The Transparency Dilemma: Why FMCSA’s Proposed Rules Miss the Mark

Ding. Round 2. The recent Federal Motor Carrier Safety Administration (FMCSA) Notice of Proposed Rulemaking (NPRM) has reignited the debate over the role transparency plays in the broker-carrier relationship. This regulation is dangerous to the industry as it threatens to expand on exposing proprietary information in the name of “transparency” in contract negotiations between a broker and a shipper. It could also lead to a broker violating trade secret laws by revealing proprietary information of the shipper.

We can all agree that enforcing a one-size-fits-all approach to sharing detailed financial records – including all charges and payments for every shipment – within 48 hours of request presents significant challenges. We understand the desire to hold brokers accountable. However, the reality is that brokers operate in a highly competitive and regulated industry, where their role as intermediaries requires them to take significant risks and responsibilities to ensure a smooth and efficient supply chain. Handing over proprietary records extemporaneously is not as simple as it may sound.

One claim being made by those who want rate transparency is that brokers attempt to sidestep transparency altogether by drafting contracts that exclude certain details. This argument misrepresents the nature of freight broker contracts. Brokers are not trying to “waive” transparency for the sake of it; they negotiate contracts in good faith, balancing the needs of both shippers and carriers while maintaining competitive pricing. These contracts cover essential elements such as payment schedules, risk mitigation and transportation arrangements – all necessary to keep operations running smoothly. It’s a mutually beneficial model that thrives in a dynamic market with razor-thin margins.

Moreover, the idea that brokers can simply bypass transparency is misguided when you consider that brokers and carriers enter into agreed-upon contracts defining each party’s responsibilities. This is basic contract law, and even FMCSA itself acknowledges that Congress has not explicitly prohibited such waivers, meaning brokers retain the right to negotiate terms that suit their business needs.

There’s also concern over the timing of when carriers could request to see these records. Given that brokers often operate on payment terms ranging from 30 to 90 days, asking them to provide details before they’ve even been paid is problematic. It’s easy for regulators to talk about transparency, but asking brokers to provide records without full access to payment information could disrupt cash flow and create administrative nightmares. A 48-hour deadline for sharing records when payments are still outstanding risks producing incomplete or outdated data, leading to bad-faith assumptions based on incorrect expectations.

Then, there’s the argument that brokers have a regulatory obligation to provide detailed transaction records upon request, including all charges and payments related to each shipment. While this intention is understandable – ensuring brokers aren’t hiding anything – it fails to consider the sensitive nature of the data being requested. Brokers often operate under confidentiality agreements with shippers to protect critical information such as pricing, lanes, and commodities. Forcing brokers to disclose too much transactional detail electronically could have unintended consequences, such as driving rates down or exposing sensitive moves. Brokers work to secure the best rates for all parties involved, but excessive transparency could undermine their negotiating power, ultimately harming everyone in an already financially strained industry.

The FMCSA is overstepping its authority in trying to influence private contract negotiations between two independent parties.

In short, the FMCSA is overstepping its authority in trying to influence private contract negotiations between two independent parties. FMCSA should focus on keeping our highways safer – its sole mission and purpose of existence – and not meddling in private disputes between two parties.