Freight brokers, by nature, are exceptional salespeople. It’s their job.
But when the sales pitch frequently changes, or is based on shaky assertions (or both), their credibility rightfully takes a big hit.
So it goes in the ongoing battle royale between brokers and owner-operators/small carriers. As LaneAxis reported during the height of the Covid crisis this past Spring, Carriers finally erupted in anger over their belief that brokers have been fleecing them for years. Low rates and a lack of pricing transparency sparked nationwide trucker protests stretching from SoCal to the White House.
Original Argument: Too Much Capacity
At the time, the broker coalition angrily refuted accusations of “price gouging” and a lack of transparency, claiming low demand was to blame for low rates.
“Brokers and 3PLs are not price-gouging – there is simply not enough freight to support all of the carriers,” said Robert Voltmann, CEO of the Transportation Intermediaries Association (TIA), a lobbying group representing brokers and third party logistics. “There are too many trucks chasing too little freight,” added Voltman, who made the comments in May, 2020.
Fast forward a few months, and the freight market is bouncing back strong, particularly in the spot market. Now that capacity has tightened up, especially with the upcoming holidays, brokers are taking a new tack in their fight against broker reform: stoking fear of higher costs for truckers and consumers if trucking advocates get their way.
New Argument: Too Much Cost
ArcBest, a self-described “multi billion dollar” 3PL, recently warned government regulators that if proposed broker reforms are enacted, every broker will incur at least $500,000 in additional costs every year – costs that will inevitably be passed down to Carriers and consumers.
“Essentially, any benefits received from carriers in modifying [regulations] will result in a substantial detriment to shippers, consignees and consumers and most likely to carriers as well,” wrote Barney Long in a mid-September letter to the Federal Motor Carrier Safety Administration (FMCSA).
Long claims revisions being sought to the brokerage industry will increase equipment, software programming and personnel costs to the tune of at least half a million dollars per year.
Long was responding directly to a petition filed by the Owner-Operator Independent Drivers Association (OOIDA), which seeks to improve broker transparency by:
- Requiring brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed.
- Explicitly prohibiting brokers from including any provision in their contracts that requires a carrier to waive their rights to access the transaction records as required by existing law.
A separate proposal seeks to require broker contracts exclude any stipulations or clauses that exempt brokers from having to comply with transparency requirements.
“If it wasn’t already clear before, it’s clear now: The freight brokerage industry is doing everything it can to maintain its iron grip over freight transportation,” says Rick Burnett, LaneAxis CEO and Founder. “No matter the season or circumstances, they need to maintain control and will always manufacture excuses for preventing broker reform and transparency. They have no incentive to drive cost savings into the transportation network. By nature, their model is margin driven with price masking baked in. LaneAxis has been fighting this uphill battle for years, knowing full well that independent truckers have had enough of the deception and excuse-making. We have been building a Shipper-direct network specifically for those truckers – so they no longer have to put up with this abusive and deceptive behavior.”
The LaneAxis Direct Freight Network is the first BROKERLESS network in trucking history. LaneAxis is empowering Shippers and Carriers to connect and do business directly with each other on the basis of total transparency and trust, backed by the patented technology LaneAxis provides.
To learn more, visit LaneAxis.com.