Letters: Reregulation (cont.), Climate Change

These Letters to the Editor appear in the Aug. 3 print edition of Transport Topics. Click here to subscribe today.

Reregulation

I differ from the “Reregulation, Please” letter writer’s view that small carriers are offering transport service prices that are too cheap (click here for previous letter). Yes, there are some shoestring trucking operations hauling for very low freight rates, but there also are large carriers doing the same.

I see the major problem our industry is facing as the large number of freight brokers today.

Many carriers think deregulation allowed anyone with $300 to become a motor carrier. They forget that deregulation allowed anyone who had a telephone and could get a $10,000 bond to enter the trucking industry. Many of these brokers do not own trucks and, unless they can find one, they cannot provide trucks to haul the shippers’ freight.

Property brokers are not the only brokers that are hurting trucking. Carrier asset-based brokers also are bringing down freight rates.

Years ago, before deregulation, loads were not brokered; they were trip-leased to other trucking companies. Back then, trucks were paid a higher percentage of the freight charges paid by shippers, too. A carrier that offered loads usually paid the truck that actually hauled the load 90% or more of the revenue.

After deregulation, the number of property brokers who could offer brokered loads grew from just a few to many thousands.

Brokers got very greedy — not only the ones who did not own any trucks, but also carriers that are brokers. Today, most brokers take 25% or more of the gross revenue paid by shippers, leaving little for the truck that hauls the freight and making it almost impossible for the truck to earn a profit.

One solution would be to in-crease the bond required for brokers to a minimum of $100,000 from $10,000. Brokers that do a high volume of business should have bonds equal to 30% of their annual revenue, and those that go out of business owing thousands of dollars to carriers should be banned from being brokers in the future when they file for bankruptcy. That would eliminate some of the fly-by-night brokers.

Also, there should be a regulation requiring broker-carrier contracts to include a statement by the broker informing the carrier that hauls the broker’s loads of the gross revenue paid by the shipper.

Outlawing double-brokered freight also would help to increase the revenue paid to carriers. Much of the freight offered today has two or more “middlemen,” with each taking a large percentage of the freight charges paid by shippers.

In addition, brokers are hurting the trucking industry because most do not care who hauls their freight. Most are interested only in finding the lowest-priced carrier. Carriers, in some cases, offer very low rates to shippers, locking out carriers priced higher.

Brokers have hurt trucking rates more than the small, cheap carriers the letter writer speaks about, and a large percentage of these brokers are other carriers offering rates to other carriers so low they will not haul them on their own trucks.

Quality service and dependability are not important to most brokers.

I think linking trucking safety and freight rates is a rational argument. Only about 4% of trucking accidents are because of unsafe equipment. To improve trucking safety, carriers must hire better drivers and offer better training.

Another way to try improving safety is to require onboard recorders for carriers with high accident rates and to reward carriers with good safety records with incentives such as reduced paperwork. Reward carriers that do it right, and increase oversight of those that do not.

Times are tough on trucking, and carriers need to reduce costs through efficiency and to offer better quality service.

Richard Marsh

President

SpecializedCarrier.Com Inc.

Pahrump, Nev.

Climate Change

I enjoyed your article that featured American Trucking Associations’ thoughts about climate change legislation (click here for story).

As is often the case, industry representatives paint an unfounded picture of the effects of new legislation.

ATA claims that any substantial cost increases imposed directly or indirectly on trucks by climate change legislation will curtail the delivery of vital consumer goods across the nation such as food, medicine and clothing.

Wow, it’s telling Americans they might not receive life-saving drugs if climate change legislation is enacted.

Remember when research showed that seat belts saved lives? The automobile manufacturers warned they would go bankrupt if they had to incorporate seat belts in every vehicle. I guess in a way, they were right; they did go bankrupt but not because of seat belts.

We are told that the cost of fuel is determined by supply and demand. However, with the enormous amount of current speculation in the trading of oil futures, the price we pay is much more a function of speculation than real economic considerations.

Studies show that climate change legislation will cause a modest increase in the price of fuel. However, the greatest threat of an unpredictable spike in fuel prices comes from other factors.

It’s unfortunate the trucking industry cannot find a more honest argument in its opposition to our nation’s efforts to deal with global warming.

Don McAdam

Atlanta