Transport brokers, truckers back Senate bill to curb third-party abuses

Trade associations representing the nation's third-party logistics service companies and independent owner-operator drivers have joined to back Senate legislation introduced Tuesday to crack down on allegedly fraudulent behavior by truck brokers and other intermediaries against smaller trucking concerns, notably one-person owner-operators.

The Transportation Intermediaries Association (TIA) yesterday issued a statement saying it has joined with the Owner-Operators Independent Drivers Association (OOIDA) in support of the Motor Carriers Protection Act of 2010 (S.3483). The bill, introduced by Sens. Olympia J. Snowe (R-Maine) and Amy Klobuchar (D-Minn.), would increase the bond requirement for brokers to $100,000 from $10,000 and for the first time impose bonding requirements on freight forwarders. The legislation also sets stricter government requirements for entities seeking broker and forwarder authority, and levies tough penalties—such as unlimited liability for freight charges—for such violations as conducting brokerage activities without a bond or license.

In the statement, TIA President and CEO Robert Voltmann said most of the language in the Snowe-Klobuchar bill already exists in the federal regulations, but the Clinton and George W. Bush administrations never enforced them. "The result has been the growth of crooks that operate unchecked, broker surety companies that offer no surety, carriers that re-broker freight without permission or license, and undercapitalized companies that are ill-prepared for the modern transportation marketplace," he said.

Voltmann said the two groups determined a "united approach" was needed to correct problems affecting legitimate brokers and carriers.

"Brokers, forwarders, owner-operators, and carriers need each other, and the speed of today's logistics marketplace means that companies must be able to reasonably rely on representations made in the terms of their agreement," Voltmann said. "Unfortunately, the seeping encroachment of fraudulent operations [has] left the legitimate industry vulnerable."

It is nearly impossible to quantify the cost to the industries, given that there are 16,000 third parties of varying sizes doing business in the United States. For smaller truckers, the core issue is not getting paid in a timely manner for freight tendered to them by brokers, or in some cases not being paid at all. Over the last five years, about one-quarter of all owner-operators have had trouble collecting payment for their services from brokers or other intermediaries, according to an OOIDA survey.