Those of us who operate third-party logistics companies have dealt with this problem for years. The following Transport Topics opinion piece covers many of the pitfalls involved in rebrokering loads.
Opinion: The Risks of ‘Rebrokering’
By Robert Voltmann
CEO, Transportation Intermediaries Association
This Opinion piece appears in the May 13 print edition of Transport Topics. Click here to subscribe today.
Carriers that seek the ability to “rebroker” freight without separate broker authority and bond will keep the door open to marketplace fraud and nonpayment. Worse still, the practice will expose carriers to the ever-increasing risk of liability for accidents they did not cause. Calling rebrokering “convenience interlining,” “subcontracting” or something else makes no difference; the practice will create problems for the industry.
A few things to keep in mind: Brokers did not want a bond; motor carriers wanted the bond increased. “Interlining” as defined in MAP-21, the new transportation law signed by President Obama last year, follows the definition established by the old Interstate Commerce Commission, which never allowed carriers to rebroker freight, by any name, without separate broker authority. Additionally, owning or operating a truck is not necessary to get motor carrier authority. The questions those seeking to allow carriers to rebroker freight without separate broker authority and bond should be answering are: Who is responsible for freight payments, carrier selection liability and cargo liability? Let’s look at each of these.
Brokers did not want an increase in the bond. The Transportation Intermediaries Association agreed to it as part of an overall agreement with American Trucking Associations and the Owner-Operator Independent Drivers Association. These organizations wanted the bond increased and new regulations on broker bond/trust companies to better protect their members. It is ironic, then, to have other carrier organizations arguing that they don’t want the bond increased.
Because owning or operating a truck is not necessary to obtain motor carrier authority, if brokerage is not defined as it is in MAP-21 — and applied to everyone involved — the status quo of fraud will continue.
If carriers are allowed to rebroker freight without separate broker authority and bond, this opens the door to those who seek to cheat carriers, get motor carrier authority, grab loads from load boards, get an advance, flip the loads to carriers and disappear. The performing carriers will be left unpaid. This is one of the things that TIA, ATA and OOIDA sought to prevent. The provisions in MAP-21 spell out responsibilities and protect all involved. We believe that whoever hires a truck is responsible for paying for that truck.
When carriers rebroker freight without separate broker authority and bond, they also open themselves up to vicarious and negligent hiring liability — without any protections associated with brokerage. Many lawsuits of the past few years have involved the selection of carriers that were later involved in accidents where people died or were injured.
Millions of dollars in settlements or damages were awarded by courts and juries in these cases. In many of them, tort lawyers tried to establish increased liability when the case involved a carrier hiring another carrier. But a trend also emerged limiting the exposure of properly licensed brokers that have well-defined carrier selection procedures in place. Why would carriers not want to avail themselves of these protections?
Read the conclusion of this piece in our May 21, 2013 post. For more information on MAP-21, see the US DOT website.
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