Mayday, mayday! A tale of two sides of a dispute over spot rates

Article written by Cliff Abbott

trucks line Constitution Avenue
Trucks lined Constitution Avenue in Washington, D.C., for 20 days in protest of low spot rates. (Courtesy: Diego HZ)
Frustration over spot freight rates bottoming out due to the COVID-19 pandemic drew more than 100 small-business owner-operators to Washington, D.C., for a “May Day” protest that lasted for three weeks.
The protest group, comprised mostly of members of various Facebook groups, began the protest without a clear objective, other than to draw attention to low freight rates. Proposed solutions to the problem ranged from investigating brokers for price gouging to permanent suspension of hours of service rules, elimination of the requirement for electronic logging devices, and even the abolishment of the Federal Motor Carrier Safety Administration (FMCSA). As the protest evolved, a demand for a White House meeting moved to the forefront. President Donald Trump helped encourage the protesters with supportive tweets and comments.
Trump appeared to side with the protesters, tweeting, “I’m with the TRUCKERS all the way” after sending an administration official to greet the group with a bag of hats bearing the messages “USA Strong” and “Keep America Great.”
The following morning, during a call-in interview on the popular “FOX and Friends” television show, Trump answered a question from host Ainsley Earhardt by saying, “Oh, they are price gouged.” He continued, “All they want is to be treated fairly.”
The frustration caused by low freight rates was real, and has been felt by many carriers who depend on the spot market, some of them TCA members. Unfortunately, many of the protesters attempted to deal with the issue by assigning blame for the ups and downs of a free market.
Spot freight rates rose in the first half of March in response to increased demand for food and household products spurred by sales to a public preparing for shelter-at-home orders. It didn’t take long, however, for rates to plummet as manufacturers and distributors shut down or restricted operations. With less
freight to haul, rates were bound to drop, but then it got worse.
“A lot of carriers who normally haul contract freight are forced to come to the spot market when their customers aren’t providing as many loads,” said DAT Solutions Senior Analyst Ken Adamo. “That’s a double-whammy to owner-operators who depend on the spot market. Rates are already down, and suddenly they’re competing with carriers that aren’t normally in the spot market.”
Brokers were an easy target for protesters, who accused them of lowering rates paid to carriers, retaining a larger percentage of payments from shippers. Some were convinced that brokers were colluding to keep rates low, demanding investigation from the U.S. Department of Justice (DOJ).
While many of the truck drivers were voicing accusations on various social media websites, others were taking a more reasoned approach. Discussions were often heated as some voiced the opinion that the way to raise spot rates was to refuse to haul cheap freight.
That was the message from Robert Voltmann, president and CEO of Transportation Intermediaries Association (TIA), an industry group representing brokers. “3PLs and transportation brokers are not price gouging,” said Voltmann, who has announced he is leaving TIA at the end of September after 23 years leading the association. “There is simply not enough freight to support all of the carriers. In this case, we simply aren’t shipping much of anything and there are too many trucks chasing too little freight.”
Voltmann added that suspension of hours of service (HOS) regulations due to the COVID-19 pandemic “created more artificial capacity in the marketplace.” He added, “To blame 3PLs for this situation is not only irresponsible but also reckless.”
The protest escalated on May 13, when the DOJ announced it found no grounds to investigate brokers for price gouging. That same day, hundreds of buses rolled into the capital, carrying out a protest by members of the American Bus Association and the United Motorcoach Association. Trucking protesters temporarily blocked Constitution Avenue, forcing the bus caravan to reroute.
Two days later, blaring air horns were the backdrop to a Trump press conference in the Rose Garden where he outlined the nation’s steps to combat COVID-19. The president raised eyebrows, and attracted the national media to the trucker protest, when he said “They’re protesting in favor of President Trump” and claimed the horns were sounding as “a sign of love.”
On May 20, the protesters achieved their primary goal of obtaining a White House meeting. Although the president was not in attendance, protester representatives said they were told that he was listening in via live audio feed. After much discussion and dissent, the group decided to go with broker transparency as their main issue, followed by further HOS revisions and better representation of small trucking businesses in government.
The transparency issue stems from 49 CFR 371.3, which requires brokers to disclose full rate information to any party to a transaction upon request. In many cases, brokers instead demand that carriers waive their right to see the information in the contracts they are presented. When rights aren’t waived, there are claims that brokers refuse to do business with carriers that request the records. When access to the records is given, brokers often require carrier representatives to view the records in-person at the broker’s place of business during normal working hours, requirements that effectively prevent carriers from seeing them.
The Owner-Operator Independent Driver Association (OOIDA) sent a letter to congressional members on May 6, asking for a revision to the regulation that requires brokers to submit electronic copies of the records to carriers within 48 hours of completion of the load. Protesters, however, demanded access prior to acceptance of the load. Many feel that the ability to see what the shipper is paying, and how much the broker is keeping, will help reveal if the carrier is being treated fairly in negotiations.
The TIA responded to the OOIDA letter with a letter to its members that placed the blame for the waiver on confidentiality requirements from shippers. While the letter instructed members to comply with 49 CFR 371.3 and be courteous to carriers, it also reminded them of the legality of requiring in-person access at their offices.
Since the White House meeting and breakup of the Washington protest the following day, OOIDA and TIA have repeatedly lashed out at one another. There has been no word of a revision at FMCSA, however, the DOJ has reopened its investigation into broker dealings. Representatives of the protesters claim they are communicating with both agencies and progress is being made.
Perhaps the best solution came from Ken Adamo. “I think returning back to normal will assuage a lot of this conflict,” he said. The desire for a return to normal is something carriers of all sizes, brokers and government agencies can agree on.

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