Broker Group CEO Warns Full Transparency Will Put 3PLs & Owner Operators Out of Business

BROKERS FIGHT BACK, part II: In part 2 of Transportation Nation Network’s exclusive two-part interview with Robert Voltmann, CEO of the Transportation Intermediaries Association, he reveals why brokers require carriers to waive their right to review the transaction record, and what happens if they refuse.
Plus, he warns critics pushing for full rate transparency why they should be careful what they wish for, and much more.

Alexandria, VA – The head of the largest association representing third party logistics (3PL) companies is not backing down to those pushing for full rate transparency in the shipper/broker/carrier relationship and revealing why he believes they should be careful what they wish for.

Robert Voltmann, CEO of the 1,700-member Transportation Intermediaries Association (TIA), has been watching with keen interest the recent uprising among many small business truckers furious over low freight rates.




 

After President Donald Trump recently expressed his belief that brokers were price gouging independent contractors amid the COVID-19 national emergency, Voltmann says that he, along with his members, quickly realized they were in for an unprecedented battle.

“We’re certainly taking it serious,” he told Transportation Nation Network (TNN) in an exclusive interview last week.

Voltmann, whose TIA membership is comprised of a wide range of brokerages including the biggest players in the space, have come under intense criticism during the pandemic as freight rates have plummeted.

The furor sparked an almost three-week protest in Washington D.C. and trucking groups such as the Small Business in Transportation Coalition (SBTC) and the Owner Operator Independent Driver’s Association (OOIDA) to demand that Congress and the Federal Motor Carrier Safety Administration (FMCSA) take action to crack down on 3PL companies.




 

The controversy and D.C. protest has even led to the United States Department of Justice (DOJ) opening an investigation into alleged violations of the 1890 Sherman Antitrust Act, which criminalizes corporate collusion for the purpose of price fixing.

In part I, Voltmann dismissed such allegations.

We’ve not done anything,” he said. “Let the Justice Department investigate. They won’t find anything.”

Click HERE to read part I.

“If they don’t waive that right they can’t move that shipper’s freight”

At the core of the outrage directed at 3PLs in recent weeks is the lack of disclosure of freight rates paid by the shipper to the broker, and the widespread practice deployed by many brokers requiring carriers to waive their right to know.

Critics argue brokers are seeking to hide transaction records in order to conceal profit margins of as much as 60 percent, despite the fact brokers are required to comply with the now famous 49 CFR 371.3 provision.




 

Voltmann went on the record with TNN in an attempt to dispel these notions.

“Most shipper contracts today have strict confidentiality rules in them. So, the reason the broker asks the carrier to waive that is because if they don’t waive that right they can’t move that shipper’s freight,” he explained.

To illustrate his point, he posed two examples.

“Does Coke want Pepsi to know what their cost of transportation is? Hell no! Does Proctor and Gamble want Johnson and Johnson to know what their cost of transportation is? No.”


FYI: Someone else used the Coke vs. Pepsi example this week.

Click HERE to find out who.


Voltmann argued that since de-regulation in 1980, shippers are not under price transparency regulations, and 371.3 now needs to be “modernized” because it essentially places an undue burden on brokers.

Why? Because shippers insist on these non-disclosure provisions to be included in their contracts with 3PLs.

Brokers have little choice but to agree to these terms, Voltmann insists.

“That’s going to hurt them a hell of a lot”

If the carrier requests to view transaction records, TIA advises members to allow them to do so during normal business hours at the broker’s headquarters.

Critics argue this is simply a way of skirting the regulation, but Voltmann warns that carriers should think twice before choosing to exercise their right under 371.3 or face the real prospect of losing business.




 

“What happens is, if a carrier doesn’t waive their right under 371 the broker can’t use that carrier with freight in which a shipper has put a non-disclosure provision in. I have no idea what the percentage of that is. Let’s say its 50 percent of shippers with these non-disclosure agreements. We already don’t have enough freight to serve the owner operators, and now you take 50 percent of the freight we do have away from them? That’s going to hurt them a hell of a lot.”

Is this true?

Do shippers really demand brokers refuse to book loads with carriers that have asked to view the transaction record?

In pursuit of an answer, we turned to Gail Rutkowski.

Rutkowski is the executive director of the National Shippers Strategic Transportation Council (NASSTRAC), which is the shippers association for transportation and logistics professionals who manage freight across all modes.

“If a shipper found out the broker was disclosing the transaction to any carrier, they would refer to their confidentiality clause in their contract and say that the broker is in jeopardy, they’ve broken that contract clause,” Rutkowski said.

 

While she says such demands would not be “carrier specific,” she was clear that shippers expect brokers to abide by the contractual agreements.

“I don’t want my rates disclosed to anybody for any reason. What I agree to pay the broker or the carrier is nobody’s business but ours,” she stated.

