We all know 2019 was a, well….less than a perfect freight year. Rates saw a new low, while the cost to operate continue to rise. Rate were pretty good in 2018 and some entrepreneurial spirits decided to take the leap and start their own trucking companies, only to find out the grass isn’t greener on the other side. With rates continuing to slide downward, some carriers are looking to lay the blame on the people responsible for giving them the freight rather than the ones accepting it.
We have often heard carriers say “broker’s make too much money while we are out here suffering” or something like that. It’s not that they just say it, but they say it with conviction. One independent trucker is taking it to a whole new level, and it is interesting to think about.
Jeffrey Loehr got into this business for the same reason everyone else did a year ago. He wanted to provide a stable income for his family while experiencing life on the road. Like most other small carriers, who transition into the carrier role, he soon learned there was a bit of a learning curve. Rates were not what they were supposed to be in his eyes, or rather they were, but he was not getting his “fair share.”
Recently something has been eating him up. He recalled pulling a load for a broker and was paid $500 for the load. He was told by the shipper that he paid the broker $700 and that upset him. To him, the broker making a $200 profit on the load was unfair. He feels that the broker has less expenses than he does coupled with the fact that he, as the carrier was doing all the work, why should the broker make more after expenses then him? I know it is a silly concept, but it gets even crazier. Loehr says he would not have booked the load with the broker knowing that the broker was making $200 on the load, although he, himself is the one who sets the price of the truck and what he needs to run for. Keep reading, it gets better.
Loehr is like 100’s of other independent truckers who utilize a dispatch service to find him freight. A dispatch service is typically, a small home-based operation where someone charges a percentage of the loads value to search for freight for that carrier. One of the issues with dispatch services, especially the home based folks, is that they often are unreliable.
Loehr found this out the hard way when “I called him Sunday and he said he wasn’t dispatching anymore” essentially stranding Loehr in on the West Coast without a load. Loehr, jumped on the load boards himself, ready to find a load only to find all the outbound loads were paying less than his target rate was to leave. So he sat, thinking about how little brokers were paying and imagining what type of profits they were making on the loads. He figured it was much too high so he drafted a legislative bill, an actual bill in hopes that he can sway brokers to open up about how much they make per load, so he can use that as a determining factor on whether or not to accept the load from them.
In today’s episode of Freight Broker Live, we interviewed Loehr about this prospective bill and what he hoped it would achieve. He essentially stated he wanted to know how much each broker was making to determine who to book with. He said several times during our interview today, which can be heard here, and that it was not about regulating the amount of profit, only to see how much they make per load, which is contrary to his opening comment on the Facebook group Hotshot Trucking in America, a group primarily comprised of truckers who haul gooseneck trailers with pickup trucks.
“I feel that good brokers should embrace this because it’s only fair. I’m not asking for anything unfair. If they are taking a fair cut of the load pay then they shouldn’t have an issue. It’s the BS Brokerages that are taking advantage of the struggling trucker that will be affected by this and it in no way affects us as drivers/carriers.” Loehr writes. He makes no mistake what he is looking to accomplish “ I am looking for better rates and I feel this will get us there. If Brokers are required to disclose then they will be more apt to fight for better pay for the truckers. As long as they are able to take what they want and blame it on low load rates from shippers, they are happy keeping the shipper happy and us less than profitable because they know for every carrier that quits, there’s 2 more starting fresh.”
This, my friends, shows the tremendous disconnect between brokers and carriers. While this is an extreme version of the disconnect it shows how dire our rates are and the toll it is taking on drivers, who are struggling to make money without, what seems like a firm understanding of how the industry actually works. How rates are calculated and recognition that they are the ones who make the final decision to put that freight on the truck and accept whatever rate the broker is offering..
It is important to mention that a lot of this confusion stems from The Regulation 49 § 371.3 Records to be kept by brokers which reads (according to Cornell Law School)
(a) A broker shall keep a record of each transaction. For purposes of this section, brokers may keep master lists of consignors and the address and registration number of the carrier, rather than repeating this information for each transaction. The record shall show:
(1) The name and address of the consignor;
(2) The name, address, and registration number of the originating motor carrier;
(3) The bill of lading or freight bill number;
(5) A description of any non-brokerage service performed in connection with each shipment or other activity, the amount of compensation received for the service, and the name of the payer; and
(6) The amount of any freight charges collected by the broker and the date of payment to the carrier.
(b) Brokers shall keep the records required by this section for a period of three years.(c) Each party to a brokered transaction has the right to review the record of the transaction required to be kept by these rules.
The issue with this, and many other regulations, is that the FMCSA keeps all regulations written in a way that it is left to interpretation of the person reading.. Carriers read the entire process from the shipper through the broker and then to the carrier and everything in between as a single transaction. But there are two transactions, or more, in every brokered load. The transaction between the shipper and the broker, and the transaction between the broker and the carrier. We have often heard of carriers claiming they have the right to see how much a broker is making due to this interpretation, and until resolved will continue to hear it, well until rates come back up.
What the author of this “Bill” might be looking to do here, is have the FMCSA clarify whether a transaction includes both the shipper to broker and the broker to carrier transaction and to that, we say best of luck.