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April 08, 2022 Feature

How to Add Capacity to a Congested Supply Chain: The Broker’s Perspective

By Anne Reinke and Chris Burroughs

We are heading into the third year of the COVID-19 pandemic, and the supply chain continues to face a unique transportation crisis that threatens the efficient flow of goods to consumers and businesses. These supply chain challenges have become an obstacle in the economy’s recovery and future growth.

The U.S. economy has experienced huge volume surges in the past, but it has never before had the sustained spike in growth at such high levels for as long as we have recently seen: 17 straight quarters. Transportation carriers can’t catch their breath. Shippers and brokers lack the capacity to move the necessary freight. More disconcerting, headwinds such as labor shortages, raw material shortages, and equipment scarcity mean that transportation capacity can’t be quickly added to handle the current and burgeoning freight volumes. Equipment such as maritime containers and Class 8 trucks can’t be manufactured at the rates they’re needed, due to parts availability and labor shortages that have slowed manufacturing output. Moreover, even if trucking companies could receive new equipment at a steadier clip, finding drivers for new trucks is another major challenge.

The COVID-era economy has reached a critical moment. Inflation is at its highest level in 40 years. Record numbers of freighter ships have piled up off the West Coast waiting to be off-loaded. Major motor carriers have dumped customers simply because they don’t have the capacity to haul their freight. The White House has attempted to intervene to sort out the dysfunction. Port operators have warned of a supply chain “system collapse.”

This article will explore some of the short-term and long-term steps that the surface transportation industry, as well as policy makers, can take to help alleviate the ongoing supply chain crisis.

Brokers Can Help Efficiently Unlock Capacity

More than ever, freight transportation intermediaries are the vital point of connection between freight that needs to be hauled and the trucking operators that need to move it. While there is no single solution or action that will immediately alleviate the supply chain disruption, several issues could be addressed to help the movement of goods. One of the keys to solving the ongoing capacity crunch lies in forging stronger relationships among shippers, brokers, and carriers. These industry members need increased collaboration with a modernized tool kit for working together to make more efficient use of existing trucking capacity. This increased collaboration is especially critical in the short term as it appears that the challenging market dynamics will not materially improve through the rest of this year. At the same time, it is critical to understand that the market can and will adjust to the unprecedented market dynamics we currently face, but it will take some time. In the interim, there are some ways that the government and shippers can help to alleviate the current crisis. However, policymakers need to be careful to avoid policy overreactions that could have unintended long-term consequences and potentially impede the natural market response to the current challenges.

One way to alleviate the current market strains would be for shippers to rely more heavily on the spot market and brokers, which exist to provide more flexibility in the supply chain for situations like these. Brokers can use advanced technology and relationships to more timely source critical capacity for shippers, especially when the demand for freight movements exceeds the freight moving under contract. Members of the Transportation Intermediaries Association, which I represent, tell me that the request for brokers is more than twice the amount than normal. Those intermediaries are well-positioned to assist carriers and their customers reduce the impact of the current crisis.

Easing Certain Regulations Can Help Expand Capacity

An immediate way that the government can reduce congestion in the supply chain is to help free up productivity and access to the markets, as well as support access to drivers, through the repeal or rightsizing of counterproductive federal and state regulations.

Cross-Border Vaccine Mandates

On the federal level, the Department of Homeland Security (DHS) should reverse its January 22 guidance requiring full vaccination for those entering the United States. This guidance has already exacerbated, and will further exacerbate, strained truck capacity by immediately eliminating 10–15 percent of the drivers coming from Canada and deterring over 30 percent of U.S. drivers from entering Canada. Within one week, rates to move goods by truck skyrocketed 30 to 75percent in certain lanes. The lack of available drivers also has created days-long backlogs. This has resulted in shortages on shelves, which lead to higher-priced commodities, which become a problem that spreads through the entire economy, further increasing already high inflationary pressures.

Further, the essential worker exemption granted to truck drivers, under which truck drivers have been operating since the start of the pandemic, was based on the solitary and outdoor nature of their employment. A similar exemption on truck drivers was even granted by the Department of Labor to the Biden Administration’s vaccine mandate on companies with 100 or more employees. Ultimately, the Supreme Court rendered that mandate unconstitutional as implemented by the Occupational Safety and Health Administration (OSHA). The DHS should immediately restore the truck-driver exemption in the cross-border vaccine mandate. The cross-border vaccine mandate was ill-timed and poorly conceived and has the potential to further damage the supply chain and broader economy—but a truck driver exemption is one way to head off that potential damage.

