The Broken Safety System Threatening Shippers and Brokers with Chris Burroughs

Speaker A: Hello, friends. Welcome to the Logistics of Logistics. My name is Joe Lynch. Thank you so much for joining us today. Today's topic is the broken safety system threatening shippers and brokers with my friend Chris Burroughs. How's it going, Chris?

Speaker B: Joe, good to see you, sir.

Speaker A: Good to see you again. So, Chris, very important topic today. So please introduce yourself and your company and where you're calling from today.

Speaker B: Yeah, I'm, um, Chris Burrows, president and CEO of the Transportation Intermediaries association, or as commonly known as tia, calling from the beautiful Commonwealth of Virginia here.

Speaker A: Very nice, very nice. So what does TIA do?

Speaker B: So, tia, we're the trade organization, trade association for the third party logistics for the freight brokerage industry. So we do all the great things that trade associations do for their members. Tip of that spear is really advocacy and government affairs. We are the voice of the industry on Capitol Hill with members of Congress, with the federal agencies, with the administration. In addition to that, we have a wide variety of educational courses. We hold conferences throughout the years for our members. So also for learning and networking opportunities. So the full gamut of the trade association. But like I said, uh, advocacy is really what we're, what we're known for. And as true with many trade associations.

Speaker A: Yep. We need you now because we, uh, had this big ruling, the Montgomery decision. And you guys are right, standing in the breach. So talk about the legal ruling that is the Montgomery decision that everyone is scurrying about trying to figure out what's next.

Speaker B: Yeah, uh, so there was a Supreme Court decision recently. It was called the Montgomery M case, dealing with Sage Robinson as the broker and Carbine Transport was the carrier in the case. So before the Supreme Court, it was actually Montgomery v. Carbine Transport. But CH Robinson, for all intents and purposes, was the party there more or less defending themselves. So it involved a truck crash a few years back where somebody was severely injured. Like I said, Robinson was the broker of record and went through district courts. There was a, uh, split in the district. Decisions really centered around the defense of what's called the F4. It's a 1994 piece of legislation that became law. It's the Federal Aviation Administration Reauthorization act. And really talks about states stepping in and preempt or the federal government preempting state decisions. So rate, you probably hear rates, routes and services. States cannot set standards on those provisions in terms of trucking and transportation. And like I said, it's been a defense that a lot of TIA members, a lot of brokers, shippers, have used throughout courts There was multiple different split decisions throughout the country. So it obviously rose to the level of the Supreme Court saying, hey, we should take a look at this and see if this is a viable defense in terms of safety. Are brokers excluded or are they part of this federal preemption under F4 in terms of their being negligent in the selection of a trucking company or go, uh, ahead.

Speaker A: Yeah, we'll get more into that in a minute. Because this affects everybody who is a broker. If you're a carrier and certainly I think also shippers. The real threat though is to the brokers and the carriers. Am I right to say that?

Speaker B: Absolutely. So, yeah, fording ahead, the decision obviously was 90 in favor of the Montgomery, Sean Montgomery side. That really eliminated this defense. So it's really going to change the landscape, the liability landscape and the carrier selection landscape amongst shippers, brokers and carriers.

Speaker A: Yep. So let's talk a little bit more about TIA and we'll get back to that. So first off, I could not work at tia Transportation Intermediaries association because I cannot consistently say intermediaries. That would be a very hard problem for me to get over. But your mission is this advocacy. So right now you guys have a petition that is going to what Congress to help out with, to get some clarity for us in the brokerage world and in the carrier world.

Speaker B: The petition actually goes to the fmcsa, the Federal administration. Yep. But to go back to your intermediary report, I always love to tell the story. So we'd obviously love to say TIA more on the Hill, talking with members of Congress, with agency staff. But there's actually four or five different TIAs. There's like telecommunication, there's tire, there's toy, there's the tortilla industry, which is way cooler than what we do probably. I love tortillas. So yeah, I'm with you on that. Transportation Intermediaries Association. And when you're talking with a 20 year old on Capitol Hill or a member of Congress, by the time you get that out, they're kind of checked out. So TIA is what we like to say. But there is competing TIAs out there. But yeah, so we, we've recently filed a petition for rulemaking to the FMCF to really get clarity. It's all about getting clarity in the carrier selection process. And it's asking them to promulgate a federal standard. What certain checks should a shipper broker look at when selecting that trucking company? And this is actually, it's based on a piece of legislation that we have been pushing for years both from a clarity perspective and also a safety perspective. We've been pushing that on the legislative side for a number of years. And we want to have conversations with the agency moving forward to get this out, to get the clarity and reduce a lot of the confusion because of the decision. And uh, we'll go into this a little bit later. But because of the decision, there's so much confusion out there now because it puts it back into the states in terms of a patchwork of what the liability standards should be or what that selection standard should be, which is going to be different based on what locality and state you're in.

Speaker A: Yes, yes. And it's. We've always had this system where the brokers pick a carrier and you say, did you vet them? We've been talking about vetting a lot more in the last five, seven years than we ever have in the past. We've cargo theft, cybersecurity, places where you guys are taking a leadership role also. But that's for another day. We've talked a lot about vetting and. But I can vet. I can say, hey, I just picked the, the very best carrier in our system. They haven't had an accident in 20 years and they have an accident. Am I on the hook? Am I on the uh. And if you're CH Robins or so many other big companies, you wonder if are they just being added to the lawsuit because the trucking company has a million dollars in revenue and they have a trillion dollars in revenue.

