The Small, the Big, and the Unlicensed Freight (Property) Brokers...

The SBTC had a big win this week in Federal Court. Facing an imminent court order against them, the FMCSA finally did the right thing and published our intermediary bond exemption application on regulations.gov under its own docket --as opposed to a mixing of two matters under one docket, published our actual application for the public to read and then comment on, as opposed to leaving it off the docket for half the comment period, and restarted the 30- day clock. We used the judicial system to force their hand and make them do the right thing. We exposed their negligence, incompetence, or deception-- take your pick-- and showed them we will use the law and the courts to 'regulate the regulators' as we have been promising to do.

Before we go any further, this might seem like the worst week to do anything that might in any way help "brokers," but in actuality, it's the best week. You see, this week... we finally got some traction on who the real problem is for small carriers and independent truckers (owner-operators with their own authority). This week, it became apparent that it is the BIG BROKERS --not the small brokers --who are taking advantage of the smaller players in the transportation industry during this pandemic and exploiting a national emergency by gouging their shippers and low-balling truckers. This week, it became clear that this is not about broker versus trucker, a narrative some trade groups have tried to push for years, but simply about big versus small.

As the Small Business in Transportation Coalition representing all the small players in the industry, we would argue that the big players are exploiting all of the small players and that is exactly what we have said to the Department of Justice Antitrust Division this week (more on this next week after our meeting with them on Monday). They called me today and want to know more about our antitrust and price-fixing complaint. And boy do we have a lot to tell them.

Also on Monday, our Intermediary Bond Exemption Application will be republished and will start a new 30-day comment period. We encourage you to file a comment. But before you do, read the application. Don't just switch into pro broker or anti broker mode. We are beyond that now. Here it is...

https://www.regulations.gov/docket?D=FMCSA-2020-0130

The reasons why we have resurrected this issue are two-fold.

First, FMCSA has never moved forward with a comprehensive enforcement program. They promised to do this in 2013. You can read that promise here.

Here is the part to note:

C. FMCSA Implementation and Enforcement Timelines Companies providing broker or freight forwarder services, including motor carriers, are required to obtain the appropriate operating authorities and, as of October 1, 2013, are required to meet the new minimum financial responsibility requirements. FMCSA will be providing a 60-day phase-in period beginning October 1, 2013, to allow the industry to complete all necessary filings. Beginning November 1, 2013, FMCSA will mail notifications to all brokers and freight forwarders that have not met the $75,000 minimum financial security requirement. FMCSA will provide 30 days advance notice before revoking the freight forwarder and broker operating authority registrations. FMCSA acknowledges there are motor carriers that occasionally broker loads that have not previously been required to obtain operating authority registration from FMCSA as brokers. However, FMCSA is unable to determine at this time how many motor carriers may be engaged in some brokering activities, making implementation of a comprehensive enforcement program difficult. Therefore, FMCSA will phase in its enforcement of the broker registration requirements for motor carriers that also broker loads. During the first phase-in period, FMCSA will accept complaints regarding unregistered brokerage activities of motor carriers through our National Consumer Complaint Database (see https://nccdb.fmcsa.dot.gov/). FMCSA will work with industry groups to use this complaint information and other data to ascertain the extent of the unlicensed broker population subset within the motor carrier industry. The agency will then work toward developing a comprehensive enforcement program.

Seven years later and 1.75 billion in tax-payer dollars spent and they have produced absolutely nothing, nada, jack squat.

Meanwhile, since Congress dissolved the I.C.C. 25 years ago, and after over 20 years in existence, FMCSA has never enforced the laws on unlicensed brokers. And they have allowed people to call themselves "dispatchers" instead of brokers and operate unlicensed with impunity. I suggest that is like never tending to a weed in your garden and letting it grow into a tree over 20 years. It is then much more difficult to remove. I did a program this week on Auto Transport Intel on why "dispatchers" who work for more than one carrier are illegal brokers. Watch it here.

We contend this constitutes unfair competition.

Second, the FMCSA has an obligation in the Moving Ahead for Progress in the 21st Century Act (MAP-21) to report to Congress on the appropriateness of the 75,000 bond every four years. They have never addressed this in their reports (they have filed two of them) and they have never told Congress that the $75,000 bond put 9,800 small business intermediairies out of business in December of 2013. In the past, FMCSA ruled that $25,000 was the right bond amount to adjust for inflation and avoid anti-competitive effects. Now they have gone silent. We believe, because they have been captured by Big Trucking and Big Broker.

In fact, we warned truckers back then --circa 2013-- that if the Big Brokers eliminated their smaller competitors (many were forced to join the Dark Side and become their agents), they could play rate games with you in the future. As you step out of your DeLorean this week, look at where we are now in 2020. Great Scott!

And so the purpose of this bond exemption application is to expose how the playing field is not level. Why do big brokers have the same bond amount as a one-man small business owner? Why does FMCSA make small brokers --including owner-operators trying to get their own broker license to cut out the middle man entirely, be their own broker, and broker loads to themselves, get a $75,000 bond... but "dispatchers" who are paid to arrange transportation just the same are allowed to operate unlicensed with no bond at all? Even FMCSA's Jim Mullen agreed with me back in January... Unless you work for just one carrier.... if you are a person... who is paid by anyone... to arrange for transportation, you are a broker. Period.

We are attempting to bring to the public and the industry's attention the fact that FMCSA has failed to fulfill these two obligations. And that it is time to either enforce the law on all or relieve all the small players (not the big guys, though) of the bond requirement. FMCSA now needs to make a choice. And it is time to reexamine why dispatchers try to creatively operate without the bond; namely, that it is a barrier to entry and there should be a lower starter bond that grows as your business grows on a sliding scale. Otherwise, you are not fighting fraud, as some have speciously suggested in classic flip-flops, but you are fighting competition from the small players. Big versus small.

So we have asked this... until FMCSA develops that comprehensive enforcement program they promised 7 years ago, that they temporarily remove the bond requirement just for small businesses so that a level playing field is created. We know they won't do it because they are captured by the big boys. But we will have publicly made our points nonetheless and highlighted their shortcomings. In the end, we expect this will lead to reform at FMCSA. Remember, we are still politically pushing to #DEFUNDFMCSA.

This matter is now open to the public, finally. We had to file a lawsuit to get them to publish the application in the Federal Register and solicit comments. As you comment, a Federal Judge is now manging the FMCSA's compliance with the law to make sure there is no more funny business.

One last thing... I suspect OOIDA and TIA will next try to spin this to turn you against us, so watch out. Don't believe the hype! You might respond by asking them what their little deal was all about back in 2010, in which both groups sold out their memberships. You can read more about that little beauty over here.

So read the bond exemption application, know and understand what its true purposes are, and file your comments. In favor of... or against. Let's engage them in discussion that they cannot lawfully avoid and ignore. Remember, if you're an independent trucker, you should have the right to get your own broker license to cut out the Big Brokers altogether rather than be at their mercy like you are now. Let's pressure FMCSA to step up to the plate and do right by all small businesses.