California Independent Contractors Should Be Permitted to Operate

There are also state laws that, while not with such immediacy, could further impede the efficient movement of goods and should be rolled back or suspended during this crisis. One California law is a prime example. Some transport intermediaries doing business in California are concerned that California’s independent contractor legislation (AB 5), which is popularly known as the “gig worker bill” and which essentially bars independent contractors from operating in the state, will further exacerbate the supply chain situation by narrowing the pool of available drivers and companies. This is particularly critical in terms of easing congestion at the ports. Most dray carriers operating at the ports are independent contractors. Should the law be sustained, those independent dray drivers may exit the industry rather than operate as employees for someone else. That would drastically impact capacity at these already-hypercongested ports. While the law is being challenged and is currently under a legal stay until the U.S. Supreme Court decides its fate, its chilling effects are already apparent to brokers and motor carriers because some dray drivers have already exited the business in anticipation of future restrictions.

This California law undermines the independent contractor model and is upsetting a highly fluid and competitive marketplace. It is inhibiting the operations of many companies and upsetting the livelihoods of many drivers. Almost 90 percent of all trucking companies are small fleets of fewer than five trucks. Over the last decade, the number of independent drivers, or “owner operators,” has doubled. This is a thriving industry, empowering Americans with the choice to create small businesses and their own work schedules. California imposed a legislative dictate with vague benefits and severe costs—impairing a vibrant and healthy motor carrier industry that underpins much of the nation’s economy. This law should be rolled back, and the current economic supply chain crisis provides even greater impetus to do so now. This is particularly warranted in view of the reality that many of these independent operators, in addition to the larger fleets, were willing and ready to enter the worst hot zones of the pandemic to ensure that essential goods were delivered.

The federal Protecting the Right to Organize Act of 2021 (the PRO Act), which would change the way that independent contractors are classified at the federal level, would exacerbate the effects that we are seeing from the California law by spreading them nationally with a potentially devastating impact on our national surface transportation marketplace. A diversified and decentralized freight system that can adapt to market changes rapidly is critical to our economic health, growth, and national security. The Colonial Pipeline data breach provides an instructive example, where one cyber incident affecting the largest pipeline in the nation caused severe impacts in 14 states. Those states must rely on the oil from that one pipeline. Likewise, if only 100 motor carriers existed in the supply chain, one hack could severely impair that supply chain. With nearly 300,000 for-hire trucking companies with an average size of five or fewer trucks, redundancies are built into the system—and must remain that way for the integrity of the trucking industry.

State Environmental Regulations Must Be Smarter

In the same vein, certain state environmental regulations are also acting as a chokehold to port access. While nearly everyone recognizes the need to reduce carbon emissions, the reduction must be accomplished in a prudent manner. The transport brokerage industry consistently prioritizes building a stronger and greener industry by, for example, filling back haul for trucking companies that return home and need work, reducing those trucks’ “empty” miles. Nevertheless, some state environmental regulations make it difficult for the transport brokerage industry to do its job.

Many intermediaries work closely with the Environmental Protection Agency’s (EPA’s) SmartWay program to utilize clean trucking companies, but regulations must be right-sized, discrete, and not a deterrent to the efficient movement of freight. For example, several of the California Air Resources Board (CARB) laws directly and negatively impact the manner in which transport intermediaries conduct their business and manage their capacity in the state. Specifically, intermediaries must navigate CARB’s Truck and Bus Regulation, the Tractor-Trailer Greenhouse Gas Regulation, and the Transport Refrigeration Unit Airborne Toxic Control Measure (TRU ATCM) Regulation. Additionally, a proposed regulation, the Advanced Clean Fleets Regulation, seeks to achieve the goal of zero-emission trucks and buses everywhere in California by 2045.

These CARB regulations hold transport intermediaries accountable for motor carrier emissions’ compliance for all freight arranged in the state of California. The scope of the requirement is so broad that it requires intermediaries to check compliance of specific trucks, which is beyond the scope of how the industry works. These regulations have led directly to a number of intermediaries ceasing business in the state, and the same can be said for motor carriers, who may not have the resources to install all of these green technologies. These regulations also have led to situations where a carrier may haul the freight to the state line but refuse to enter the state, which in turn requires another carrier—one willing to operate in California—to finish the load.

These state regulations can be promulgated despite the usual preemption of interstate commerce because the federal government gave California a federal waiver under the Clean Air Act. In the long term, Congress should remove this waiver; but in the short term, California and Governor Newsom should temporarily suspend the AB 5 law and these environmental regulations if they are serious about alleviating the congestion at the ports that is exacerbating our national supply chain crisis and contributing to excess inflation.

Infrastructure Funding is Essential

Wherever possible, infrastructure funding should support the supply chain. This is an area where, in the long term, the federal government can be a key partner in helping to build a more resilient supply chain nationwide. The Infrastructure Investment and Jobs Act (IIJA) is an important tool in that endeavor. Key programs to support freight, roads, ports, and congestion reduction will help to bolster throughput. The Biden Administration’s commitment to help unlock grant funding at the ports is a good first step. While a large pinch point affects the ports, as discussed earlier in this article, there are pinch points throughout the links in the supply chain, and freight movement must work fluidly at every point.

