3PL Perspectives
AS WE HAVE talked about frequently over the last two years, the pandemic created a freight explosion, and the volume of freight was at a level seldom seen by our members before. The pandemic also broadened the awareness of the need for 3PLs in an efficient supply chain, with the number registered brokers rising from 27,000 in 2020 to about 31,000 today. When any industry is as sought after and successful at solving problems as ours has been, new entrants are guaranteed. Most new entrants, we believe, seek to make an honest living, and provide solutions for their customers. However, there are those who want to replicate our success without replicating our ethical commitments. Consequently, we have seen an incredible uptick in illegal brokering, including double brokering, and dispatch services brokering freight.
Freight volumes have leveled off, and the illegal brokering has only increased. Perhaps the increase is caused by too many people chasing less freight. Regardless, we are hearing more frequent complaints from our members about double brokering. TIA Government Affairs has been on Capitol Hill and the Federal Motor Carrier Safety Administration (FMCSA) is seeking legislative or regulatory solutions that could drive a stake into the heart of double brokering. We have been successful on the legislative side: FMCSA was legislatively required to create guidance for dispatch services, and when they should be required, to register as brokers. TIA was also able to get language on the FY 2023 Appropriations bill that would require FMCSA to explain why they are not enforcing the law and imposing civil penalties on illegal double brokers.
On the regulatory side, we have run into a few headwinds. FMCSA did issue guidance on dispatch services, and relatively quickly. And FMCSA did take a number of our comments and concerns into account. For example, the guidance suggests that if the dispatch service is arranging transportation for more than one carrier, it likely should register as a broker. And if it receives compensation from anyone other than a carrier, again, it should likely register as a broker. However, guidance is not legally enforceable, and if these services are already breaking the law, guidance is likely not a deterrent. However, we will work with the 118th Congress to see if we can get more teeth in the guidance, especially if some of these dispatch services are headquartered in unfriendly overseas nations and are overseeing sensitive or government freight.
Regarding double brokering, FMCSA believes it does not have the authority to pursue civil penalties in commercial disputes. So, our Highway Logistics Conference and Government Affairs team is putting together a white paper to flag to our regulators that double brokering can potentially compromise safety as well—and as a consequence, there are certain red flags that their investigators can and should look out for. We will continue to push for these modest changes while our members are greatly affected and often harmed by these bad actors.
There is much to do in 2023—your team is already hard at work. Please let us know any examples you can share to help build our case with our legislators and regulators. Thank you as always for all you do for the industry, and for your membership with the TIA.
