Part 4 – How Does A Broker Qualify Their Carriers And Do They Always Do It?

Pimp Daddy Carriers Wants to Carry Your Freight, Is That Cool With You, Shipper John?

This is Part 4 of our Series on Busting Brokers involved in transportation accidents that result in injuries.  Parts 1 – 3 are available in our library.

Now that you know a little about the industry, have checked the carrier’s B.A.S.I.C. scores, and satisfied yourself that it had bad safety scores, your next step is to find out exactly how the broker in your case goes about qualifying carriers, and in particular what it did to qualify the carrier in your case.

In other words, we know the BASIC scores are available, and in your case you now know what the carrier’s BASIC scores were.  But are the BASIC scores being used by brokers to make our roads safer?  What process do brokers go through in selecting the carriers they hire to haul loads for their shipper clients?

While there is no set procedure to which all brokers adhere, we know what the “Industry” powers-that-be say about using the SMS BASIC scores.  This quote from Tom Sanderson, CEO of major 3PL company Transplace, and Board Member of Alliance for Safe, Efficient and Competitive Truck Transportation (“ASECTT”) gives some insight:

 

“[W]e urge you to compete based on service and based on price, not based on safety.” —Tom Sanderson CEO, Transplace; Bd of Dir. of ASECTT

[W]e call you to action.  If you are a shipper or a broker, do not use the CSA/SMS scores to select carriers.  If you are a carrier—and some of the large carriers do this, thinking that this is a competitive advantage for them—we urge you to compete based on service and based on price, not based on safety….We think the FMCSA should stop publishing the scores and abandon the efforts to mathematically determine which carriers are safe to use.[1]

 

YOU JUST CAN’T MAKE THIS STUFF UP.

If you’re skimming for content, please take a minute and read the quote from Tom Sanderson just above. Doesn’t that just make the transportation’s stance on the importance of safety on the roads clear? They don’t value it.

So what does a typical broker do to qualify a carrier if it does not look at the BASIC scores before hiring the carrier?  Here is an example:

Pimp Daddy Broker Company (fictional name used for purposes of hypothetical example only) is like a transportation brothel and needs a plentiful stable of motor carriers available to service its clients (the shippers).  It therefore enters into contractual relationships with a large number of carriers that it can potentially hire for loads in the future, and which it can use to bid against each other to obtain the lowest shipping price for each particular shipment.  When Pimp Daddy Broker Company first takes in a new carrier, it enters into a master contract with that carrier to generally govern their relationship; this master contract requires the carrier to maintain DOT operating authority and not have an unsatisfactory safety rating from the DOT.  However, it says nothing about the carrier’s BASIC scores.

Now, once the carrier is in Pimp Daddy Broker Company’s stable, it is eligible to be engaged by Pimp Daddy to haul Pimp Daddy’s loads so long as it maintains its DOT operational authority.  Pimp Daddy likes to keep its clients happy, though, so it always makes sure the carrier has a good on-time performance history before hiring it for a particular load.  In fact, Pimp Daddy uses modern technology to track certain aspects of the carrier’s service history with Pimp Daddy to ensure the carrier performs well for its shippers.  For example, things like on-time pick-up and delivery rates and other non-safety related performance factors are plugged into a computer program and all carriers are given a performance related score.

When Shipper John (again, a fictional name used for purposes of hypothetical example only) then contacts Pimp Daddy with a load it needs hauled, Pimp Daddy gets to work.  Pimp Daddy usually agrees to a set payment from Shipper John before it knows what the carrier will charge to haul the load.  Pimp Daddy then puts the load out on its website for all interested carriers in its stable to bid against each other to win the load.  The carrier with the lowest bid usually wins the load, and a Pimp Daddy employee checks the carrier’s Pimp Daddy performance score on the computer at that time to make sure it has a high enough score with respect to on-time and related performance issues.  The computer also makes sure the carrier has current operating authority from the DOT to be on the roads, and minimum DOT required insurance.  The difference between what Shipper John pays Pimp Daddy and the amount the carrier agreed to accept from Pimp Daddy to haul the load is often referred to as the “spread,” and represents Pimp Daddy’s profit on that load.  Once the amount has been agreed upon and the carrier’s Pimp Daddy score checked to ensure it is a reliable member of Pimp Daddy’s stable, a separate contract is entered with the carrier for that particular load setting forth the particulars of that delivery.

This example shows what often occurs when a broker hires a carrier to deliver a load.  As can be seen, the focus of this process is on pricing and on-time performance, not the safety level of the carrier the broker is putting on the roadways.  So, what could Pimp Daddy have done that it did not do? We will visit several examples and talk about formulating your rules of the road in your trucking accident case involving a freight broker next week in Part 5 of our series.