The Supreme Court recently ruled that freight brokers can be held liable if an unsafe carrier they contract with has an accident while hauling the broker’s load. Brokers argue they lack access to fleet-level safety data and rely solely on the Federal Motor Carrier Safety Administration (FMCSA) to judge safety fitness. Historically, broker vetting meant simply verifying that a carrier had proper authority and insurance before loading. Following this ruling, the conversation is shifting toward active risk management. Brokers and shippers must now establish their own baseline safety standards and guardrails to protect themselves.
Contents of this video
00:00 10-44 intro; The Supreme Court Ruling on Broker Liability
01:05 The Risk of Motor Carriers that Aren't Safe
02:47 Shippers: You Need to Set the Safety Standards
04:37 Decoding FMCSA Data
07:41 Accuracy of Safety Ratings
08:42 How to Protect Your Business Moving Forward
Speaker 1:
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Speaker 2:
Is broker liability a game changer for trucking safety? Hey everybody. Welcome back. I'm Jason Cannon and my co-host is Matt Cole. The Supreme Court ruled earlier this month that brokers can be held liable if an unsafe carrier that that broker's contracted with has an accident hauling that broker's load. Now, there's a lot to this case and all the circumstances that surround it. So if you're interested in all the details, click the link in the description below.
Speaker 3:
The broker at the center of the case, C.H. Robinson, argued that brokers don't have access to the fleet level details that would help judge a carrier's safety fitness and they rely on FMCSA to make those determinations. Brokers, they said, simply select a DOT authorized carrier from the pool, but that conversation is changing and a big word in that conversation is risk.
Speaker 1:
We've always focused on risk and this is basically what we're talking about here is the risk of placing loads on motor carriers that aren't safe. I've been a safety director for a trucking company. I've been on the agency side. I've been on the insurance carrier side mainly focusing on loss control safety. And when it comes to basic scores and things like that, I gave the first presentation on these at the American Society of Safety Professionals back in 2010. This is a fascinating piece for me because we would have freight brokers for all of the years I've been here almost eight years and freight brokers would reach out to us and what they were looking for was a quote unquote vetting platform, but their version of vetting is do they have insurance? Do they have authority? And that was mainly it. We would walk them through our whole system and say, "We've got the basic scores and the insurance companies use us and they're making risk decisions and da, da, da, da." And during this whole time, the vast majority of them were quite literally, "We don't want to be in a position to make a determination as to whether these motor carriers are safe or not.
We want the government to tell us." So they looked at it as being, if the government says they've got an authority and they've got proper assurance and we've got a certificate of insurance and blah, blah, blah, whatever, load and go. And so that for me was just always a very, very fascinating thing. And they've said for many times over the years that they want the government to come up with a system to tell them who's safe and who's not safe. Well, the government does kind of have a system. It's called the basic scores. It's called CSA. What they don't like about that is that they need to figure out in the CSA score, they want to cut and dried. They want a, we will be liable or we won't be liable.
Speaker 2:
Freight brokers are now going to have to determine what is acceptable risk and they're also going to have to set their baseline standards. Shippers too are going to have to develop their own guardrails.
Speaker 1:
They are the ones that are putting this into the market, into the public sphere. They need to be the ones that set the standards that say, "You know what? It's going to be acceptable. This is what's acceptable." And that's going to make its way to the freight brokers and the freight brokers are going to have to work within that parameter, but they're going to have to start getting that data. And again, we would certainly love for them to get it from us. That's what we've been doing since the late 1930s, but that is the information that they need to make the determination. And it's just like any other safety programs. You've got these shippers, I don't care who they are, corrugated manufacturers, frito lay, whatever. Name your organization. If you go to their mission statement, they talk about a safety is priority, safety this, safety that.
If you're an electrical contractor that comes on these organizations property to change a light bulb, they've got a service that that electrical contractor needs to supply all of their safety programs to this service that tells them that if these guys come on site, they're going to follow these safety rules, they have a safety plan, they have this, they have the other thing. And that's literally come on board to change a light bulb. But yet when they take their loads, throw it onto the public roads, there's very little or no guidance. Their contracts may say they need to follow this federal regulations or something, or they need to be safe or whatever it is, but there's no standards that they've set in order to be able to ensure that these organizations are fine. So they're going to have to set their standards and not only are they going to have to set their standards, but they're going to have to follow their standards like any other safety policy.
And that, my friend, is how they're going to protect themselves.
Speaker 3:
More than 80% of all active carriers are currently unrated by FMCSA because they've not undergone a compliance review. No review means no verified data, which means no FMCSA validation of their safety record. But fleet safety is more of a puzzle than a photo. And Chad says enough data exists in most cases to identify the safe and unsafe operators.
