impacted the corn supply chain, stifled innovation, hurt trade and opened the door for other countries to pursue similar restrictive measures,” Duvall said in a statement.
Mexico is the largest importer of U.S. corn. The first 10 months of last year, the U.S. exported $4.8 billion of corn to Mexico. Most U.S. corn is produced in states such as Iowa, Nebraska and Illinois, and shipped by rail, truck and barge, according to the U.S. Department of Agriculture. The bulk of U.S. corn exports to Mexico are shipped either from the Port of New Orleans via container ship or by truck from the port of entry in Laredo.
This restriction being lifted will create stronger cross-border demand for agricultural products.
