Document Type

Article

Publication Date

1994

Abstract

Motor freight brokers are the connecting link between shippers and carriers, uniting shippers who have cargo to deliver with carriers who have available motor transportation. Acting as traffic managers for shippers and sales agents for carriers, brokers arrange thousands of transactions each day, many of which either start or end up in the international stream of commerce. If used effectively, brokers can lower the transportation costs of domestic and international shippers and increase the revenue of carriers, which ultimately will stimulate interstate and overseas trade. International shippers must often rely on freight brokers to arrange motor transportation for their freight once it arrives in a U.S. port. Cognizant of this reliance, brokers frequently extort excessive freight charges from international shippers. More often than not, the international shipper's only recourse is in the U.S. court system. To foreigners, U.S. courts are confusing, costly and intimidating, and thus many international shippers are left without adequate recourse against disreputable brokers. If the freight brokerage industry continues on its current path, a time will come when international shippers, who essentially require the services of freight middlemen, will discontinue, or at the very least decrease, business with companies in the United States because it is no longer economically feasible to transport their freight. The brokerage industry's ills must be cured before this occurs. The answer to the brokerage industry's problems lies somewhere between the two extremes of massive regulation and total deregulation. Congress needs to find an amicable middle ground between the stifling regulation of the past and the unstable deregulation of the present. Responsible regulations can be enacted to stabilize the brokerage industry without imposing undue financial or administrative burdens on brokers and without unnecessarily impeding competition. This article proposes a set of regulations which, if enacted, will provide stability to an industry that has teetered on the brink of disaster since 1935. Section II of this article depicts the brokerage industry as it exists today. Section III details the history of federal regulation of freight brokers. Section IV illustrates the recurring problems posed by unregulated and undercapitalized brokers. Finally, section V proposes a series of regulations that are intended to cure many of the current ills of the brokerage industry.

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