Shippers Should Align with TRUCC

Shippers Should Align with TRUCC

Copyright 2008, Traffic World, Inc.

Listening to Bob Voltmann of the Transportation Intermediaries Association last week as he testified before Congress against the TRUCC Act conjured up the W.C. Fields quote: "never give a sucker an even break." In this case, the part of the sucker is being played by truckers, shippers and in the end consumers who are footing the bill for fuel surcharges collected yet never received by the people actually paying for fuel.

In the marketplace, fuel surcharges are intended to accomplish two primary goals. First, to temporarily augment base freight rates so that shippers are not continually renegotiating those rates due to constant fluctuations of fuel prices. Second is to stabilize the trucks available in the marketplace in order to keep base freight rates from spiraling out of control due to the inability of motor carriers to haul anything at current base rates without a fuel adjustment.

Collecting fuel surcharges and not passing them through to whoever is paying for the associated fuel is fraud, plain and simple. Despite Voltmann''s contentions, it is an all too common practice. The TRUCC Act is simply intended to do away with that practice.

Opponents of the TRUCC Act have launched a campaign of misdirection, misinformation and fear mongering. They claim the TRUCC Act is about creating more opportunities for litigation and that passage would essentially equate to economic re-regulation within a free market. These well-worn tactics of obfuscation belie the actual motivation for brokers to oppose the legislation - they are pocketing portions of fuel surcharges, paid by shippers intended to reimburse service providers for fuel costs and to stabilize the marketplace.

Those middlemen are not only worried about having to give up their fraudulent source of profits, they are also scared to death of having to admit their practices to their shipping customers.

Beyond distorting why OOIDA gets involved in legal actions to assist its members, Voltmann and other opponents have stated the TRUCC Act has nothing to do with surcharges but rather setting up lawsuits. Utter nonsense. Absolutely nothing in the TRUCC Act creates a new private right of action against brokers or carriers, and certainly nothing creates litigation exposure for shippers.

The notion that the TRUCC Act is a step toward "re-regulation" is also absurd. 49 C.F.R. ?371.3 (c) states "Each party to a brokered transaction has the right to review the record of the transaction required to be kept by these rules." It''s simply disingenuous to equate refinement of current law with market re-regulation. The requirement that some level of disclosure take place with the financial settlement is not burdensome and in fact is identical to that already in place for motor carriers who contract with owner-operators and pay them by a percentage.

Under 49 C.F.R. ?376.12 (g), the regulation states that motor carriers who contract with owner-operators under a compensation method expressed as a percentage of gross revenues must provide documentation before or at the time of settlement such as a copy of the rated freight bill or a computer-generated document containing the same information so owner-operators can verify they''ve been paid properly. Lessors have the right to view all original documentation. This came about due to a concern that some motor carriers were skimming owner-operators of their contracted percentage. It''s unconscionable that any believer in a free market would also think it is OK to siphon surcharge funds and that the only controlling authority is "catch me if you can."

This level of disclosure has actually worked in just the opposite manner prophesized by opponents of the TRUCC Act.

There has never been a flurry of litigation related to this provision. The required disclosure and accountability actually avoided the need for protracted litigation caused by the short-changing of owner-operators.

The shipper community is being done a grave injustice by transportation middlemen who use fuel surcharging as a profit center. Shippers should be very concerned that money they''re paying to stabilize the market is not accomplishing that goal. The record bankruptcies within trucking could be ameliorated by fuel surcharge pass-through. When the economy and freight volume begins to grow again, shippers will likely face their worst nightmare - dramatic increases in base rates as a result of lack of adequate truck supply.

I strongly urge shippers to look beyond the hype and rhetoric espoused by opponents of the TRUCC Act and review the legislation for themselves. Contrary to opposing the bill, shippers should be among its strongest proponents.

-- Johnston is president of the Owner-Operator Independent Drivers Association.