Speaker B: Yeah. And it's been. This isn't a new. There's a lot of buzz on social media and the press about now brokers can be sued and how liable the reality is this is not new. The first negligent selection case was a, uh, case known as the Schram case, also involving C.H. robinson. To your point, when you're the 800 pound gorilla in the room, you're going to be, you're going to be a target for folks to go after with your pockets. But that came back in 2000. So nothing new to the industry.

Speaker A: Okay, I didn't realize that.

Speaker B: Yeah. And actually this year Tia has been releasing for 20 years, uh, our carrier selection framework. So it's not best practices. It's kind. It's a. Here's things that you could potentially look at or incorporate into your carrier selection process. Again, this is not a standard. We're not, we're not in the standard making business. But it's a framework to potentially use within your business on things. So this issue has been top of mind of our folks for a number of years because of some of these decisions and cases that have been coming out for 20 plus years at this point.

Speaker A: Yep. So I think there's a lot of people who just think when they hear tia, they go, oh, I love tia. I go to conferences and they host them and they're always great. There's a lot more to it. We'll come back to all that in a minute. Chris, tell us a little bit about you. Where'd you grow up, where'd you go to school? Some career highlights before you took the top job at tia.

Speaker B: I grew up, I grew up in Northern Virginia, so not far from Washington D.C. and uh, I went to school at Shepherd University, a small Division 2 school out in Shepherdstown, West Virginia. We like to call it the Harvard on the Potomac. So very small liberal arts school.

Speaker A: Those are sometimes the best schools because you get the attention.

Speaker B: Absolutely, absolutely. And my background really has been in government affairs and politics. So my dad was a longtime congressional staffer, 40 plus years working on the House side of Congress. Something obviously stuck with me. He would take me in the summers out here in Washington D.C. and a lot of places there's HOV lanes and he needed an additional rider to get on those HOV lanes. So I was called, they call him Slugs. I was basically his slug.

Speaker A: What is HOV Stam? I don't even know.

Speaker B: We don't have that high, high occupancy vehicle.

Speaker A: Oh, okay. So you have to have two people in it. California has that too, right?

Speaker B: Yeah. So two, two or more people get you into the city quicker. So as we were commuting in during the summers, he would put me in the back of a congressional hearing room, usually with a quarter and I would just play with it. And apparently something stuck in because I was really always into politics, always into government relations. So after graduating college I started working for the Transportation Infrastructure Committee on the House of Representatives side and obviously love the issues of transportation. Did that for a few years working directly for Congress. Went to a small boutique lobbying firm after that. Had about 10 or 12 clients, a ah, variety of different sectors including TI. I was one of our clients. So I got to know our uh, previous CEO, Bob Voltman, but Bob Voltman first. And yeah, 15 years ago Bob offered me a job to come in house as a manager of government affairs and help, help with that department under, under my boss at the time, Nancy. And here we are 15 years later. I'm, I've assumed the role two years ago of President, CEO of TIA, following Ann Reinke, who was a great mentor for me over the past four years that she was at tia. So, yeah, it's a great organization. Love the members. These are salt of the earth folks in the list industry. But my background's pretty much exclusively been government relations and politics, which obviously fits extremely well with what we do as a trade association.

Speaker A: Yeah, and I was going to say not just the politics, but also on, um, the transportation side, which is important. And by the way, my last episode, which published yesterday was with iana. They have a brand new. They have a brand new index that we talked about. But anyway, let's get into today's topic. So give us this background on, um, this Montgomery decision. Talk to me as if I know nothing, because I know just a little more than that.

Speaker B: So like I said earlier, it was an accident involving, um, involving a young man who severely injured. Robinson was the broker of record. There was a split decisions at the court level in terms of this F4A preemption defense or brokers.

Speaker A: What does F4A stand for?

Speaker B: Yes, the Federal Aviation Authorization act. It's from 1994. It's a law that Congress passed that talks about preempting state regs when it deals with rates, routes and services.

Speaker A: It exempts it. So now they're saying take that exemption away.

Speaker B: Potentially.

Speaker A: Yeah.

Speaker B: And to be fair, so we were all aware that the Montgomery decision went 90 in favor of the petitioner or the, the plaintiff side. But to be fair, 31, because there were such a, ah, split decisions in the districts. 31 states had already said basically this wasn't a viable defense. So this isn't totally resetting the marketplace in terms of liability standard, but it will, it'll, it will change the landscape moving forward for a variety of reasons. So decision comes out. Obviously, I think there's going to be. We're still in that reactionary period, and I think we're going to be for a while because it really takes all the potential of brokers being preempted from state regulations dealing with safety and puts it back within those states. So now we're going to have a patchwork, which is what F4 tried not to do. But we're going to have a patchwork of decisions that are going to be coming out from states on different liability thresholds. And what that means is in the state of Illinois, you could, a broker could be held liable for what's called negligent selection based on X, Y and Z. In the state of Texas, it could Be ABC in the state of Virginia. It could be def. Uh, we just don't know what those standards will be and we're probably not going to know for a while because until some of these decisions come out. So because of this confusion, because of all these conflicting information that exists out there and a very limited data Source from the FMCSA, 94% of trucking companies are still unrated, meaning they haven't had that compliance audit from the federal government yet to give them a rating.

