Article written by James Menzies
While truckers are widely being feted as heroic frontline workers by a suddenly adoring public, there’s a growing sense they’re being taken advantage of within the industry by opportunistic or predatory brokers.
Accusations of price gouging by brokers, while difficult to quantify, have even attracted the attention of U.S. President Donald Trump, who said during a recent appearance on Fox & Friends it’s his belief that brokers are gouging truckers. When truckers took their rigs to Washington, D.C. in protest of low rates, Trump tweeted “I’m with the TRUCKERS all the way.”
Meanwhile, it wasn’t only the U.S. president taking to social media to voice his opinion, as the tensions between trucks and brokers mount. An email making the rounds from one freight broker taunted a trucker, fueling the fire.
“I’m not a salary paid employee. I’m commission, I determine what I make,” it read. “I average around $200,000 a year…I know what I’m doing. I paid you $800 and had $1,300 from customer. Tell me how smart you are. Oh and I put a new truck in your place for $650.”
Did that opinion reflect the way brokers widely feel about their freight-moving partners? Or was it simply a tone-deaf, vile missive from a frustrated broker? Are brokers padding their margins while exploiting desperate truckers?
Robert Voltmann, president and CEO of the Transportation Intermediaries Association, dismissed any idea brokers are to blame for low rates.
“Brokers don’t set prices, the market does,” he pointed out. “When there are too many trucks chasing too few loads, rates go down, and since mid-March rates have plummeted. Nobody has gotten pre-virus rates.”
He says broker margins average 16%, but acknowledged both shippers and brokers will test the market.
The Owner-Operator Independent Drivers Association (OOIDA), for its part, called for greater transparency of broker pricing, but stopped short of accusing brokers of price gouging. Instead, it called on government to better enforce U.S. federal regulation CFR 371.3, which requires brokers to keep transaction records and make them available to carriers.
I asked TransCore Link Logistics to drill into its data to see if there was any evidence of price gouging by Canadian brokers. It uncovered nothing out of the ordinary, except for a supply-demand equation that favored shippers.
As an example of how rapidly conditions were changing, and how quickly the pendulum was swinging in the favor of shippers and brokers, TransCore Link Logistics highlighted the busy Quebec-Ontario lane. It went from an outbound truck-to-load ratio of 1:1 in the third week of March – a perfect balance – to 6:1 for the month of April. There were fewer outbound loads from Quebec to Ontario in all of April than in the third week of March, and instead of one truck for every load, there were suddenly six trucks per load.
That imbalance goes a long way to explaining rapidly falling rates. It’s not necessarily because a greedy broker is padding his or her pockets.
The spot market story was similar south of the border, where most of the bad broker allegations were emanating from. When I approached industry analyst Avery Vise, vice-president of trucking for forecaster FTR, he reasoned: “It’s not a broker’s job to save a carrier from its own poor decisions. Sure, there are bad brokers just as there are bad carriers, but fundamentally what we are seeing is a tough freight market that unfortunately will not recover as quickly or consistently as it collapsed.”
So, don’t expect Trump to come to the rescue of truckers and hold big brokers’ feet to the fire, demanding they reduce their margins to keep truckers viable. You’re on your own here. You can help your cause by leaving cheap freight at the dock.
I’ll leave the last word, as unpopular as it may be, to Voltmann. “It’s the motor carriers that accept it. If carriers don’t accept the rate, both shippers and brokers will offer higher rates until the load is accepted. That’s the free market economy.”
Original Source: https://www.trucknews.com/blogs/freight-conditions-are-tough-but-are-brokers-really-to-blame/
Article written by James Menzies