For a long time in the trucking industry, freight brokers have been given the privilege to act as agents for both their customers and carriers but also act in their own interest at the same time. Transparency and accountability are the most sought-after qualities of an agent. However, in the trucking industry, brokers fail to reveal the actual shipping rate paid by their customer to the carriers. Additionally, most brokers fail to reveal to their customers the actual cost they incurred to move their freight. More importantly, most brokers demand trust from their customers regarding the quality of the carriers they hire to haul the freight. Lack of oversight leads to unfit carriers being hired who would be less than desirable if broker was required to provide a detailed report about each carrier they entrust with their customer’s freight.
In 2020, OOIDA sent a proposal clamoring for the need to legislate on transparency and accountability of brokers. The FMCSA is concerned with knowing why such a petition deserves to be passed into law. So, why exactly are transparency and accountability needed in the trucking industry?
There is a need for transparency so that the carrier can fully understand the details of the work they are contracted to complete. Think about it – when carriers are unaware of details such as the shipping rates, shipment details, or the client’s identity, it makes them mere figureheads in the transaction. Knowing the identity of the shippers and the freight hauled ensures carriers have a better understanding of the parties they are ultimately liable to. More transparency with the end customer would allow the carriers the opportunity to better understand the expectation of the shippers to decide if they can meet those expectations.
To give carriers more insight into the transaction being negotiated
Without the carriers, goods cannot be hauled, and transportation is impossible. Ultimately, it is the carrier who is performing the transportation services. Therefore, carriers deserve the right to know the rate the shipper is paying so they can negotiate their cut. They can accept jobs knowing the full details and decline underpaid jobs.
Ensures integrity and accountability of all parties
When transparency becomes a vital obligation in the trucking industry, brokers can be held accountable for their actions. Non-disclosure of the shipping rates enables scam brokers to inflate shipping rates to carriers with the intent of not paying them. Double brokering and identity theft scams are notorious for inflating the rates to the carrier with no intention of ever paying that carrier. If the carrier knew what the original rate was by having communication with the shipper, then the carrier would stand a better chance against being deceived. Again, this scam is possible because brokers are not held accountable when it comes to price transparency.
Fair compensation for carriers
Non-disclosure of shipping rates empowers brokers to keep larger percentages of the rates paid. Carriers are unaware of the actual freight costs and are easily exploited and underpaid. Transparency of the shipping rates will enable fair compensation for carriers who will be better equipped to negotiate a fair rate that does not take advantage of either party.
Brokers are indeed the ones who source for shippers. However, carriers and owner-operators execute the principal task. They deserve the right to know the details of the job they are contracted to do. Transparency and accountability in the trucking industry will create a fair marketplace for brokers, carriers/owner-operators, and shippers. The proposal by the OOIDA benefits all parties involved and should not be dismissed without proper consideration.
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