Speaker A: So am I right to say it this way, Chris, that even though this is not looked at as a positive ruling for our industry, that it probably forces us to do the things that you're trying to do right now elevates it?

Speaker B: I think this has been talked about a lot in the media is a lot of the companies that are really putting stringent carrier selection processes in place are going to continue to do that. And some of the folks that maybe fly by night or hiring unscrupulous, uh, carriers, hopefully that the, this would stop that that's a positive of it. But there are going to be impacts to this for sure. And two of those impacts are going to be obviously increased insurance cost. I think some of the insurance cost has really already been baked in because like I said, these decisions began in really 2004 with that tram decision with C.H. robinson. So they're not new. So some of the cost has really already been put in. But there's going to be a reaction by the insurance companies to increase per. Increase cost of the insurance. We don't know what that looks like.

Speaker A: Is that cost for the brokers or

Speaker B: cost of the carriers or cost probably across the board. Now the personal injury for carriers is $750,000. That's federally mandated. That hasn't changed in a number of years and probably should go up at some point, but that'll be cost to cost a broker some insurance mostly. And secondly is you're going to see, and I don't use this term, I've talked about this a lot, but I don't use this term negatively, is you're going to see an overreaction on the vetting process because you're really going to have to drill down into what your selection process is and there's going to be a segment of trucking companies that are going to be excluded. That's just a reality of uh, it. You're going to tighten the screws down. There's going to be a segment of trucking companies that are excluded and some of those folks may be the conditional carriers, which are authorized by the fmcsa, there's some of those folks, maybe the unrated carriers that don't have a lot of data. And that could be problematic to some of those small folks, because an unrated carrier, by all tens of purposes, and we said this for years, they're unrated. Maybe I should, maybe should back up a little bit in terms of. To get a safety rating from the fmcsa, it's still done by a physical audit. So meaning the FMCSA has to physically go out and audit the company. It's a strenuous two to three day process typically. And from that they get a safety rating. As you can imagine, with limited resources, they're not doing a lot of these a year. I think I just saw an article recently that the number of safety ratings or audits that were coming out has drastically decreased. We saw a massive decrease during the pandemic, obviously because we were all social distancing. Prior to Covid, we'd asked the agency, I think they said they do about 10,000 audits a year. Just 800,000, 500,000 roughly, somewhere in between there for hire trucking companies. But they have 340 inspectors. They can't do these audits for 800 or 5,000, whatever the number is in terms of active trucking companies. So it's a problem. So with that large number of carriers that are unrated, and again, what I was saying before, they're unrated because they really haven't done anything to trigger that compliance audit. So they haven't had crashes, they haven't had a lot of violations. There's data on them, but there's not enough data for the agency to be like, we really gotta go touch this guy. So those, the carriers are gonna be excluded, which is, can be problematic for them, but that's gonna be their reactionary step taken by industry.

Speaker A: Yeah, Chris, you might. It's a little off topic, but, uh, there I think that's relevant. Under President Obama, we had the Food Safety Modernization act signed, which was the first upgrade of the FDA in 70 years. And it really was saying rather than a, uh, focus on inspection, we're going to have more of a focus on process, which is just catching up to modern manufacturing. And as part of that, they also said we have to get our hands around arms around all of the food that comes to our country from other countries. That and the whole goal of Food Safety Modernization act is to prevent people from getting contaminated food and from people tampering with our food anyway. They don't have enough auditors. So they had a whole process for let's create third party auditors, especially in other countries because we don't have the FDA worldwide. Although we do have a bigger footprint than you would think. And I almost think the same thing needs to happen happen here if you're going to. I would rather than not grow the fmcsa. I, I prefer third party auditors just because of the efficiency that the private sector has.

Speaker B: And actually remember that I remember the FDA rule very well. I sat in actually the first meeting that was held on that over at College Park, Maryland at the FDA headquarters. So yeah, that was a massive change of the industry. Uh, I remember asking the FDA official

Speaker A: by the way, it impacts our industry because in the past trucking companies we had sanitary rules for sanitary movement of freight but. Or food. And I always remember when I did a lot of training and consulting in that and I remember some of the webinars I did with trucking company people are like Joe, we don't answer to the fda. We answer to fmcsa. We answer this guy, that guy. We don't answer to the fda. I was like not the law. I'm just telling you what the new

Speaker B: rule is that changed under the sanitary transportation because now there's a segment of transportation under fda. Yeah. And that, that, that all began in because of an instance, I think it was a tank truckload of liquid eggs that the properly wasn't a clean out. And then they put powdered milk for ice cream or powdered ice cream in there and everybody got sick. And there was a couple instances like that led to the federal government stepping in and saying hey we fda, we need you to have some oversight of transportation for sanitary conditions to our food. And like I said, we put a lot of education out, we worked with them, we advocated with the agencies. There was a lot of buzz around that and it worked. It's been a very positive movement for the industry.