“We’ll go out of business… so will the owner operators”

OOIDA is asking Congress to step in and require brokers to provide an electronic copy of the load transaction to the carrier upon delivery, thereby disclosing the rate the shipper paid and the margin the broker made as well.

The SBTC and OOIDA is asking the FMCSA to strictly enforce 371.3 and disallow brokers from including provisions requiring carriers to waive its rights.

What if this happens?

Voltmann and Rutkowski agree it would be the death of the brokerage industry and… many small business truckers.

“If Congress were to come in and say 371 is now mandatory, shippers will stop using brokers,” Voltmann said. “That means all those owner operators are going to have to field their own salesforce. We’ll go out of business. If the brokerage part of the industry disappears, so will the owner operators.”




 

“The marketplace would go away, and honestly, I think it would be the death of owner operators as well, not just the brokerage industry,” Rutkowski predicted. “If the brokers go, the owner operators are going to go. Because shippers aren’t going to have the time to contract with every individual owner operator that’s out there.”

Rutkowski says that what would likely happen is the spot market freight would get sucked up by large asset-based carriers with brokerages.

Specifically, she mentioned Werner, US Xpress, and J.B. Hunt as some of the likely winners in such a scenario.


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Additionally, Rutkowski said shippers would also demand new regulations be placed on carriers.

“Then the carrier needs to disclose how much it costs them to run the load. If we’re going to be sharing profit margins then every party of the transaction should be sharing that same information. You can’t penalize one party of the transaction,” she argued.

 

“We’re explaining ‘it’s the marketplace'”

Voltmann says TIA is mobilizing its members to make their case to U.S. lawmakers and regulators.

“We’re explaining ‘it’s the marketplace,'” he stated. “Brokers represent 25 percent of the overall freight market. So, they’re not driving market price.”

Plus, Voltmann argues the COVID-19 recession has created an unprecedented business environment.

“All American life has been upended and its unfortunate that the small carriers are at the short end of that stick, but my members are their sales force. They are trying to get the best rates they can to serve those carriers.”




 

“We are definitely rethinking that now”

Voltmann also revealed TIA members are once again discussing the possibility of petitioning the FMCSA to revise 371.3, which he concedes maybe they should have already done.

“The reason we never petitioned to remove that was because we felt like there was a market-based solution in which motor carriers voluntarily waived their rights under it by contract. If they didn’t want to waive their rights they didn’t have to, but then they couldn’t move the shipper’s freight in which there was a confidentiality agreement. So we never saw the reason to remove the provision. We are definitely rethinking that now.”

To be clear, Voltmann pointed out the TIA’s “model contract” with carriers does not include a provision requiring carriers to waive its right under 371.3.




 

Critics have argued the widespread use of these provisions among brokers is an “evasion of regulation.”

Again, Voltmann dismissed this allegation.

“If companies come to this conclusion totally on their own, it’s market driven,” he commented.

Did you miss Part I?

In part 1 of TNN’s exclusive two-part interview with Robert Voltmann, he weighs in on the newly launched United States Department of Justice investigation into alleged freight broker price fixing and collusion.
Plus, he responds to claims that brokers are price gouging truckers amid the COVID-19 pandemic and more.
Click HERE to read it now.

 


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Comment (18)

  1. It’s a simple. Brokers have no skin in the game. Limit a broker to 10 to 15% all they get of the rate. They don’t have to release what the shipper is paying. But when the govt comes in an audits them they had not better keep any more than thatv15% or shut them crooks down. Sitting there makes phone calls or emails does not justify them keeping 40 to 50%

    1. Voltmann are crook scum bag and the rest who supports him are a pack of disgusting lowlifes !
      Comply with 49 CFR 371.3
      I am as O/O want Transparency not your BS

  2. In my view, I think if any brooker has a contract on place with a flat rate with any shipper why do they have to play with the rate on the market. They are making a great amount of money without owninga truck. Any brooker gone out of business that you know?

  3. His argument is super lame saying because shippers don’t want anyone knowing what they paid etc. Why not? What are they hiding? The hell with the shippers too if they don’t want transparency then it’s because what they are doing is wrong. DOJ needs to overhaul the whole system and find out what these contracts are hiding. Owner operators and small business won’t go out of business especially when the freight needs to be transported and there aren’t enough drivers. Only privacy needed is like the medical field just patient information like demographics and etc. The cost is never private because insurances and even 3rd parties need to know how they are going to pay or if they are overcharging or underpaying etc.

  4. I agree with other commenters. THIS ARTICLE IS TRASH! Where is the journalism that holds interviewees accountable? The argument isnt about 3713 & past shipping cost. This is about the broker calling the shipper, “buying the load”, then low balling the company (hence the driver doesn’t get adequate wage increases) or o/o. Ex: if Coke is willing to pay $2000 for 600miles with delivery date of 36hrs from pickup, it doesn’t matter what they paid previously; brokers should not be able to stand firm, haggling in the eight & nine hundred dollar range, which is what they do.

