Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
When the bill reauthorizing the nation's transport funding mechanisms became law in July 2012, much was made of the fact that it was the first multiyear funding law in seven years and that the federal government would be doling out $105 billion over the subsequent 27 months to pay for infrastructure projects.
Largely overlooked in the 1,656-page bill was language that on Oct. 1 changes forever how truck freight is laded, brokered, and transported. To some, it smacks of trucking reregulation. To others, it brings clarity and accountability to a business lacking in both. For those who make their nut moving freight, it reshapes the decades-old operation of property brokerage, which is a $300 billion-a-year business.
On that date, the federal government makes it more expensive for brokers to do business, enforces strict rules on what brokers and truckers can and can't do, and levies stiff fines for noncompliance. The law also forces shippers to be more vigilant in how they tender their goods for transport.
First off, there is the higher cost of brokering. Anyone seeking a broker's license will have to post a $75,000 surety bond, which ensures a carrier will be paid if a broker fails to do so. The more than seven-fold jump in the bond's original $10,000 ceiling has drawn the ire of smaller brokers, who argue it will drive many independents out of business and concentrate activity in the hands of larger brokers, a claim the main broker trade group, the Transportation Intermediaries Association (TIA), denies. The Association of Independent Property Brokers and Agents filed suit July 16 in federal district court in Ocala, Fla., to block the provision.
That may not cause a major problem, however. A survey released July 11 by Portland, Ore.-based consultancy DAT of 250 major truckers and brokers said two-thirds have already purchased the higher bond. Of those who hadn't, 79 percent said they were either shopping for the bond or intended to do so, DAT said. Only 3 percent said they didn't plan to buy the higher bond.
The big changes come elsewhere in the law. As of Oct. 1, a trucker can no longer take possession of freight from another trucker or a broker, a long-held and fairly common practice known as "double-brokering." A trucker cannot broker freight without a brokerage license, and that authority must be completely separate from the trucking operation. The trucker showing up at a shipper's dock must be the same carrier whose name appears on the bill of lading. If not, a shipper must create a new bill with the new trucker's name and identification number, and pay just the new carrier. Truckers can accept cargo only with their own equipment.
An exception to all of this is the so-called interline agreement, where the origin trucker accepts the load, drives a certain distance, and then tenders the goods to another trucker. In practice, however, such operations are rare because of the time and cost involved in transferring loads and because carriers are reluctant to give up revenue.
Brokers, meanwhile, can no longer take physical control of cargo and can only arrange the transportation for their shipper clients. A broker must ensure the trucker with which it has arranged the transaction is the carrier appearing at the shipper's dock. A broker cannot insure the cargo, except as a contingency, meaning its coverage would kick in if a carrier's policy fails, a rare occurrence. A broker cannot appear on the bill of lading as a carrier. In essence, the law transforms a broker into a shipper and strips it of any carrier-related functions.
As for shippers, they need to know that a trucker can no longer accept their freight for brokering purposes, and that a broker or a third-party logistics (3PL) company cannot physically touch the goods. Neither party can be on the bill of lading in the "carrier" section. A broker or 3PL can appear on the bill's section marked "3PL" and can receive freight bills.
The penalties for violating the laws are not cheap. The federal government can levy a maximum fine of $10,000 per load on the guilty party.
CHANGING ROLES
Experts said the law stops a trucker from holding itself out as the freight hauler, only to switch roles—unbeknownst to the shipper—into that of a broker. "If a carrier does not move the freight, it will have to disclose to the shipper that it is acting in another capacity ... No secrets can be kept," said Robert Mucci, a commercial risk management specialist with Worcester, Mass.-based Wolpert Insurance Agency Inc.
Mucci said the law would prevent a trucker who agreed to haul a load from claiming after the fact that it was not liable for a lost or damaged shipment because it was merely acting as a broker. Because the Federal Motor Carrier Safety Administration (FMCSA), a Department of Transportation sub-agency that oversees truck safety, will issue unique registration numbers to each party for their specific authority, "there will be a Berlin-type wall separating broker-arranged shipments from 'subcontracted' shipments," he said.
David G. Dwinell, who owned his first truck in 1958 and today instructs brokers on, among other things, how to avoid liability issues, called the law a "get-out-of-jail-free card" for well-run brokers who operate their business without controlling drivers' actions and who are not in possession of the cargo.
Dwinell called the provisions a prime example of well-intentioned legislative overreach. He said the elimination of double-brokerage wipes out an important source of revenue for a trucker, especially if it has too much business for its own fleet to move and needs to farm out excess loads. Over the years, truckers came to view the practice of double-brokerage as "their sacred right," he said.
Dwinell said the language was essentially crafted by the American Trucking Associations, the Owner-Operator Independent Drivers Association (OOIDA), and the TIA to protect their respective interests, and called it a stab at backdoor reregulation. He said the provisions would add friction to the trucking supply chain, deprive truckers of business, and invite more extensive safety enforcement by the states.
Truckers, Dwinell said, will bear the biggest burden. "The net effect of this will be incalculable," he said. When asked about the cost, he replied, "write the word 'billion,' pick a number out of the air, and put it in front."
A LONG LEGISLATIVE ROAD
The language is the culmination of several years of legislative wrangling designed to clean up a corner of the shipping world that sometimes operates in the shadows. Supporters say the provisions establish clear functional lines among the various players. It gives shippers peace of mind that the carrier on its bill of lading will be the same one that shows up to haul its freight, they say. And it curtails the sleazy act of "churning," where a trucker without brokerage authority grabs freight from a load board, gets an advance from the shipper or broker, flips the load to another carrier, and then disappears, leaving the second carrier empty-handed. Roughly one-quarter of owner-operators have had trouble at one point or another collecting from brokers or other intermediaries, according to OOIDA estimates. In some cases, the truckers never get paid, the trade group said.
The language in the law "spell[s] out responsibilities and protect[s] all involved," Robert A. Voltmann, TIA's president and CEO, wrote in May. "We believe that whoever hires a truck is responsible for paying for that truck."
Voltmann said truckers who rebroker freight without proper licensing expose themselves to a legal nightmare called "vicarious liability," where a company can be held responsible for accident-related damages even if it wasn't directly involved in the incident.
In recent years, the plaintiffs' bar has focused on the potential liability in carrier-to-carrier relationships to win big settlements for accident victims. By contrast, brokers who are properly licensed and who demonstrate robust carrier selection procedures have been, to some extent, insulated from legal exposure, Voltmann said. "Why would a carrier not avail [itself] of these protections?" he wrote.
Jett McCandless, founder and CEO of CarrierDirect, a Chicago-based firm that consults for carriers and 3PLs, said the law will deter low-rent truckers and brokers that, out of desperation, engage in behavior beyond the scope of the law and its ethics. Double-brokerage, he said, leaves shippers vulnerable to actions they have no visibility into or control over. "All of the controls they have in place, all of the reasons they did the procurement, go out the window," he said.
McCandless said the new rules would go a long way toward removing the bad actors and, by extension, make the business cleaner and the roads safer. "It legitimizes the space," he said.
Voltmann said it's high time truckers operating in brokerage be required to have separate broker authority and the bond that accompanies it. "Brokerage is not a hobby. It's a profession with certain responsibilities, including protecting other people's money," he said. "The majority of money touched by a broker, whether that broker is asset-based or nonasset-based, belongs to other people."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.