Speaker A: I still don't like the clean out standard. I know we're going down into the weeds, but you have to clean out your truck. If I just move chickens, I probably shouldn't be moving fruit in the next load a chicken, poultry after they're dead. And I always felt like they left the. They didn't want to be too prescriptive about the clean out. But I always said don't focus on the clean out. There should be some sort of test, right. Maybe a swab. You swab four places to make sure that it's clean. But that's, that's me. Uh, anyway, let's get back to our thing here. There's not enough people at FMCSA to do all these reviews. So we have 94% of carriers that will never. That are not rated and they haven't been rated because there was no need, no reason, there was nothing flagged because of their driving record. Right?

Speaker B: Uh, absolutely. And I would say you brought up earlier about third party inspectors, something TI has really supported on this front to change it from a physical auto system to one of data. And actually President Obama.

Speaker A: Oh, I like that.

Speaker B: Yeah, President Obama tried to do this towards the end of his second term and it got stalled for a couple of reasons. One was timing and then when President Trump came in he rolled it back. Two is also there was some strong opposition from some of the, from the trucking side and some of the bus side. But what President Obama said was hey, we have data. Or his administration said, he said we have data on all these trucking companies already. Let's build an algorithm that's fair to industry. That's not the compliance safety accountability program that there is problems because that's a relative system and CSA and sms, the safety measurement system, carriers are put into pools based on their size and if let's say there's a carrier that has a bunch of clean inspections they would go down which is good. In csa, the higher the score the worse. And then a carer who may not have done anything wrong but may not have those positive inspections is going to go uh, up. So in a relative system that's problematic but he said let's use the data, let's build an absolute system and let's give carriers a safety rating of which he proposed to safe or unsafe and can move get rid of the conditional that you're bad but you're not bad enough and let's give carriers or safety rating based on data.

Speaker A: No, I like, I like that. And by the way, you can also say yeah, you, you did, you, you did this audit on your own. We trust you. But keep in mind there are random audits that we're going to keep you honest and that way you make it clear to everybody that just because we didn't audit you doesn't mean I don't think most carriers are like this. That you don't have to follow the rules because we've never been audited and we're all set. Yeah, this is a challenge and I think the challenge you're getting to here is we're going to have an overreaction because of this Ruling some carriers who don't deserve to lose business are going to lose business. And if there is an accident, there was never a standard, right?

Speaker B: Yep. And that's a perfect segue into why we filed the petition. We need the federal government to kind of prescribe that standard for us. What are the things, what are the minimum standards or what's the standard that our brokers and shippers should look at? We think it's authority, we think the insurance that they have valid insurance on file. And three, they haven't been placed at a service at the carrier level. Now there's a couple of different ways to a carrier can be placed out of service.

Speaker A: We say that one more time. You said there's three things that they should be judged, um, on authority, operating

Speaker B: authority, valid, um, insurance is a lot different topic. But there's a lot of fraud in the insurance marketplace as well. And they, and the carrier has been placed out of service. And like I said, most people look at that and say that means they're unsatisfactory. That's one trigger. Not doing your biannual updates. If you have the Trump administration 2.0 maybe if you have a non English speaking driver, the ELP violation as a driver, that was a trigger for an out of service, uh, at the carrier level. But they could also trickle up to the, I'm sorry, at the driver level, which also could trickle up to the carrier level. So there's a variety of different ways a carrier can be placed at a service. So those are three things. And we're open to discussing with the agency and other segments of industry on um, what other checks should be in place. But we need a national federal standard from the FMCSA to give industry the clarity they need. Because we're not going to know in many instances that a carrier is unsafe until an accident happens.

Speaker A: So you said that one more time. National federal what?

Speaker B: The federal motor carrier safety selection standard is what we have been pushing for.

Speaker A: And so at that point, if I'm a broker and there is an accident and somebody says you guys are liable, I can say, hey look, I followed this national federal selection standard. I did what I was supposed to do. The very best carrier in the world can have an accident and they can be negligent. They're probably not doing it on a regular basis. But if, if you're driving millions of miles over time, there's going to be accidents. And this also, we run into this with autonomous vehicles. There are accidents and deaths every day in trucking. Unfortunate, but millions and millions of Miles, obviously we need it. It's the backbone of our economy. But if one of those accidents killed somebody today and it was an autonomous vehicle, it'd be front page news for a week. And there'd be. And there'd be rumblings in Washington about banning autonomous vehicles.

Speaker B: And yeah, I just want to be clear. This standard wouldn't be. People probably hear that and they go, oh, this is brokers looking to skate liability. It's not. It's. It is. This is. Sure, it's a defense that we could point towards, just like we point towards the F4A defense. But again, 31 states already said, prior to the Montgomery decision, 31 states already said the F4A is not a valid defense. So this is a. This is more clarity to a massive confusing system because quite frankly, the FMCSA has dropped the ball on data over the years for the past 20 years plus in terms of what constitutes a safe carrier. And I say. I don't say that lightly. And I want to give a massive shout out to this administration and this FMCSA because we've met with Administrator Derek Bars numerous times since he's been. Since he's assumed the role as a minister. And he's the real deal. This is a guy that wants to get things done, and he is passionate about safety. And he knows that the agency has kind of sat idly behind for many years, and he wants to fix that. He truly does. And you've seen that with Secretary of Transportation Duffy as well. And he's taking a lot of action. They've taken a number of steps to address a lot of these problems, safety concerns over the years. So this agency, this administration is taking the right steps, but it's a lot. There's been a lot of neglect over the years that they've got to dig out of. Yeah, it's.

