The Trucking Industry Needs More Transparency from Brokers

The relationship between carriers and brokers has been strained these past few months. Even though supply chains are of the utmost importance during the COVID-19 pandemic, shipping rates have been dropping. At the same time, demand is increasing, which should theoretically give carriers and owner-operators more leverage when negotiating rates. The majority of the friction comes from the lack of transparency with brokers, but the OOIDA is proposing legislation to Congress that might make get everyone on the same page.

Brokers and a Lack of Transparency

For a very long time, brokers have offered jobs to carriers and independent drivers without disclosing many details. In some cases, drivers do not know who the clients are, what they want hauled, or the rate they are paying the broker. This has led to some less-than-ethical transactions which have placed carriers in awkward positions. On the financial side, the lack of transparency has led to brokers severely undercutting rates to carriers and owner-operators. Declining rates from brokers are especially dangerous during the coronavirus pandemic, when carriers need a strong cash flow to keep operations rolling.

The Proposal from the OOIDA

The Owner Operator Independent Drivers Association (OOIDA) sent a letter to Congress last month, asking for more transparency between brokers and carriers. The thinking behind the letter is that if brokers are open about the shipments and the rates, then everyone could get more equal footing, communication would be improved, and there would be more fairness in shipping rates. It would allow carriers and owner-operators the ability to choose jobs with better payouts rather than settling for consistently lower rates that barely cover the cost of fuel for the trip.

Maintaining Cash Flow with Low Rates from Brokers

If you run a trucking company or if you are an owner-operator that regularly works with brokers, you are probably used to long turnaround times on receivables. One way to eliminate the wait and improve cash flow is with freight invoice factoring. Instead of waiting on staggered payment schedules and payments from brokers every 30, 60, or 90 days, freight invoice factoring can turn receivables to cash within 24 hours. If you want to speed up your access to revenue, contact the professionals at Single Point Capital today.