Modern Day Carrier Vetting That Protects Freight Brokers | Episode 344

DOT Blitz Week inspections sideline roughly one out of every three trucks, tightening capacity and driving spot rates higher across all equipment types. In this episode, we break down what those out-of-service numbers really mean, how broker liability and negligent hiring are evolving after recent court rulings, and why your carrier vetting process needs to be practical, documented, and built around the data brokers actually have access to.

We also cover how to interpret CSA scores, where carrier vetting tools like Highway and RMIS help or fall short, and how to build a scalable compliance workflow that protects your brokerage without slowing down good carriers.

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Transcript

Why Carrier Compliance Matters Now

SPEAKER_01 0:00

Today we're talking carrier compliance selection. What should you be looking at on a carrier's record and what systems to use to make sure that you're properly screening motor carriers before booking them on a load? Obviously, after the recent Supreme Court ruling that puts potential liability on freight brokers, this has been a hot topic lately. So, Ben, I thought that was a really good episode. We just wrapped up there, kind of went through top to bottom on you know what's going on with the results of you know the DOT uh Blitz week and you know how brokers are shifting, you know, how they're doing business and selecting carriers. What are your thoughts?

SPEAKER_02 0:38

Yeah, it was a really good episode. I mean, we definitely covered what is happening, what's changed in the landscape across the industry, what additional risks may be out there, and also covered what you can do to protect yourself. So definitely worth listening all the way through the end as we talk about that, as well as the Texas Supreme Court ruling that is definitely relevant to the Supreme Court ruling. So definitely.

SPEAKER_01 1:03

It's a good one. Let's hop right into it. Welcome back for another episode of the Freight 360 podcast. We are post-Memorial Day. We are into the summertime here. Ben, how's things going down in Florida for you?

SPEAKER_02 1:16

Not horrible yet. But I was at Ava's tennis lesson yesterday, and I think I'm gonna start working with her coach on Saturdays. And he was like, he only had like 11 o'clock available. And it's like 11 o'clock in the middle of the day is pretty rough. Like, you don't have anything like that.

SPEAKER_01 1:31

You try to go in as early as you can, or do you try to go late in the evening?

SPEAKER_02 1:34

As early as possible. I'm like, I would legitimately go play at five in the morning if somebody else would go play with me because like the earlier the better. It's way cooler. It's actually still nice outside, and I don't know when the sun's up, but like it's up pretty early now, maybe like six, somewhere around there. But yeah.

SPEAKER_01 1:50

Yeah. I used to love that, dude. Like when I was uh when I was deployed in the Middle East, like 5 a.m. was I'd get up, I'd work out, like whether it was like you know, weights or running or whatever. And you're right, like it's because it gets like hot as hell, you know, in that in that heat um later in the day. But those mornings, man, they're they're nice, you know what I mean?

SPEAKER_02 2:11

Because it's like my favorite time of day by far anymore. Maybe that just happens as you get older, but I'm like, I honestly get excited. Again, if I had a good night's rest and didn't work late or have a bunch of stuff going on, like went to bed at like nine, I'm like, I enjoy waking up at like 4:30, five o'clock. Like nobody's awake, everything's completely quiet and silent. I'm like, I get work done or I'll like work out or just like meditate for a half an hour. I'm like, it's like the most peaceful time of day. And like I noticed that like how quiet it really is because like if I do put the TV on, it's on a level that I normally can't hear it at, right? Like normally my TV's on like 12. If I put it on, I'm like, oh, I can hear it at three. That's how just loud everything is all the time during the day. And like you kind of don't notice until it isn't loud, and you're like, so nice.

SPEAKER_01 2:57

Um well, anyway, we're gonna dig into some good stuff today. You know, we have the results of Blitz Week from DOT. We've got, you know, more discussion and reactions with the Supreme Court ruling. But if you're hey, if you're brand new, tons of other content, make sure to check us out freight360.net. There's a whole searchable library. The YouTube channel is packed full. We're trying to release every length of content that we can now because we know you guys all consume it differently. So whether it's the shorts or kind of your shorter segment, you know, five-minute videos, and obviously our full-length discussions here if you want to really dig into a certain topic. So share us with your other friends in the industry. You got the newsletter you can subscribe to for free, and we send out industry updates and market trends and you know, breaking news twice a week. You got the Frey Broker basics course as well if you're looking for an educational option. And this episode is brought to you by Ascend TMS. So if you're looking for a great TMS, Ascend has a really good one designed for the small to medium-sized broker that's growing, and it has all the functionality of an enterprise-level TMS without the price tag. And you can get 90 days for free, no card needed. You do need a referral code to get that offer. We have one. Check out the show notes or description box wherever you're consuming this, and you can get that. So let's get a quick little uh sports rundown here. NHL. I don't know if you saw this, but the uh the last night, because this is it's Wednesday right now. Last night, the Colorado Avalanche, who are like they won the President's Cup in hockey, which means they won the most games in the regular season, they got eliminated in a 4-0 sweep against the uh Vegas Golden Knights.