Speaker 1:
The vast majority of motor carriers, unless they're brand spank and new, are going to have basic scores. Now here's an example. These are guys that were in the Super Ego network. Now again, it's just fun to look at these guys because they've got a lot of data, but regardless, they are not rated. So when they say 80% don't have a score, what they really are saying, and it's true, it's almost 85% of motor carriers don't have a DOT rating. That is true. That is a fact. Well, guess what? That's why the FMCSA came up with this information. That's why they came up with the basic scores. So you can have a basic score for a motor carrier. As an example, unsafe driving, all you need are five relevant inspections. For vehicle maintenance, five relevant inspections, crashes, you just need to have more than two crashes.
There are minimum thresholds in our cases. For example, here, HAZMAT, these guys are NA because they don't have any hazmat inspections because they don't haul hazmat. I mean, that's the way it works. Just looking at other motor carriers here, the vast majority of active motor carriers are going to have basics percentile scores. And guess what? The FMCSA sets alert thresholds for all these. Alert threshold for unsafe driving is 65 percentile. That is the threshold that the FMCSA looks at and says, "Okay, that's a problem." As these scores are calculated and they have more of these in alert and depending on what percentile they're at, that is what dictates the ISS, the inspection selection system. Again, the government creates these scores, they are private, they are not public. We calculate them and these scores are precise. So if a motor carrier goes to their own SMS and they look at their own scores, these are the scores that they're going to see.
That's our value prop along with all of the other stuff that we do. So there are scores. The government has set standards on what they see as being an alert. And if you dig into the data, those alerts are things that have a correlation to a crash. So when you're looking at those kind of things, here's again, this is just an example, unsafe driving. This company, again, they've got a lot of motor carriers or they've got a good number of vehicles that they operate, but they've got 36 dangerous driving violations. They've got other seatbelts, speeding, different things like that. And people can sit there and argue and say that, "Hey, a seatbelt doesn't lead to a crash." No, but guess what? That is a correlation to poor safety behavior. And again, our focus is risk and exposure, but regardless, whether they have scores or not, we still know they've got a bunch of inspections and whatever their violations are are relevant, even if they don't have scores and it's available.
Speaker 2:
For the carriers that do have a safety rating, the writing itself doesn't always paint the full picture or an accurate one.
Speaker 1:
Here's the difference, okay? Satisfactory rating and it's relatively new, which is great. And some of these DOT ratings can be decades old, right? But what this means basically is think of it as an ocean. For whatever reason, people can relate this more to an OSHA inspection. You have them come on site and everything is good on site, but the very next day somebody could get a fingercut off or they come on site because somebody got their fingercut off and everything's fine the day that they're there. This is basically a paperwork office review. We're looking at driver files, we're looking at vehicle maintenance files, we're looking at all these different files and things like that and paperwork, the regulatory paperwork is good to go. They're fine. But what they're doing on the road tells a completely different story. But again, this is the thing that they were depending on is that they got an authority, they're satisfactory so they're even better, but this is all blind.
They didn't see any of these things.
Speaker 3:
All this doesn't have to be some great event horizon for capacity exits among small motor carriers unless those motor carriers are historically unsafe operators. Largely it will probably be a good thing.
Speaker 1:
The government collects this data. Their original purpose with this was to focus how they were going to target their manpower. What motor carriers on the roadside do we need to focus on? Which motor carriers have the problem? Which do we need to enforce? So look at it from the standpoint of you're a manufacturer and you've got a saw or something like that, right? You're building doors or something like that and you've got this big saw that's cutting wood all the time. You can have safety policies and you can have personal protective equipment and you can have different tools available to make that operation as safe, potentially safe as possible, but that doesn't mean you're going to stop every bad thing that's going to happen. What this data and these scores help us understand is the history of the safety of that organization, the violations, the crashes, the different things like that.
History is a predictor. So just like any other safety policy, an organization needs to decide what is safe. Now again, I hesitate to use that term. We deemed this company to be safe. What is safe? But what we did was we evaluated the exposures and we determined that these were acceptable and that we need to follow those whatever guidelines or policies or standards we put into place. And then that's what can help make it defensible in court because they can sit there and say, "Hey, we looked at the industry or we looked at these motor carriers and we felt that the government standard, if a motor carrier did not have an unsafe driving alert or whatever it might be, that's where we decided that that was acceptable." So this is a case where I think that again, shippers and we as consumers are probably going to have to just start ... I mean, again, nobody wants to pay more for anything.
However, it's been low bidder for many, many years and they've been playing games and I don't think it's going to put the small motor carriers out of business. I think it would actually help motor carriers that focus on safety and make sure that they are at the standards that they need to be and I think it's going to help the industry be more safe.
Speaker 2:
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