  5. FMCSA, doj, usdot should also investigate commercial truck insurance companies. They are sitting in their yachts sipping margaritas laughing at all of us, meanwhile they keep raising prices and we are obligated to pay them otherwise our MCs get revoked. Insurance companies have been the leading cause for most large carriers going out of business.

  6. These large brokerage only firms are taking advantage of the shippers too. They post at the last minute to drive up freight costs. Voltmann proclaims brokers and Independents will lose, I suspect only brokers will. That will leave business to large carriers with brokers like JB Hunt, etc however; they all need Independents to haul freight and reduce overhead. Independents will rise and brokerage only firms will fall, like CH Robinson, UBER and TQL. The firms that exploit us. Let em fall! They are hiding the truth, they practice unethically and exploit the truckers.

  7. This is my two cents Just as there is a minimum wage there should be a minimum cents per mile, (cpm) if the O/O has a valid MC# number. That number could be adjusted with the price

  8. These clowns have just changed the definition of BS! from bull st*t to broker sh*t! If that wasn’t the lamest excuse to justify why were getting broke off by brokers. That lame clause is what the brokers came up with to hide the actual haul rate. Did anyone expect the CEO to say anything different about how he has become a millionaire off the backs of the hard working truckers. Has anyone hauled direct freight and had a shipper mention, the keep it to yourself clause? The only reason the brokers don’t want you to know the actual haul rate is apparent! Really! Brokerage is not scientific! 1. Find loads 2. Negotiate price. 3. ( Scum! ) I mean skim off the price. Get a driver to haul for their reconfigured rate. 4. Laugh all the way to the bank. What you don’t know does hurt you! Corona and Covid Broker are who we need to watch out for, and stop accepting cheap freight!!!!!

  9. This has got to be the biggest bullshit story ever told! Truth be told a lot of shippers are turning away from using brokers now. See loads posted on load boards every day shipper direct. Seeing more and more signs at both shippers and receivers asking driver’s to check with them first for there next load and cut the middle man (broker) out.
    Let the chips fall were they may…if brokers get forced out so be it. There are enough owner operators that know who to contact to get loads.
    And who’s to say shippers won’t start posting there own loads?
    Would anyone really miss the likes of TQL? Most likely no.

  10. This guy is so full of crap! First off, nobody needs to know the company name. Secondly these companies have an idea of what each is paying already, so that case is ridiculous.

    It’s very simple. They don’t want to share that they pocket most of the money to sit on their butts and put on a loadboard. If this isn’t the case than fine. Let’s have a mediator look and record their findings?

    If brokers go out of business companies will still need to ship. They can easily post to loadboards that already exist. And if brokers are indeed keeping larger portions than they should be, hiring people to do this at a company will save them money.

    Bottom line, brokers save businesses nothing. Brokers deliver nothing. They are overpaid secretaries. They should not make more than a small percentage of what’s being paid to ship products, and I am certain when the greedy brokers are put out of business their will be someone willing to fill that void. They would still make good money. 16% of multiple shipments is not chump change. I personally think that’s to high. And it would save bickering time. If a rates fair to start with then a driver or company can just call and take it. I’ve had them raise their rates by hundreds of dollars so I know they pocket the majority of what they are paid.

    Show what your keeping. It’s the law, bottom line.

  11. Its simple. The brokers are crooks. Pepsi and coke deliver to venezuela it cost them next to nothing to manufacture their product. Sugar, corn syrup ,and phosphoric acid! Its poison to the people anyways just like theses scam artist brokers!

    Eliminate brokers create new frieght boards where the goverment can take 10-15 percent for insuring it stays legit and honest. And offer brokers new jobs at places like Walmart considering they favor these big companies why notet them all go work for them direct! They can push a mop . We drivrrs don’t need them! They are parasitic to the trucking industry.
    And for those brokers reading this well this comment is followed by goverment agencies! Trump 2020!

  12. Hi fellas, I think truck drivers should have some kind of Syndicate. We should create our own insurance company and our own brokerage firm, So we could stablish or own rules. We have the money to invest what else do we need. We have the trucks, they depends on us, Stop stealing our money. What you all think about this?

