Letter: Flexibility = Survival
This Letter to the Editor appears in the June 3 print edition of Transport Topics. Click here to subscribe today.
Flexibility = Survival
Authorized carriers come in all shapes and sizes, ranging from a truck or two to an operation of thousands. Each business model is different, a model that is shaped to fit the products they haul and their customers. This model also is tailored to give the company flexibility.
Currently, the law gives authorized carriers the needed flexibility to utilize assistance from other authorized carriers if a situation arises where the originating carrier is unable to complete a customer’s contract with its own equipment.
This practice is commonly known as “subcontracting,” “subhauling” or “convenience interlining.” These carriers hire others to transport shipments that the carrier is authorized to transport in whole or in part.
Prior to MAP-21, the statutory definition of “transportation” was widely viewed as allowing a carrier to “arrange for” transportation it was authorized to provide without first obtaining a broker’s license. However, contradictory language in-cluded in MAP-21 jeopardizes these subcontracted movements.
As defined in law, a broker is only an arranger, not a provider of transportation. A broker, unlike a carrier, does not accept liability for cargo loss or damage. The broker regulations clearly define a broker as any party “other than a carrier or carrier agent” who arranges for transportation.
Convenience interlining as practiced every day by agricultural and intermodal haulers, as well as many small and midsize carriers, is entirely unlike brokerage in that the originating carrier making the “arrangement” retains cargo liability and pays the contracted carrier.
These requirements would be confirmed by the MAP-21 corrective legislation being advocated by 32 state trucking associations (at last count), three conferences of American Trucking Associations and other trade associations.
It is true the broker definition established by the Interstate Commerce Commission is believed by some to have prohibited carriers from rebrokering freight without separate authority. However, this view has been questioned.
In a 1949 ICC case, the ruling did limit carriers from subcontracting freight; however, that ruling was not the final word. That decision actually created an uproar nearly 65 years ago. Carriers petitioned the agency to reconsider its decision, pointing out the importance of convenience interlining to augment fleets and provide services to shippers when the originating carrier lacked equipment in the right location on the right day.
As a result, the ICC reversed itself and made clear a carrier could retain another to provide service without obtaining a broker’s license, as long as it booked the shipment and retained liability.
The reason for this dustup was to “fight fraud in transportation.” However, amid the excitement of fighting fraud, a long-standing practice was put in jeopardy of being stripped from carriers.
Whether it is a tomato hauler at capacity, or an intermodal carrier surprised by the arrival of a second ship, or a carrier with three trucks who has had one break down, this is a practice that allows them to keep a relationship with a shipper and be allowed needed flexibility.
Many believe the practice is only utilized by a select few, but the support from state associations, ATA’s conferences and others would prove otherwise. We need to ask ourselves: “Will stripping carriers of their flexibility during the busiest times of the year cut down on fraud in transportation?” The groups and their members believe it will only add unnecessary burden and cost.
Agricultural and Food Transporters Conference
American Trucking Associations