Letters: Setting Standards, Rail Pays Its Way, Where’s Rocky?, Brokers Controversy, More on Brokers

These Letters to the Editor appear in the May 31 print edition of Transport Topics. Click here to subscribe today.

Setting Standards

I agree with “Opinion” writer Paul Landry: There’s no question that safety is more important than money. As consumers, we need to do the same when it comes to setting priorities. (“Shippers Should Put Safety First,” 5-3, p. 7; click here for previous Opinion piece.)

For example, our society complains about the lack of customer service, yet has migrated to big-box retailers to save money.



I’ve never heard anyone leave a big box store and say, “Never mind the prices, the service in there was great.” Have you?

We will not take the obvious step of valuing service enough to take our business where the best service is, and that typically is a mom-and-pop operation.

We clearly expect businesses to maintain higher moral standards than we are willing to do ourselves, though we are fully capable of doing it.

So, if we want to ask shippers to put profit after safety, we ourselves need to value things more highly than making a good deal. Let’s set the ball in motion to value what is important: long-term relationships, treating people fairly, being good citizens and being safe.

Then let’s hold businesses up to our standards.

Danny Schnautz

Clark Freight Lines

Operations Manager

Pasadena, Texas

Rail Pays Its Way

A May 17 letter headlined “Trucks Pay Their Way” lamented the differences in federal charges for trucking versus railroads (p. 7; click here for previous letter).

I have no argument with most of the letter writer’s points because I’m not really aware of the ins and outs of the taxes and fees your industry deals with, aside from fuel taxes and licensing and permits.

What I can point out is that some railroads pay real-estate taxes to local municipalities wherever they have track. They also have to maintain and upgrade their rights of way. These are burdens the trucking industry does not endure.

Taking CSX as an example, its entire line out of New Orleans over to Mobile has been rebuilt twice in the past 10 years. Similar undertakings are now under way in Tennessee as a result of the recent floods that devastated that area. Uncle Sam isn’t writing a check for those costs.

Academics have labored for years to tabulate the various differences in the taxing philosophies imposed on the various modes.

The railroads have griped about the interstate highway system and the dredging of waterways and lock construction for barges. Truckers have groaned about the difference in fuel taxes and railroads have done similarly with what they pay in fuel taxes versus barges.

All the shippers know is that these things drive up costs.

Larry Blazynski

Manager, Bulk Transportation

Arkema Inc.

Philadelphia

Where’s Rocky?

What happened to the anthropomorphic truck? I missed him/her from the cartoon in the May 24 issue (p. 6).

Dean Huth

Safety Manager

Overton Transportation

La Vergne, Tenn.

Editor’s Note: Rocky had exceeded his allowable hours and was in the sleeper berth. Thanks for asking. He is back this week.

Brokers Controversy

Editor’s Note: In the May 24 issue, a letter writer took issue with some of the statements and statistics in David Dwinell’s May 10 “Opinion” (“Calls to Restore Regulation Misguided;” click here for previous Opinion piece). The letter writer specifically questioned the op-ed’s contentions that: 18 of every 19 brokers fail and do so because of taking on primary liability; carriers in 2009 paid $1.5 billion in unnecessary broker commissions; language used to define what constitutes a broker should be changed; and there is no penalty for absconding with motor carrier funds. Here is Mr. Dwinell’s reply.

Eighteen of 19 brokers do fail before their 36th month in business. In the first 12 months, 40% of the bonds are cashed. Ask any surety bond company for verification. After another 24 months, the balance leaves one successful broker. The number of licenses applied for since 1981 — and those who are still actively in business today — show that fewer than 20,000 have survived.

At no time did I say brokers fail exclusively because of the liability issue. The reasons for broker failure vary. Some are about liability, but a majority fail from poor cash-management practices and paperwork. Most brokers think their entire receivable belongs to them, when in truth, only that portion that is their commission is theirs; the balance is held in trust for the actual motor carrier.

The $1.5 billion estimate of excess broker commissions is an extrapolation from all motor carrier receipts calculated from my brokering experience of more than $100 million since 1981, $120 million in agent’s receipts since 1987, and interviewing more than 17,000 motor carriers who have graduated from our broker certification course of study since 1987.

Redefining what constitutes a broker will provide severe criminal penalties for those who abscond with actual motor carrier receipts. As of today, there are only civil penalties.

My proposal achieves what the letter writer is asking for — severe criminal penalties. Brokers should support any measure that improves trucking, because brokers cannot survive without truckers.

Common carriers have been brokering to other carriers since long before the creation of the license as we now know it. A motor carrier in possession can broker to another motor carrier without a license as a majority of all brokered transactions in the United States now occur.

The nation’s laws and all common law adherents subscribe to “strict liability,” which means both that carriers are 100% liable for loss and that they cannot contract that liability away.

The only function of the license as we now know it is to provide an ar-rangement of transportation without liability, as a travel agent. Very few licensee operations meet that criteria by conduct.

Brokers are not a “mode” of transportation and cannot accept, extend or otherwise declare an interest in cargo without incurring “strict liability” — the lot of the motor carrier.

Who can make a profit from a 15% commission in exchange for accepting 100% of the liability?

Brokers are increasingly found liable for loss by their conduct. Most brokers act like motor carriers to get freight from shippers and in doing so are increasingly found liable for their conduct. Very few brokers actually are able to conduct their business without motor carrier liability.

David Dwinell

Professor

LoadTraining.com

Phoenix

More on Brokers

In response to the May 17 letter regarding higher bond requirements for brokers (“Broker Wars Redux,” p. 6; click here for letter), I want to 100% agree with the letter writer and to offer some insight as to why the brokering business has become more like the used-car business than a true and well-respected profession.

Until we stand up as an industry and push out brokers who add little or no value, we will continue to suffer the consequences. Many brokers should not be allowed to be in business. If they were trying to conduct business in typically licensed professions such as real estate agent, plumber or electrician, they would not make the grade.

The government continues to turn a blind eye to the problems that we all know exist.

The disconnect between state or federal licensing boards and the brokerage business is not that dissimilar to the reasons for the recent Gulf of Mexico oil spill or the collapse of the financial industry — which brought the economy to its knees.

So if lax regulations ultimately lead to disaster for us all, common-sense brokerage regulation can avert the issues that we know all too well exist.

To add to the letter writer’s comments, I suggest that brokers not only should prove the financial means to conduct business (perhaps a cash minimum $100,000 bond with a federal escrow agent), but to go it alone they also should:

• Be properly licensed.

• Be free from certain convictions under law.

• Agree to adhere to a code of ethics.

• Have at least three years of experience working for another licensed broker.

All I am asking is that the brokerage business be cleaned up. This is not rocket science, and American Trucking Associations, the Transportation Intermediaries Association and the Federal Motor Carrier Safety Administration — and anyone else with influence — need to push for it immediately.

The few brokers who may argue about the new rules are probably the exact individuals we do not want representing us.

Tim Higham

President and CEO

Interstate Transport Inc.

St. Petersburg, Fla.

 

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