Transport intermediaries must help move freight from point A to point B and use all modes of transportation to make that happen efficiently. Today, our nation’s outdated infrastructure system relies on congested roads and aging bridges that have a direct impact on transporting freight efficiently and safely. We also have world-class freight rail networks, and private investment in their infrastructure should continue to be incentivized to help mitigate the current congestion in intermodal lanes.

Innovation Can Help Amplify Capacity

We must focus on innovation. Many transport intermediaries continue to be industry leaders in the technology space as they adopt new technology and business processes to address an ever-evolving and growing transport industry. For example, transport intermediaries utilize the latest technology to facilitate the movement of freight from the start of the transaction to the end, from selecting the carrier and tracking the shipment to using automation to pay the driver. Solutions such as maximum freight visibility with real-time data, automation in the back-end office, and utilization of artificial intelligence provide great efficiency and advantages to both shippers and carriers.

However, as motor carriers are just one segment of the supply chain network, there will likely need to be greater technology collaboration or the development of data collection with other sectors. All members of the transport industry are interested in learning more about the Biden Administration’s recent announcement that it will focus on building a data framework to help move goods more efficiently. This framework may be useful if it reflects the actual nature of how freight is moved and where and how data is shared. As the government considers this step, it should reach out to all segments of the transport industry to ensure that data collection is robust and interoperable.

The Motor Carrier Selection Process Needs Rigor

Finally, concerns have been expressed for many years about the motor carrier safety rating process and its effects on the marketplace; capacity; and, most importantly, safety. The Federal Motor Carrier Safety Administration (FMCSA) is still using an outdated physical audit system to rate motor carriers for safety. Because of inadequate resourcing and technological constraints, this antiquated system has led to 90 percent of trucking companies being “unrated.” Because 90 percent of motor carriers are unrated, the carrier selection and vetting process is confusing and rife with conflicting information, which leads directly to a backlog and time constraints on operations of intermediaries to facilitate the smooth flow of freight across the many surface transport networks. This lack of clarity also prevents several thousand small motor carriers from being utilized, a problem for intermediaries seeking to facilitate surface transport flows. Furthermore, the absence of reliable data and lack of a functional database of carrier profiles can have the perverse consequence of unfit carriers being eligible for selection and traveling on the nation’s highways, and fit carriers being ignored. This situation has ultimately meant that unfit motor carriers are selected despite poor safety profiles, no insurance, or a history of highway accidents, leading to more highway fatalities and injuries than should be occurring. In 2021, the number of road fatalities increased in the first half of the year by more than 18 percent, a truly alarming amount.

Transport intermediaries are not only focused on reliable carrier ratings and data to improve safety. They also advocate for reliable broker data to discourage all third-party logistics professionals from operating unethically. The Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. No. 112-141 (July 6, 2012)) was signed into law by President Barack Obama on July 6, 2012. MAP-21 established that for an entity to legally broker freight across state lines, it must have the proper authority and financial responsibility, predominantly to ensure a safe and fair marketplace. Unfortunately, since being signed into law, the FMCSA has assessed no violations and made no findings of unlawful brokerage activities. This is deeply concerning because several transport intermediaries have filed complaints in the FMCSA’s National Consumer Complaint Database that have not resulted in enforcement action. This lack of enforcement encourages nefarious actors in the marketplace to illegally broker freight and create an unsafe supply chain with no consequences.

The entire transport industry needs a new system that is built on fair and reliable data and strong enforcement. Those steps will expedite motor carrier selection, give industry stakeholders more certainty about the carriers they utilize, incentivize utilization of the safest carriers, and ensure that all intermediaries uphold all their legal obligations.

To further these objectives, Congress should pass H.R. 3042, the Motor Carrier Safety Selection Standard Act of 2021, sponsored by Congressman Seth Moulton (D-MA) (sixth district) and Congressman Mike Gallagher (R-WI) (eighth district). This legislation would require the FMCSA to begin the process of developing a new safety fitness determination (SFD) process to change the way carriers are rated. Provisions in the recently enacted Infrastructure Investment and Jobs Act would also beneficially strengthen FMCSA’s use of the National Consumer Complaint Database, leading to greater enforcement of laws pertaining to brokers.


In summary, the supply chain is a complicated dynamic that can be drastically impacted by slight variations. The COVID-19 pandemic created unprecedented disruption that turned the economy on its head. More collaborative relationships between industry stakeholders and federal and state policy makers will be key to reducing burdensome regulations that are contributing to supply chain challenges now and could continue to do so in the future. Prudent action at this point can help ease the current supply chain crisis and prevent it from getting worse as post-pandemic demand continues to surge. The chain will bend, but with the resolve of transport intermediaries, carriers, and policy makers, steps can be taken to ensure that the chain will never break.

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By Anne Reinke and Chris Burroughs

Ann Reinke ([email protected]) is the president and CEO of the Transportation Intermediaries Association (TIA), a Washington, D.C.–area organization that guides third-party logistics companies and professionals. Chris Burroughs ([email protected]) is the vice president of Government Affairs for TIA.