The Federal Motor Carrier Safety Administration (FMCSA) has recently proposed new rules aimed at broker margin transparency. These regulations would reshape how brokers conduct record-keeping and disclosure.
Public comment on the proposed rules ends on January 1, 2025. Click here to leave your comment. To read an opinion on the proposed rules from DAT’s Chief of Analytics, Ken Adamo, click here.
A brief history of broker margin transparency
Broker margin transparency has been a point of contention in the freight industry for decades. At its core, transparency regulations are meant to ensure that carriers, shippers, and brokers can access fair and clear records of payments, fees, and charges linked to freight transactions.
Historically, the current rules under the 49 CFR 371.3 regulation already grant carriers and shippers the right to inspect broker records. However, industry stakeholders, especially carriers, have long voiced concerns about the lack of practical access to these records. Brokers have been known to add clauses in contracts that waive access rights or make records available only at their business headquarters, a requirement many carriers find impractical or unfollowed in practice.
The Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) have been at the forefront of the fight for more transparency. Their demands intensified in 2020, leading them to petition the FMCSA to impose stricter regulations. Four years later, the FMCSA’s response takes the form of a proposed rulemaking that seeks to balance transparency demands with operational feasibility.
What are the newly proposed rules?
The FMCSA’s proposed rulemaking seeks to clarify broker transparency obligations, making them more accessible and effective for all parties involved. Here’s what the new rules would entail:
Electronic record-keeping
Under the proposal, brokers would be required to maintain transaction records in an electronic format. This shift addresses complaints about physical-only records being accessible exclusively at a broker’s principal office, which has often limited carriers’ ability to inspect them. By moving to electronic records, carriers and shippers can more easily and remotely access crucial information.
Detailed itemization of records
The proposed rule would eliminate distinctions between brokerage and non-brokerage services in record contents. Instead, brokers would need to itemize every fee and charge associated with a shipment. This means charges such as shipper claims for damages or delays would be documented in detail, ensuring full visibility into transactional costs.
Obligation to provide records upon request
Currently, the regulation emphasizes the right of carriers and shippers to access transaction records. The new proposal reframes this requirement as a duty for brokers. Brokers will be mandated to fulfill requests for records upon request, solidifying this obligation under regulatory terms.
48-hour timeline for record disclosure
Perhaps the most impactful provision, brokers would need to deliver requested records within 48 hours. This ensures that carriers can access the information they need in a timely manner, improving efficiency when resolving disputes such as payment discrepancies or service issues.
Why are these changes important?
The proposed rules aim to address a broad set of challenges plaguing carriers and shippers due to lack of transparency.
Dispute resolution: Having records that document every claim with complete visibility allows carriers to substantiate their side when confronted with alleged claims regarding delays or damages.
Time savings: Electronic formats and rapid access to records could save carriers hours spent navigating bureaucratic obstacles or requesting records in person.
Leveling the playing field: Small carriers, who often lack the resources to negotiate favorable terms, will gain better access to transactional details that could empower them to seek fairer agreements.
OOIDA President Todd Spencer lauds the proposed changes for improving carrier defense and promoting compliance. “[These] updates will help carriers defend themselves against alleged claims on a shipment,” he noted. Similarly, the FMCSA believes streamlined practices will make it less likely for parties to resort to costly legal remedies.
Concerns and pushbacks
The FMCSA’s proposed rule is not without criticism. The Transportation Intermediaries Association (TIA), the leading trade association representing freight brokers, views the rule as unnecessary regulatory overreach.
“TIA has consistently maintained that the broker transparency regulation…is obsolete and un-American,” TIA stated, arguing that the rules were established in an era when brokers acted as commissioned sales agents for motor carriers. The group opposes the proposal’s alignment with transparency advocates, emphasizing instead the importance of resolving freight fraud — an issue they view as far more significant.
However, the FMCSA believes the rulemaking adequately addresses the core issues, noting that transparency could influence long-term rate negotiations by giving carriers stronger grounds to advocate for fairer compensation.
What’s next?
The FMCSA has opened the proposed rulemaking for public comment, inviting feedback on the potential effects of these changes, including their impact on freight rates and operational procedures. The comment period runs through January 21 and is accessible here.
Key takeaways for carriers and brokers
Carriers can look forward to enhanced access to transaction records, reducing headaches associated with disputes and payment discrepancies.
Brokers should prepare for increased compliance requirements, particularly around maintaining electronic records and rapid response timelines.
Both parties should stay informed as the rule evolves, ensuring their interests are represented when it is finalized.
Public comment on the proposed rules ends on January 1, 2025. Click here to leave your comment. To read an opinion on the proposed rules from DAT’s Chief of Analytics, Ken Adamo, click here.