  13. This is our problem according to the info given in these first two articles. We truckers are sick and tired of being offered loads at ridiculously low rates while we know dam well the brokers are charging the shippers more than enough to be able to offer us decent linehaul rates. So we are finally demanding the enforcement of the longstanding rule 49 cfr 371.3 which states that all parties involved in a load transaction have a right to know the total amount of the cash involved in said transaction. Or something to that effect. And it has been an industry wide practice to allow shippers to have non-disclosure clauses in their contracts with the brokers which the brokers use to hide their rates from us drivers, telling us if we demand to see the rate sheet we can’t haul for that particular customer. And that our demand for the established rule 371.3 to be strictly enforced will cause them to loose their accounts and send all their shippers running to the big lowball freight companies like JB Hunt and Prime, knocking them belly up and us O/Os right along with them. I call BS on all these lies they’re using as excuses. There are hundreds of brokerage employees who are knowledgable of what these shippers pay their agencies to get their loads delivered, they have all the financial data on every account in front of them on their pc screens daily. I’m sure when these people are hired they are required to sign a non-disclosure agreement along with a non-competition agreement as a condition of employment. The employees know their jobs depend on the loads the shippers send them so they attempt to play by the rules. But only a dam fool would believe that any information that widely shared could not be had in a NY heartbeat. Ask me to find out what kind of deal any shipper in the world has with a brokerage and give me the funds to work with, and i’ll have their whole history of shipping for you tomorrow! So these people who want confidentiality are not getting that anyway in their current dealings! THERE IS NO REASON THAT HAULERS WHO SIGN A NON-DISCLOSER AGREEMENT CANNOT BE TRUSTED AS MUCH AS BROKERAGE EMPLOYEES TO HONOR SAID AGREEMENT. We are financially involed in each of these hauling agreements. Many of you brokers today have the gall to want to dock drivers for being delayed and arriving late on a delivery, which often sucks the last tiny bit of profit from an already too cheap load. But few have i encountered who paid a bonus for on time delivery. I say give us complete transparency on all rates and charges involved in the loads we book and let the chips fall where they may. I believe truckers will be better off without greedy middlemen holding all the power over our earnings while pimpin us as we do all the real work. I believe this whole non-disclousure spiel is a conspiracy between brokers and shippers to cheat drivers out of a fair profit. Who agrees with me on that?

  14. It’s amazing how CEO spins that from providing the real answers to questions. First of all they know exactly how much is required to run a truck. Expenses fuel taxes on fuel tolls planning, insurance and maintenance of the equipment.
    Secondly he’s defending that investigation will reveal how much money he’s pocketing on top of alleged membership to TIA
    In a nutshell has price only dropped 30% at best. Freight rate dropped over 50% across the board.
    Insurance prices and maintenance prices went up by the way not that TIA even cares.
    Overall OOIDA propose transparency after the fact of freight delivered is not a speculation but reality and comply with all regulations on top of that will actually reveal how much brokers pocket and will give over operators option if they want to get involved with particular broker in a future. End of argument.
    Do you think Pepsi or coke give rats about the freight charges on moving the product. If have to be moved they will pay. We’re not stupid we can add numbers when I go to Walmart and see prices going up that means so freight charges are too. Since we pass those on the customer since big companies just write off as loss in profits.
    Those plays will have a effect down a road. Like owner operator got his authority and insurance paid upfront for 2 months I guess you can drive for 2 months and hang authority and keep looking for other options
    Brokers sitting in office made money today by offering lowest rates and tomorrow he doesn’t have a truck company to haul freight because they were greedy transparency revealed.
    Pick your battles TIA because American dream is about to cut off your source of income. I’m guessing you stash money away so you can survive the rest of politics you’re not helping to resolve.
    First step is to recognize that we have problem and fight it like don’t exist

    You all have a great day.

  15. Bull, freight rate transparency was a law. Then the brokers lobbied to have this transparency blocked. Another thing is, customer names can be omitted from the rate transparency. Like this morons argument, he is a liar and scammer. Just because you haul a load from a major manufacturer or supplier, most of the freight is paid by the purchasing entity. As in any business, product has different contacts, for example. A contract can be a point of origin contract or a door to door contract. By giving transparency, the shipper will not know what kind of contract it is and who is paying for it. They will just know what the rate is. Of course if you’re hauling to Walmart and their contract is a door-to-door contract. You would know that Walmart is paying the freight. Without knowing the actual contact, no one will know. Therefore rate transparency has nothing to do with a broker contract. No matter how you look at it, when someone is trying to hide something, they are doing something bad!

  16. The biggest problem we have in this country is unification. If all trucking companies big or small would agree on a 48 hour off duty, maybe we would get somewhere. France trucking industry did it a few years ago and saw a tremendous advantage in doing so. Truckers need loads, but brokers need trucks even more. No matter how many loads you advertize on your load board, if you do not have the power unit to take care of it, you re not moving anything and therefore not making any money. On the other hand, as a trucking company , big or small, I can go myself to the shipper and negotiate the load on my own. Too many people who know nothing about the trucking industry have a voice in what should be done. It s like a construction worker passing Bill’s about HOW a plastic surgeon should proceed. Every business need to make revenues in order to flourish. Brokers as well as truck drivers. This is the greatest country in the world, and we can prove that to the rest of the world by working together and not against each other. In the long run, everyone involved in this industry will benefit.

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