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What is broker transparency in trucking?

Transparency between carriers and brokers has been an issue for decades. It’s no secret that carriers often feel ripped off by their own customers. 

At Bobtail, we understand the challenges carriers face when working with brokers, and the recent decision by the FMCSA to delay crucial steps toward broker transparency has sparked concern in the industry.

The Current Landscape

While there are commendable brokers dedicated to ensuring the well-being of carriers, there’s an unfortunate reality of bad actors seeking quick profits at the expense of fairness.

Carriers have long sought accountability through pressuring the Federal Motor Carrier Safety Administration (FMCSA) to enforce transparency rules. However, a recent setback has delayed progress toward creating a more equitable freight market.

Understanding Broker Transparency Rules

Believe it or not, transparency rules for freight brokers are already in place under federal regulations (49 CFR §371.3). These regulations mandate brokers to maintain records of transactions and make them accessible to carriers upon request. This includes documentation of loads, compensation details, and payer information.

However, brokers, for obvious reasons, are not thrilled about these rules. Many go to great lengths to avoid transparency, especially when engaged in practices like double-brokering loads or other fraudulent activities.

The Escalation of Fraud

The urgency for broker transparency has intensified due to a concerning rise in fraud within the trucking industry. Reports at the end of 2022 revealed a staggering 400% increase in fraud complaints, highlighting a pervasive issue that demands immediate attention.

As a factoring company, we’ve witnessed various forms of fraud, from doctored paperwork to stolen freight. It’s clear that the industry needs enhanced measures to address these challenges.

The Call for Action

In 2020, the Owner Operator and Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition petitioned the Department of Transportation (DOT) and FMCSA to enforce transparency regulations. The petition sought two crucial changes: 

  1. Automatic provision of electronic transaction records within 48 hours of delivery,
  2. The prohibition of contractual clauses waiving carriers’ rights to transparency.

Despite the initial promise of a proposal review in June of this year, the FMCSA’s recent announcement pushes the rulemaking for broker transparency to be proposed by October 31, 2024. This delay, following three years of anticipation, raises concerns about the timeline for effective enforcement.

The Path Forward

Better enforcement of transparency is crucial for creating a safer and more accountable trucking industry. It would empower carriers to identify fraudsters and ensure all brokers are held responsible for their role in the market.

So, what can carriers do in the meantime? Waiting for federal intervention is not the only option. Organizations like OOIDA and the Small Business in Transportation Coalition actively champion transparency and other issues important to the trucking community. 

We recently published an article, video, and recordings of workshops to educate carriers on how they can identify, report, and avoid fraudulent brokers. Seek out these and other resources to learn how to protect your business from freight scams.

Broker transparency is not just a buzzword; it’s a necessary evolution for the trucking industry. Let’s work together towards a more transparent and fair future in trucking.