Speaker A: And, uh, I know there's some people like me would listen to a podcast like this and go, oh, God, just what we need, more overreach by the government into our business and into our lives. And I think all we're talking about here, Chris, is we're not saying hire thousands of people and add a whole bunch of bureaucracy. I think what we're saying is let's have some standards, let's have some guardrails that guide the industry so we don't bump into kind of. Steve talked about it, this patchwork of state regulations where what we don't drive through. I'm just making this up. We don't drive through Idaho anymore because of this right or we know we close that terminal because of the liability in that region versus this region. And the thing that we have going for us here is this massive country is the laws are consistent across, across the states. So as I drive from New York to la, I don't have to say, oh, yeah, the speed, speed limits always change, but they're usually set by the federal level on the expressways. I don't have to worry about a million different laws that are crazy in one state or another.

Speaker B: Sure, absolutely. Yeah, you nailed it right on the head.

Speaker A: Just give us some guardrails, fellas.

Speaker B: Yeah, and train association, that's been our line for a while, is that we don't. We're not in the business of burdensome regulation to get in the vapor, to get in the way of our members doing their job. But there is some regulation that is good and is needed. You do need some federal government intervention on certain things.

Speaker A: By the way, we had during COVID we had problems at the port and then we had. I forgot, I'm going to drop the ball on this, but we had a federal ruling rule change at the port because you think, okay, why do I need the government there? The reason we want the government is there because the ports are an economic center. And if there's a whole bunch of. Lawlessness is probably the wrong way to say it, but if there's a whole bunch of maybe unnecessary fees that are happening, the government just says, hey, you're going to prevent this country from doing business with the rest of the world because of this port. Let's just get it right. And your petition, this is rulemaking. They're asking. We want to hear from tia, we want to hear from the industry so we can put the guardrails up. That makes sense.

Speaker B: Yep. It's really just, let's have a discussion, let's figure it out and let's put something together that improves safety and provides clarity to the folks out there in the industry transformation industry.

Speaker A: So what's the next step? You've, you've submitted a petition. What is what. Give me some of the bullet points from that.

Speaker B: Yeah, we were in the, actually this week meeting with, with administrator Bars and his team at FMCSA about the petition. And it will move to what you just described. It'll move to hopefully quickly, although nothing in the federal government moves at, uh, too fast a pace, but hopefully relatively quickly into a period where there can be discussions with the agency and the public either through a, uh, comment period or one off conversations. But we want to start working with the agency to develop what the standard would look like. And then that would have to go out to a public comment period, as do all rulemakings, so that the general public and everyone has a chance to provide their perspective on what this should look like. And then the agency gathers up all of those different comments, they read them, they take them into consideration, and then they would develop a final rule.

Speaker A: Yeah. And, uh, I followed the fmcsa. I'm sorry, I followed the Food Safety Modernization act as they put in the. The rulemaking. And not very many people commented that was. So this is your opportunity. If you're a trucking company or if you're a broker or you're a citizen, this is the time they're going to ask, we want your two cents. And I think this is again, another place where TIA steps into the breach and says, guys, we as the trucking community and the brokerage community and the shippers, we all need to come and give them our two cents. You can't complain later and say, God, I can't believe how stupid this is if you didn't participate in the comment section.

Speaker B: Yeah, uh, absolutely. Like I said, it's a chance for brokers to comment on the confusion and the clarity they need. And what we talked about. Those carriers that are going to get segmented out, this is their chance to comment too, because this is their livelihood, this is their business. Shippers as well. And really everyone within the industry should at least have their voice heard, no matter what your opinion on it is. And that's why the system's in place, that's why the processes are there. Take advantage of it.

Speaker A: So, Chris, give me the dream scenario here. If Chris Burrows said, I am going to spend the weekend with FMCSA and we're going to hack this out, what does it look like when you're done? Give me three or four bullet points

Speaker B: on what that looks like based on our proposal that we sent to them. Like I said, it's really the three things that we outline. The authority, the insurance, and really the safety status that we have. And if, in my dream world, we would start that, we would use that as our starting point. There may be some other data points that are added, but that would be the standard that the agency promulgates. And then the second part of our petition deals with the high risk carrier list. We're asking for that to be publicized, to be put out.

Speaker A: That's your list, right?

Speaker B: No, that's the FMCSA's list.

Speaker A: Okay. All right. Don't you guys have A list?

Speaker B: No, we don't have a list as an association. Now, uh, the FMCSA has for years had a high carrier list.

Speaker A: High risk.

Speaker B: Yep. It's based on some data points, uh, within that, like I talked about earlier, that compliance, Safety Accountability, Safety Measurement System database that they internally use for kind of investigative action, for audits, for warning letters, et cetera. So they have a list of. I don't know how big it is. I think last I read years ago, was like 4, 4000, 3 or 4000 trucking companies that they consider high risk. We're asking for that to be promulgated out to public.

Speaker A: Yeah, don't hide it. We need it in our hands.

Speaker B: Don't hide it. We need to know. Exactly.