Sponsor Notes And Quick Sports Talk

SPEAKER_01 4:39

So Vegas is going to the Stanley Cup on the eastern side. You got a battle between Montreal and Carolina. So we'll see how that one pans out. But we're getting, what do you got?

SPEAKER_02 4:47

I I heard this morning they were talking about it, like they've got three Stanley Cup appearances in nine years that the franchise has been in existence. And they've had like three different head coaches, and there was some other crazy stat too that I heard.

SPEAKER_01 5:03

I think they made a change, a coaching change, like eight games into their season, or so they had some kind of like new coaching change that it was kind of an anomaly that they uh that they're going to the cup this year. So, but yeah. Yep. Well, that's hockey for you. Um, did you see Kyle Bush, the race car driver?

SPEAKER_02 5:22

I saw a headline, but I do not know what happened. Yeah, so like 40 years old. How old was he? He was younger than I thought he was, too.

SPEAKER_01 5:29

Here yeah, here's what's crazy. So he died at 41 years old of pneumonia, and I believe it was like I think he was like racing two days before, and he was like at one of his kids' events the day before, and then just got sick, and it was like really random and or I guess really sudden. So a big name in the in the uh racing world. So that was that was crazy and unexpected. So we're we're coming up in the for for football at least. I'm getting this is like when I get really excited because you get like a lot of these, you know, training camps and whatnot. A lot of the rookies have mandatory practices and they start getting in the film room and just kind of with the with the coaching staff. So football is gonna be around the seat or right around the corner before you know it. So pretty excited. The Bills have their the new stadium officially has the Bills logo up on the side of it. So it's uh it's pretty cool to see. And then directly across the street, they're just slowly knocking down the old one. So they're just like piles of rubble. It's crazy though.

SPEAKER_02 6:27

But you go get any of it? You gotta go get a brick or something to put in your I did it.

SPEAKER_01 6:31

They they were trying to sell everything, man. Like it's you know, it's capitalism at its finest, right? Like if you were a seasoned ticket holder, you got like first dibs to buy your seat. How much did the seat go for? We didn't get anything. I don't really care. I'm not missing a project like that. What's that?

SPEAKER_02 6:48

Just curious, how much did the seats go for?

SPEAKER_01 6:50

That's a good question. I think my brother, because my brother was actually looking at it, I think it was like 300 bucks for like a you know, a blue plastic seat or whatever. I don't know. Like I I have a lot of like sports stuff in my basement. Like I have I wouldn't call it a man cave, it's more like a we have like a home theater type thing, but I have a lot of like really cool like signed sports stuff down there. And I just I don't know, I can't imagine having like a chair, like a bleacher seat or whatever.

SPEAKER_02 7:20

Well, I was I was gonna say like Three Rivers, which they tore down like now probably 27 years ago, right around when I was in college, which was the stadium I grew up going to in Pittsburgh. I had a buddy that got the I think they were yellow into his man cave from Three Rivers, and another guy got the urinal and basically had it installed in his bathroom. At least a portion of it, because it was like huge, but like one of those troughs.

SPEAKER_00 7:47

The troughs, yeah. Yeah, they just had ice in it. Yeah, correct. Yep, that's funny.

SPEAKER_02 7:53

Roland Garros tennis, one of the uh majors is on right now. In fact, Djokovic is playing literally right now, but pretty early in the tournament.

SPEAKER_01 8:01

What is there for we've talked about this before?

SPEAKER_02 8:03

There's four majors, four, yeah. There's um Wimbledon, there's the US Open, there's the Australian Open, and there's Rol Roland Garros, which is in Spain. It's the red court. The red court, the blue court, the the blue is Australia, red court is the clay at Roland Garros, green is the grass at Wimbledon, and the US Open is I think it's blue and green. I can't remember. It's the but it's they all have different different surface. Yeah, there's hard clay and grass. And like literally Wimbledon is played on grass, like the up like a putting green grass, like at that level. And they're different speeds and different pace. But it's really quite like any other sport.

SPEAKER_01 8:44

Like you're I guess the exception being like baseball, where like every baseball stadium has kind of a different layout to it, but the playing service is turf versus grass, yeah.

