Transportation Industry - USA - 2005

Article Abstract:

Transportation brokering is now a $300 billion per year business. Most transportation brokers claim they have no liability in the event of an accident. Most brokers are however liable. Learn how DOT licensed brokers are liable when their loads are in an accident. 55% of all motor carrier loads are brokered. Do not let the broker sell the non liability argument to you.

About The Author:

The author of this article has experience in the transportation industry, transportation management, and operations. He is a leading expert in transportation brokering, negotiated freight rates, and the economics of an open marketplace. The author has even been authorized by the US Department of Justice to give expert opinions in the field of transportation brokering. Additionally, he operates and teaches a school for brokering, while he is brokering freight at the same time. Furthermore, he has purchased and administered the pick up and delivery of over 90,000 cargoes. Not surprisingly, he is a noted lecturer, and consultant to many of the nations leading think tanks. In addition to the text books he has authored on this subject, the author also has a short, simple guide available to explain brokering for those who need to sort out the "who’s who" and the "what’s what" amongst all of the players in the transportation industry. His guide helps to reveal where the real liability for loss lays.

If you would like additional information about the author's services as an expert witness and/or consultant,
contact the Legal Expert Network at 1-800-597-5371.

The transportation industry (air transport, rail transport, and container transport) is flourishing as a whole, but the quality in the American trucking segment, is plummeting. The trucking market is fragmenting into thousands of small businesses, manned mostly by newcomers to the USA. As of this writing, 130 companies are applying for and are granted trucking authority and/or a transportation brokering license, daily. The principle makeup of these burgeoning applicants are owner operators who getting their own trucking authority and are evolving from owner operator small businesses to small trucking companies. This does not mean that there is an increase in new trucking capacity, only the nature of the truck owner in the trucking food chain.

The massive trucking conversion is a free market phenomenon. For $300, spent on line, an owner operator can get the same operating rights of the biggest motor carriers, and compete toe to toe for the same freight. Supply of trucks (capacity) is very tight due primarily to a lack of qualified drivers. As a result, freight rates are reaching epic dimensions. Owner operators are no longer satisfied for a fixed rate/mile compensation, especially since they are the buyers of pricey diesel fuel, they want a piece of the free market. Tight supply of trucking capacity is driving freight rates for contract carriage, (about 60% of over the road tonnage), up 45% since January 2004, and there is no limit in sight. This economic condition will prevail long term. (60 months or more, barring a collapse of the Yuan or US dollar)

The old way of trucking is passing, while the new comer entrepreneurialism is creating havoc. Many newcomers are learning the English language reading street signs as they truck America’s highways, and there is the rub. Between NAFTA, and our imaginary border policy, thousands are entering the open trucking market by purchasing a job in America simply buying a semi tractor trailer and investing $300 in operating authority.

The highly qualified and trained American drivers are leaving the industry in droves, because of recent silly Federal safety regulations that cut their pay 25%. The regulations are silly, because they have had the undesired affect of requiring another 140,000 trucks per day to take to America’s highways to meet current shipping schedules. The lower paying driver vacancies are now being filled with new comers. Consequently, the desired safety affect of the new Federal regulations is having just the opposite affect to American highway safety. Lunch at any truck stop and catch the international flavor of American truck drivers, by the time you finish lunch, you will encounter 5 foreign languages. The first requirement to obtain a Federal Drivers License (the CDL) is to read and write the English language, but there is no reading and writing skills tested, you simply punch holes in a card. The right number of holes, you get to drive an 80,000 lb rig at 75 miles hour down Americas highways. In the last 36 months at my broker training classroom newcomers from 24 countries have appeared amongst my student population. I teach trucking professionals who now have Department of Transportation (DOT) motor carrier authority and/or a truck broker license, how to find shippers, how to create freight rates, negotiate freight movement on other motor carriers as a broker.

Several things need to be noted in the trucking industry. First, many insurance companies are leaving the truck insurance market because of the defined skyrocketing risks. Second, those insurers who stay are requiring that new motor carriers buy a Contingency Cargo Insurance Policy, in addition to the require d Public Liability and Cargo Insurance Policies. One of my recent graduates, owns and operates a large insurance brokerage agency selling insurance, specifically for truckers and transportation brokers. His own words best describe the insurance industry for truck insurance as, "up in the air."

The number of inquiries made to me as a transportation expert, specifically in the field of truck broker, is skyrocketing. The first casualties, truck drivers, motorists, trucking company owners, pedestrians, and lawyers are litigating in greater numbers. A majority of this litigation that appears before me as an expert witness, involves a load placed on American highways by a truck broker.

Most transportation brokers think they are NOT liable for accidental loss, much the same way a travel agent is NOT liable when a plane crashes. The fact of the matter, however, is exactly the opposite. Most transportation brokers, including freight forwarders, are not only liable, but in some of the litigation, are found negligent in hiring dangerous and under qualified motor carriers. Liability is created when incorrect transportation operations are undertaken in day to day operations.

I have been brokering transportation since 1981, as a motor carrier with a Department of Transportation (D.O.T.) broker’s license, and as a licensed property broker alone. I have never had a claim against my broker surety bond, and have managed to pay all trucking companies and truck drivers on time. I have never been liable for a loss. In other words, transportation brokers are authorized by the United States Dept. of Federal Motor Carrier Safety Administration (FMCSA) to act as the NON LIABLE travel agent. They are not required to be insured for cargo or public liability, and not permitted to create a Federal Bill of Lading, quote a freight rate or publish a tariff. In fact, licensed brokers may not even declare an interest in a cargo. Licensed freight forwarders on the other hand, are required to be insured and do take possession of freight. Most transportation motor carriers with or without a brokers license do not understand brokering and the liability pitfalls therein. Most of my students are trucking company owners and do not know the difference between a licensed property broker, truck broker, or freight forwarder, to their peril, in liability issues. 55% of all over the road trucking movements involve brokering.

The biggest fear I have is how this dangerous transportation situation plays into the hands of terrorist. If a cargo is used as a weapon of mass destruction (W.M.D.) in all probability, the cargo would be "double brokered" (what Enron did) and the perpetrators will escape to strike again. Cargo safety in the trucking industry starts with the Truck Scale House regulators. There is no Federal training program for personnel of the State operated Truck Scale Houses on how to read Federal Bills of Lading. Something is wrong when 55% of inspected trucks have a different name on the side of the truck than is listed as "Motor Carrier" on the Federal Bill of Lading for the load in the same truck. The Federal Government is satisfied with finger printing drivers of hazardous materials in hopes that the terrorist driving a hazardous load into downtown and setting it off, will comply with the new fingerprinting regulations, while at the same time allowing trucks to continue to be marked “Explosive” for all desperate terrorist to read and hijack. Double brokering a load, hazardous or not, can be instantly eradicated from the transportation marketplace with a single sentence added to existing regulations. This however, would assume that there is some one in the Truck Scale House trained to read the Bill of Lading. There are maybe three people at Department of Transportation (DOT) who even know what double brokering is. DOT is populated by people with no transportation marketplace experience or understanding. It is even more true at the Federal Department of Transportation Security (TSA). Essentially, the Truck Scale House exists to fine drivers and collect money for under inflated tires, rather that supply security to American citizens. The TSA has enlisted all US truck drivers to be on the look out for suspicious behavior, even those in a turban with a hand held remote control, yet ignores the place where all US trucks must pass inspection daily (sometimes as many as 12 time in a day), the Truck Scale House.

The trucking industry is failing in its commitment to good public safety. The Federal Government is fostering this failure.

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