Speaker A: So, yeah, so those three areas you hit on, uh, operating authority, what within operating authority. What do you want to see in there?

Speaker B: That they've gone through the steps and are complying with FMCSA to have authority.

Speaker A: Yep. So the next one, valid insurance, and then the last one you said is about out of service versus that they

Speaker B: haven't been placed out of service for either a safety rating of unsatisfactory or not doing paperwork. Basically, compliance. They're compliant in their safety status.

Speaker A: Yeah. This I'm telling you. I was taking notes here, and even as I look at my notes, I'm like, God, do I fully understand this? And I know you fully understand this. And I think this is where somebody listening who says, oh, yeah, I know of tia. This is why you need to get involved with tia. Because I can tell you right now, if I was a shipper, I was looking, I would say I want to work with. I want to work with a broker who is part of tia, who is active in this community, who I think understands what's going on. I think this, what we talked before we hit record, this could lead to its consolidation. And the consolidation is going to happen because shippers get a little panicky and they say, I want to work with the big guy. And some of the little carriers, little brokers might say, eh, it's always new rules. I'm not worried about it. We'll do what we're supposed to do. This is confusing. This is a challenge. I think this is why you need to get involved with tia, because it's not just all those cool parties they put on. They educate and advocate.

Speaker B: There's a lot of people in the industry that have thought we'd been kind of going before the McGovern decision. We're kind of going through a market restructure. Already in terms of built on technology, it's more expensive to open, for instance, probably open a brokerage now than it is in 2015. And a lot of that is the technology stack and the technology spend that's going to come into play in terms of running a business. And I think as we talked about with insurance costs is increasing the technology costs that are there, you're going to see consolidation and you're going to see some of the smaller players exit the marketplace. You brought up earlier like what does the pool of the carrier look or broker base look like? I think for most recently the agency has said there's about 25,000 licensed property brokers. I'm curious. We've always kind of questioned that number and I think we're going to get an answer soon because the agency recently launched Modis which hasn't gone as smoothly as anybody has wanted. The new registration system within the fmcsa. But and having that conversation with the FMCSA just on the care side of things, I think they said one third of the trucking companies that they sent letters to came back undeliverable. So how many of those brokers? 25,000. I think the number is probably closer to 10. That's just a guess. Yeah.

Speaker A: Our buddy Kevin Hill tracks some of this stuff and I'm sure he's, I'm sure he's looking at in interest this stuff but he told me this not so long ago written on my wall. The top 1,000 brokers have 80% of the volume. Unless it's give or take, things change. That's the top 1,000. So the other 24,000 are sharing 20% of the volume. Which by the way there's still some good sized brokers below that 1,000. And I will say sometimes you'll find a broker connected to a large carrier and they might not be a top thousand broker, but they're top thousand carrier. The top 100 brokers have 2/3 of the market and which is 66%. The top 20 have half of the market. So we already have seen industries are already getting a little top heavy. If you're a mom PA carrier. I'm sorry Mom PA shipper and you say I don't know, I've been working with these guys, I only do two shipments a week and they take good care of me. I don't care how big they are. Obviously if you're a very large Fortune 500 company, you're going to have to go through a vetting process. That's very different. Yeah. If you don't mind. I'd like to switch gears for just a minute with you because I don't talk to you all the time. You guys are also taking the lead on, uh, some other big issues in the industry. So we've had, I think they're all first cousins. Cybersecurity issues in our space, cargo theft issues and freight fraud. So I don't know the best way to talk about those, but I'm sure you do, Chris. So what are you guys doing on that for our industry?

Speaker B: Yeah, this has been a massive problem for many years. And kind of going back to that FMCSA negligence, if you will, I found some comments that our former CEO Bob Voltman wrote back in 2008 talking about 2 million carriers and fraud. Yeah. To the FMCSA. But yeah, we saw like everyone, we saw the massive explosion of cargo theft and freight fraud really exploding during the pandemic. And it has hit our members extremely hard, just as it has everybody else. This is one issue that every part of the segment, every part of the

Speaker A: industry, it undermines the trust.

Speaker B: Absolutely. It's a massive trust problem. So we've, in addition to many other trade organizations, trade associates have stepped up and tried to work on pieces of legislation that will help us reset the table a little bit in terms of cargo theft and address some of the problems that exist, some of the gaps that are there, and create greater coordination between federal agencies and the public and industry. In addition to setting up a, uh, direct partnership and uh, a hotline for our members to provide their data that we provide directly to the FBI. There's a field office in Philadelphia and there's multiple ones throughout the country that are looking at this that are addressing cargo theft. Since 2020, I think strategic theft, which is like that cyber side of things, has increased like 1500%.

Speaker A: Yeah. That's grown faster than the. So we've always had opportunistic.

Speaker B: Sure.

Speaker A: Now we all sudden have the sophisticated strategic stuff going on.

