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Freight hauling: a shell game that needs new rules

Todd Spencer
OOIDA Executive Vice President

 

By the time you read these comments we will have a new surcharge bill for Congress to consider - and this time - to approve. The Fairness in Trucking Transactions, or FITT Act, will make it clear that when shippers pay a fuel surcharge, that money must be passed through, in its entirety, to the person responsible for paying for fuel.

The FITT Act also requires that all payment information be disclosed at the time of settlement, including total freight charges, fuel surcharge, brokerage fees or commissions and any other charges related to the trip. In essence, it requires full disclosure in trucking transactions and payment practices.

This bill does not mandate a surcharge be assessed on truckload shipments. It can't overcome the objections of the few that claim a mandated surcharge is re-regulation. What it does do is shed much-needed light on the shell game the brokers play with freight charges - oftentimes pocketing all of the fuel surcharge, plus a whole lot more, while telling the trucker it's all included in the rate.

No one is well-served by current practices where shippers pay reasonable rates for transportation service, yet the trucker barely gets operating expenses because the load was skimmed by 40 to 50 percent by someone in the middle.

Soon after the FITT Act is introduced, it will be assigned a bill number that will make it easier to identify in communication with lawmakers. Your help with calls and letters will be appreciated and needed, too.

Those who profit from the status quo will always fight change - and fairness - and you can be certain they will fight this legislation extremely hard because really big profits and gross market distortions would be exposed for all to see.

What person or organization with even an ounce of integrity could oppose a required pass-through of fuel surcharge revenues? Fuel surcharges are paid by shippers for no other reason than to offset higher fuel costs borne by the person who pays for the fuel.

If someone in the middle pockets some or all of these revenues, can it possibly be anything other than fraud - or theft - against both the trucker and the shipper? Is that not blatantly obvious to anyone with common sense?

Shippers should be just as outraged by this practice as truckers.

When shippers pay a reasonable rate plus a fuel surcharge, which is skimmed by one and sometimes more middlemen, those shippers receive a significantly lesser quality service than they paid for. Those costs, ultimately, must be borne by consumers, while the actual transportation provider may not have realized enough revenue to be able to even stay in business.

This scenario is being played out every day - right now. Not only are shippers and truckers getting less than they pay for, but some shippers aren't getting service at all because truckers aren't confident they can provide the service and be assured they will end up with revenues adequate to cover increased fuel costs, let alone make a meager profit.

The response to the recent hurricanes Katrina and Rita really shows, how distorted and skewed transportation costs and revenues can be. With Uncle Sam picking up the tab for relief loads, premium pay for premium service should be a given, but it certainly isn't for lots of drivers that hauled these loads.

As I write this column, there are significant numbers of truckers that have been waiting for payment on loads that have been heavily skimmed for more than 30 days. Still others are wondering if they will be paid at all!

The hurricane relief effort has put accountability on the front burner of the public's consciousness and prompted lawmakers to act. Where the money goes, matters. Without knowing that, it is impossible to make smart business decisions to improve efficiency at every level and provide the best bang for the buck for all concerned.

The FITT Act can't fix all the inequities involved in transportation, but it will certainly expose them to the light of day so all parties can make an informed decision and sort out the best way.

There is no downside to having transparency in transportation transactions, or for that matter, in most other transactions.

Would fuel prices be as high as they are now if people knew exactly who the players are and how deeply they get their hands in the till? Would medical costs be as high as they are right now if people could really follow the money?

Ask the players in both of those industries who's raking in the big bucks and they will all point fingers in a different direction. And it's nearly always small business that gets the short end of the stick, regardless of the industry.

Fairness and transparency in Truck Transactions - the FITT Act - will go a long way to resolve problems for truckers.

You need to contact your lawmakers now to ask for their support of the FITT Act.

For information on how to contact your senators and representatives, or if you are not sure who your lawmakers are, call the OOIDA Membership Department and they'll look up the information for you. The toll-free number is 1-800-444-5791.

You can also visit congress.org, house.gov or senate.gov on the Internet or call the U.S. Capitol switchboard at (202) 224-3121. The operators there will connect you to your elected officials' office if you provide them with your zip code.

If you're home, try looking in the blue government pages in your local phone book or call local information.

todd_spencer@ooida.com

Aug/Sept Digital Edition