TIA and OOIDA are at odds over perceived price-gouging

When President Trump recently spoke on Fox & Friends, he was asked about American truck drivers being “price gouged” by transportation brokers and what the White House would do to address that.

His response indicated he felt that was the case, saying “Oh they are price gouged…all they want is to be treated fairly and we’re going to treat them fairly.”

It is fair to say that the Alexandria, Va.-based Transportation Intermediaries Association (TIA), which is the largest organization representing third-party logistics (3PL) service providers, has a decidedly different take on Trump’s comments.

That was made clear in a recent discussion I had with TIA President and CEO Bob Voltmann. Always candid and direct, Voltmann explained that there is more than meets the eye, when it comes to Trump’s take on the perception truckers being price gouged.

This development began in mid-March, when there was an initial surge of freight, he said, which was followed by the turning off of a $22 trillion economy, due to the COVID-19 pandemic.

“Things just fell off completely,” he said. “We stopped moving freight except for food, alcohol, and medical supplies. The unfortunate thing is the big motor carriers were able to park their trucks, furlough drivers, and deal with contract business. And the owner-operators that live entirely in the spot market cannot park trucks without parking their incomes. There was no freight for them to move, so there were too many of them chasing the little bit of freight that was out there, and they don’t always understand the market dynamics.”

As a counter to that, he admitted that some TIA members do not always do a great job of explaining these market dynamics to owner-operator carriers. In short, those market dynamics were comprised of the working thesis that there were too many trucks chasing too little freight, with rates subsequently plummeting. 

From a shipper perspective, Voltmann said they are well aware of this situation and think: “I am the only one moving freight, and I should be getting a great rate because I have a limited audience of people buying what I am shipping.”

This development led to owner-operators protesting outside the White House last week that might have been getting, for example, $2 a mile on a lane a few months ago and now they are getting $1, so somebody must be getting that other dollar.

Voltmann made it clear that is not the case.

“We felt like we needed to jump in, and then OOIDA (The Owner-Operator Independent Drivers Association) runs to Congress saying brokers should have filed rates and everybody should know what brokers get paid and what they pay,” he said. “Well, if filed rates were good, Congress would not have eliminated them in 1980. And if filed rates were good, then everybody should file and charge those filed rates…in a government agency that collected and filed them all and probably call it the Interstate Commerce Commission.”

Now, the White House is involved, because the motor carriers are sympathetic, and President Trump is very sympathetic towards motor carriers, noted Voltmann.

“I guess, from his time in the real estate world, he does not like brokers,” quipped the TIA chief. “We have a full-blown issue going on here.”

When asked where things go from here, as they relate to market rates, Voltmann said that based on Truckstop/MDI data things are almost back to normal, noting that on that railroad side there is evidence of volume recovery, with both trucking rates and volumes starting to pick up.

“We have already turned the corner,” he said. The way the market works, especially for our bigger TIA members, is that they have contracts with the shippers. So, they have a contract rate for the year with a shipper, and then they go out and buy the capacity in the spot market. Their contract with the shipper might be for, say, $1.50 per mile. But, right now, it may be for $1.30 or $1.40, but when capacity starts getting tight that same motor carrier is going to tell the broker ‘I cannot move that load for today; I need $2,’ and the broker loses money. Are we going to turn around and yell at the motor carriers for price gouging when the market turns the other way? No. This is where we are, and we know it is a market reality and we just have to explain that. That is what we are working on.”      

As for the OOIDA, the organization yesterday filed a petition this week with the Federal Motor Carrier Safety Administration (FMCSA), calling for immediate action on key issues to improve broker transparency.

OOIDA said that small-business truckers are struggling and concerned about the fate of their businesses, stating that one long-time problem that has been exacerbated by the current crisis is the evasion of federal transparency regulations by unscrupulous brokers.

 “Brokers have been deliberately skirting federal transparency regulations for decades,” said Todd Spencer, President and CEO of OOIDA.  “We certainly don’t think exempting yourself from federal regulations is legal, but this is precisely what is happening. It has to stop.”    

The OOIDA petition said that brokers often find ways of circumventing federal regulations (49 CFR §371.3) that require them to keep records of transactions and make them available to carriers upon request.

OOIDA petitioned DOT and FMCSA to strengthen the regulations in 49 CFR §371.3 by doing the following:

• Require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed; and
• Explicitly prohibit brokers from including any provision in their contracts that requires a carrier to waive their rights to access the transaction records as required by 49 CFR §371.3

While there are a lot of differing opinions at play, in regards to this situation, what happens next remains to be seen going forward. The TIA has made its case, as has the OOIDA. Much stands between them meeting in the middle, as things currently stand.