Speaker B: Yeah. And this is not your mom and pop theft that's going on. This is very well organized criminal activity, mostly headquartered centered overseas. That that's kind of spearheading this. And it's a huge problem and we've been talking about it for years. When I joined TIA 15 years ago, the first piece of legislation we passed and we worked on was the Fighting Fraud and Transportation Act. So it's been a problem for a while. Um, it's unfortunate, like the safety aspect that it's taken a lot of high profile accidents and instances to really elevate it to get the tension that it's deserved. And then Guy Fury's tequila brand was one that 60 Minutes talked about. Millions of dollars of tequila was stolen. And we're like, it's Guy Fieri and Sammy Hagar. And they're like, oh, tell us more about that. That stuff is good for audience. Or the lobster heist that happened right before the Christmas holiday, that we were involved, one of our members, and we got a lot of media on that. It's unfortunate that it takes kind of those high profiles because it's affecting everybody every day.

Speaker A: Yeah. And I, by the way, I just was on Danielle Spinelli's podcast yesterday, the Fraud Girl, and so she's been working on it and I've listened to her podcast every once in a while and she's been on mine. When you talk about this issue, if somebody has a theft of their cargo, you don't even know where to look right now. There's. There was, there's still. Should I call the local police? And they're going to go, oh, it's picked up here. And where is it now? I don't know. Was in four states away. We'll call them. And I don't know if I'm right to say this, but I want your two cents. I'm up. My belief is we're going to have to fix this ourselves with technology and being a little more vigilant about who's picking up my freight. And I don't know that we can count on the government. I'm sure there's something they can do. What is your $0.02 on what they should be doing on those issues?

Speaker B: Yeah, first and foremost, I agree with you. This is everyone's role. Industry has a role. Public has a role. Federal government has a role. We all need to work together in unison to address this problem. So I agree with you first and foremost on that. There are some things that the fmcsa, for instance, could be doing more, and there's things that DHS and other agencies could be doing to help mitigate this. And I think going through this registration system, the new registration system and some of the stuff they implemented a year ago is helping. So, for instance, a year ago, the FMCSA implemented idemia, which does all the TSA security checkpoints. So when you walk up to go in the gate, you get that little picture of yourself. They check you in a background check on who you are to make sure you're not a fraudulent criminal or a terrorist or whatever the case may be. They're not doing that for insurance. So Idemia is doing all the background checks on folks coming into the marketplace. We don't have the numbers, but I'd imagine it's probably, from what I've heard, probably 20 to 30% of folks that are applying to become trucking companies or becoming brokers or forwarders or have been turned away. So closing down the front end so they don't get authorities will help. Putting teeth into their enforcement will help if there is, if there's a penalty, uh, if the bank's wide open and the vault's wide open and there's no security, what's stopping everybody from going in there and getting everything. And that's really what has happened with the, with coming into getting authority. We had a member who talked about this at our flying with the FMCSA a couple years ago with cargo theft and he said he caught one of these guys, uh, on the line and he said, you're a fraudulent company. We're gonna, we're gonna block you. We know what you're doing. You're trying to steal cargo. And the guy was, he was cocky about it. He was like, we've got a hundred other authorities, get this one shut down, we're just going to reincarnate another one and we're going to do it all over again.

Speaker A: I, I was googling, sorry. I was on AI and I asked about all the fraud vectors, all the cargo theft vectors, and one of them that popped up was the bad guys buying an existing company that had a very good record and then moving a thousand loads as a legitimate carrier. And then one day they steal 50 loads and disappear. And they probably owe the old carrier. They probably owe the carrier they bought it from. They probably bought it with loan, uh, that they're not going to pay.

Speaker B: Yeah, yeah. And that this was. Industry started reacting to all the theft and they stopped using. I mean I stopped using, but they're more cautious about using new entrants. So then they changed their tactic and they started go out and buying like you said, buying authorities that have been in place for two plus years. We saw some of the stuff on like Amazon Marketplace or there, uh, was one even on ebay has to be in business two years, good standing with shippers, blah, blah, blah, paying cash, strong offer. And it's. So they're, they're shifting their tactics. So you know why we talk about it and we highlight it. We try to be very cautious about not giving our playbook out to the public because we know these folks are listening and they're looking what we're doing, and they're adapting and they're changing their strategies. And they're smart. These people are smart.

Speaker A: Yeah. I probably three, four years ago, I talked to Ann Reinke, who was sitting in your seat at that time, and before we hit record, she said, what would you do to prevent freight fraud, cargo theft on your freight? And I said, uh, first off, I would go get all the technologies that are out there. I'd figure out which of the technology I can start using. I go, but starting day one, I would talk to the carriers who moved my freight like we used to. And I said, it doesn't guarantee anything. I go, but generally speaking, you're not being defrauded by someone you've been working with for 10 years. We automated a lot of our business, and no one wants to go back. That made sense. Uh, for the most part, that is a wonderful thing for our business. It's just there's a few bad actors, and that's why we're talking about the bad actors. We're not talking about the 99%.

Speaker B: Yeah. And I think that comes full circle to what we talked about in the beginning with the safety ratings. And what we're trying to do is relationships matter. Uh, you've got to talk. We got to start talking to each other brokers and carriers that we know that we're utilizing where we can safe carriers. And also we're using legitimate carriers. So I couldn't agree more with you. And you were spot on.

Speaker A: So building those relationships, it might make sense to do it at a conference. Do you know of any conferences that we could meet at?

