How Broker Transparency Builds Trust in the Freight Industry
In the transportation business, transparency and excellent communication are key. And broker transparency creates trust with carriers while increasing respect and boosting productivity on all sides.
Improving communication, particularly when it comes to rates and billing, helps level the negotiation playing field ensuring both parties are getting a fair deal on every haul. It also increases visibility and lowers the risk of fraud, keeping business more efficient and secure.
With broker transparency regulations continuing to evolve, we break down what this means for carriers and brokers and how more visibility helps improve business practices and eliminate confusion.
Why broker transparency is important
Broker transparency, defined as an electronic copy of each transaction record within 48 hours after completing contractual services, is important for carriers to have a clear understanding of every transaction between them and a broker. Especially in a market where rates are experiencing dramatic highs and lows, carriers’ main concern is brokers could price gouge or include provisions that require carriers to waive their rights to access transaction records. Without these details, carriers can receive chargebacks after a clean bill of lading with no method of retaliation or are simply not paid what they deserve.
In March 2023, the FMCSA affirmed the need for broker transparency, denying a petition submitted by the Transportation Intermediaries Association (TIA) to remove the requirement that freight brokers disclose transaction records to their carriers. But according to the FMCSA, the proposal will be ruled on later in the year.
Broker transparency is an ongoing debate, as seen by the heated exchanges at the Mid-American Trucking Show in March 2023. If carriers have a clear understanding of every transaction that occurs for a shipment, they’ll feel assured they are getting fair rates and are partnering with a broker they trust.
Benefits of broker transparency
Broker transparency doesn’t just help the carriers, it helps brokers too. Here are six ways transparency improves business—-and profits.
- Better communication. Allowing carriers to look at transactions can improve communication and value. If carriers know they’re trusted with this part of the business, they’re more likely to articulate their needs and what they can do to support the broker, too.
- Improved relationship. Communication is the most essential aspect of any good relationship. If trust is there, then a problem (or a success!) it is more likely to be relayed. This helps identify areas to be refined and improved, boosting business for everyone.
- Fair and accurate payments. Being transparent helps ensure fair and accurate pay for all parties. Understanding how and why mileage rates change, the fuel surcharge, shipping costs, and seeing a detailed bill of lading breaks down and justifies expenses. This also helps avoid any unexpected disputes that could cost valuable time and resources.
- Increased efficiency. Once a carrier establishes work with a trusted broker, they are more likely to haul for them in the future. This gives the broker a reliable partner, reducing time spent in the future posting loads or searching for carriers—getting hauls on the road faster.
- Enhanced reputation. Carriers are more likely to work with a broker who values transparency—and they’ll tell other drivers too. This expands the carrier network and broadens the broker’s market presence.
- Fraud prevention. While a broker might feel hesitant with this type of transparency, it’s a good way to protect your business. Transparency at any level helps prevent scams and combat fraud. It also makes conducting regular audits to identify suspicious activity easier for brokers and carriers. If everyone knows where their money is coming from and how it gets there, it limits questionable behavior.
Winning the trust of carriers
Carriers that trust you and your business practices, make your life easier. Carriers want to know specifics about chargebacks, detention time payments, and fuel surcharges so they can plan and grow their business too. Giving that amount of transparency from the beginning allows both brokers and carriers to be successful with every shipment. Being clear about expectations, fees, and benefits will keep carries coming back.
Broker transparency is about more than just building trust, it’s key to improving the industry and limiting brokerage fraud opportunities. Greater transparency helps brokers and carriers stay compliant, moving the logistics industry forward. It’s not about adding more regulations and red tape: it’s about eliminating unfair pay, cracking down on double-brokering, and improving day-to-day interactions and practices across the industry.
Increase your visibility—and trust
Trust between carriers and brokers increases efficiency and confidence in the transportation industry. Increased broker transparency creates a secure, reliable supply chain where everyone benefits.
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