FMCSA – Safety Is in Your Name. Stay in Your Lane.

The Federal Motor Carrier Safety Administration (FMCSA) recently made a decision that will move our industry back in time, all while failing to address an issue that is literally in their name—safety.

Instead of working to promote safety within the industry, the FMCSA decided to undertake a rulemaking that would further regulate freight rates, building upon a piece of 1980s regulation that requires brokers to share a copy of the pricing for each transaction with their carriers.

The FMCSA used their power to make a decision that is anti-free market and anti-business—and does nothing to solve real problems that impact everyone from carriers to consumers. 

Paying More Attention to Safety and Fraud Issues

What the FMCSA should be doing is focusing their efforts on actually addressing real issues for which they are tasked—safety. The National Highway Traffic Safety Administration (NHTSA) recently noted that large truck crashes increased 10% in 2022, on top of a 13% increase in 2021.

Additionally, 92% of today’s trucking companies are unrated because the agency is using an outdated physical audit system to rate motor carriers. A new data-driven proposal was put forward under the Obama Administration, yet the FMCSA has not done anything to re-engage on this critical carrier safety issue in the past six years.

During this same time, illegal and fraudulent activities in the supply chain have skyrocketed, leading to broken chains of custody and higher costs impacting brokers, owner operators, and consumers. Complaints to the FMCSA-monitored National Consumer Complaint Database total more than 80,000, yet the FMCSA has not investigated a single one of them and has not proposed any enforcement action.

The FMCSA claims that a 2019 Administrative Law Judge ruling bars them from enforcing civil penalties on commercial violations, because their core mission is safety.

Regardless of the significance of issues like safety and fraud, the agency seems to be following the direction of a small, but vocal movement, initiated during the first two months of the pandemic, and led by small trucking companies to impose further restrictive regulations on freight brokers by framing it as rate transparency.

Rate Transparency or Rate Intrusion?

Fast forward to now, and the FMCSA decides to initiate the rulemaking petition put forth by Owner-Operator Independent Drivers Association (OOIDA)—a prominent leader of this movement—to require electronic submission of internal proprietary rates 48 hours after delivery.

This rulemaking also prohibits brokers from including any language in their contracts that asks motor carriers to waive their rights to view the commission, which currently is legal for brokers to do.  

The issue of “rate intrusion” as we are calling it is a dispute over rates between the carrier and the broker. When the demand for freight in the supply chain plummeted because of the pandemic, rates decreased, but some carriers alleged their rates fell because of brokers. As we predicted, the decline in demand was short-lived and over the past year and a half, volumes and demand have been at record levels, along with freight rates for motor carriers.

In the 1980s, when there was a smaller market, less trucks on the road, and no internet, rate transparency was a regulation that was needed as motor carriers paid brokers a commission for finding them loads.

Forty years and a whole pandemic later, we are now living, driving, and working in a completely different world—brokers now pay carriers for their service—so why would the FMCSA want to go back in time instead of progressing the industry forward? 

This regulation reflected a time where brokers often were agents of shippers, paid a commission by carriers. To repeat, that time no longer exists.

To believe that the enforcement of this old regulation somehow responds to today’s marketplace denies reality. And to suggest that a dated regulation could prevent a marketplace distortion wreaked by a worldwide pandemic, that harmed, albeit, not for long, all players in the freight space, defies credulity.

That we are only hearing complaints from small carriers now, during a freight slowdown after two years of a freight bonanza, seems not to have piqued the agency’s curiosity. It would be fascinating to hear the agency explain what problems that seeing proprietary rates of the broker, and the broker’s customers, solve.

It would also be instructive to learn whether the FMCSA will ask for transparency in owner-operator rates so that brokers can determine how much of their bottom line goes to dispatch services, which may or may not be illegally brokering freight.   

FMCSA surely doesn’t want their stakeholders to conclude that safety has been left off of their agenda. Every day, drivers and the public are put at risk because of issues like fraud in the supply chain and crashes, yet the FMCSA decides to spend its valuable time dissecting the business relationship between an owner operator and a broker—which has nothing to do with safety. The FMCSA could use their resources and power to make a real difference within the industry. It is an utter shame they decline to do so.