Speaker B: Obviously, one thing we heavily promote is building those relationships. We've had the pleasure of the last two years of having Louis Pugh, who is the executive vice president of the Owner Operators Independent Driver association, at our conference to have these discussions. What keeps you all up at night as carriers? And we've also. We've had a shipper who's been our panel as well. And what keeps you guys up as shippers? And we do have a broker on there as well, but we want to build those relationships. About this before and other platforms I've been on. When I started tia, a lot of people were talking about, hey, our customers are our shippers, and that that' our business. That's our bread and butter.

Speaker A: And it.

Speaker B: It not frustrated me, but at the time, I was like, why are we not looking at carriers as shipper, as customers as well? Because they really are. And we've got to look at carriers as our Customers and we've got to take care of those folks because at the end of the day they're moving our customer, the customer, the shipper freight. And they're. We need each other. We've had some board members and I agree, talking with Louis over Aida and ata and other traders or trade trucking groups. We're peanut butter and jelly. We need each other. We make that perfect sandwich.

Speaker A: When is your next conference?

Speaker B: So we have a DC Policy forum, as we call it, our fly in, that's in September, but our big. And we have a tech conference in October, but our big conference is in April. We had it a couple months ago, our Capital Ideas conference, which is our largest gathering in the industry. So we're looking forward to our conference next year, our large conference next year in 2027 in Orlando, in addition to our fly in, our DC advocacy day and a half in September of this year, and our technology, our Technovations conference in October of, uh, this year as well.

Speaker A: So you have education and stuff that people can update themselves on, all the stuff we've talked about.

Speaker B: Yeah, we have a ton of education for our members that is part of the membership package and some certifications as well. So we like to keep our members up to date on everything that's going on. And those things are updated constantly with the Montgomery decision brought into it and everything else that's impacting the landscape of the industry. Absolutely. Education, efficacy, education, networking, the top three things we do.

Speaker A: By the way, if you are a shipper and you're wondering, should I continue working with this broker, Should I continue working with these people who have been moving my freight, if you see that they're a TIA member, if you see that they are part of SmartWay and that they're involved with the industry, that usually indicates that they're going to the conferences they're participating in, the certifications, the education, and they're staying up to date. Because this is again, this business you took over at a crazy time then, Chris, right in the middle of the greatest freight recession ever. But then all this freight fraud, cybersecurity issues, and now this. Your hair is going to go gray like mine, Chris.

Speaker B: Yeah, the beard's going gray already, so I got to shave it up a little bit. But yeah, no, you're absolutely right. And that's. We've been pushing the brand for a number of years of ti. We're passionate about what we do and what our who our members are, that they are the best of the best. And we do have a code of Ethics at TIA too. And if a member doesn't adhere to those best business practices, action is taken against them. We like anybody. Reputation is everything. So the TIA brand means everything to us. And that's why members join. To be part of that family, that network of folks in the industry that are doing it the right way.

Speaker A: Yep. Chris, normally I would say, let me summarize, then I want your final thoughts, but this is confusing and I don't know that I'd summarize it properly. So please summarize this and then tell us why we should join tia.

Speaker B: Yeah, so there's obviously. I think, I think you summarized it perfectly a few seconds ago. There's a lot going on in the industry, from fraud, uh, from technology to liability landscape. What does that look like? And you want a trusted voice guiding you through all that. And that's where TIA comes in. We're that trusted voice on Capitol Hill and a variety of places. Tub unit.

Speaker A: Yep. And this is exactly why we need advocacy right now. There's a reason you were based in Washington D.C. and, uh, not out in Chicago or Phoenix. We need your voice in D.C. helping us get the guardrails we're looking for to get the clarity. You said it a few times. Clarity. Make this make sense for us. Help us. Anyway, enough of my blather. I'll make sure I put a Link to your LinkedIn profile, link to your website, any other links you and your Go to Market team give me. I'll make sure I put those in the show notes. Put a big old bow on this one. Final thoughts on the topic today, Chris?

Speaker B: I think, like I said, there's a lot going on in the industry where TIA is a trusted voice to, uh, kind of help you navigate that if you're in the logistics, freight brokerage, space. Learn more about us@, uh, ti net.org we're here to help you navigate everything that's going on. And like I said, advocacy, education, networking is what we do. And we're happy to help in any way we can and appreciate, appreciate Joe being invited and always good to see you, sir.

Speaker A: Yes, thank you so much again. I'll make sure I put a Link to your LinkedIn profile, link to your website, any of the links you and your Go to Market team give me, I'll put in the show notes. So if someone wants to join TIA or reach out to Chris on LinkedIn, we'll have all those links in the show notes. And Chris, uh, I know you have you had a post on LinkedIn. That's how we started this conversation. Can you give me some links to that Montgomery decision and the petition that you guys have? That'd be excellent. Thank you so much.

Speaker B: Thank you.

Speaker A: Yes. And thank all you for listening to my podcast. Your support's very much appreciated. Until next time. Onward. Now, you have been listening to the Logistics of Logistics podcast, where we engage with leaders in the logistics and supply chain community. If you like what you hear, please subscribe, hit the like button, and leave

Speaker B: us a nice review on Apple or Spotify or wherever else you listen.

Speaker A: Also, please check out our videos on YouTube and, and connect with us on LinkedIn.

Speaker B: We're very big, uh, on LinkedIn.

Speaker A: And you can also reach us on the Logistics of logistics dot com.

Speaker B: Um, our website.