SPEAKER_02 8:56

Different turf inside versus outside. The I mean, like there's a pretty different quality.

SPEAKER_00 9:02

Yeah, that's yeah, that's a good point.

SPEAKER_02 9:04

But it doesn't react to the sport as much, where like if it was basketball, the court being different would be drastically different. Like it changes the speed of the game with the court and tennis where football.

SPEAKER_01 9:16

I like that like ice hockey too, like the Olympic, the Olympic ice hockey arenas were different dimensions than uh like NHL.

SPEAKER_02 9:24

Well, soccer, I remember in high school when I played soccer. Like, if you played on a turf field, it's exhausting because that ball rolls so fast that just keeping up with the soccer ball is like four times the speed of basically dribbling a soccer ball in grass. Fair enough.

SPEAKER_01 9:40

All right. Well, did you see any of the results of Blitz Week?

SPEAKER_02 9:44

Yes.

SPEAKER_01 9:44

So from what I saw, and then I'm curious what yours was, but like basically the first day, I think like 30 something percent, like 32% of all the inspections resulted in the driver being put out of certain placed out of service. Yep. And the second day,

DOT Blitz Week Results And Rate Impact

SPEAKER_01 10:00

it was identical. It was like the exact same. And it was basically like the the reactions were, you know, it doesn't matter when blitz week is, this is just a compliance like culture, like safety culture in the industry, rather than just, you know, how are people gonna react to a week full of or I guess it's three days full of inspections. But if you remember last year, the results were it was like twenty-five percent of the carriers that were inspected, the drivers didn't have a valid CDL to be driving what they were driving, which is insane to think about one in four. So whereas this year the the focus was more on like ELD hours of service, things like that.

SPEAKER_02 10:46

I feel like I should know the answer to that, but like, don't you get arrested if you drive a car without a driver's license? Like, don't they like not just pull you over? They just give you a drive away.

SPEAKER_01 10:55

Like, um, like if I I've seen, you know, there's plenty of YouTube videos that might make you think otherwise because the the driver is like just trying to provoke the law enforcement official, but like basically you can just get like an appearance ticket for failure to failure to have you know your driver's license. Because like most times, if you're just driving around and you don't, you know, if you get that citation, it's because you just left it at home or something like that.

SPEAKER_02 11:20

Well, yeah, that one. Like I've gotten pulled over without my driver's license, but it was valid. I mean like you don't have one or it's been revoked. Because like I'm pretty sure if you got like a DUI or something and they take it away and you're driving, like at least after a certain amount, that you go to jail.

SPEAKER_01 11:36

That's a different story. But are you talking about licensing in general? Because like a lot of these times when they get put out of service, the the the motor carrier has to figure out a way, like let's say you got, you know, a fleet of 50 trucks and fifty, you know, 50 drivers, and one of them gets placed out of service, you know, you can send somebody else in. I I suppose if it's just a one I you know, hey, if you're an owner operator and you're listening, leave us a comment and let us know what your experience has been. Very curious. Because I imagine if it's just you and your your one truck and you get put out of service, yeah, you're not going to jail necessarily, but like you're kind of stuck, right? You can't have anybody come bail you or bail that that truck out on the side of the road. So interesting. Well, here's here's what freight waves had to say. So 13,273 trucks got parked, aka put out of service during Blitz Week. And it goes on to say there was 38,926 inspections, 69,446 violations, 13,273 out of service orders, and 25,08 carriers in total got inspected. So, yeah, that's like I think it's 30, 32%. That number is probably accurate of out of service. So almost one in three inspections resulted in like a no-go. And it went on to it went on to say too in another article I read that it it what was kind of surprising is that once they found the first violation and they kept inspecting, they found more and more and more violation, like additional violations on the the same truck and driver. So yeah, and here's the thing too, and this kind of goes into like CSA scores and safety, which I want to dig into today, but if you look at a full, like the the most ri most like in-depth and inspection that you can do, um, and the different kinds of violations you can have, it gets pretty like Yes. Here's you're kind of getting like really picky on some of this stuff.

SPEAKER_02 13:39

Here's the one that I think was also kind of ridiculous. I remember a driver explaining it to me. So if you put lights on your truck that are like aesthetic, meaning like they're not legally required, but you like the way they look, like fog lights or like you know, just make it look fancy. Yep.

SPEAKER_01 13:56

If you do that, make sure like your Coca-Cola Christmas truck, right? All lit up.

SPEAKER_02 14:00

If one of the bulbs are out, you can be flagged. So like the lights you put on that you aren't required to have, if those bulbs burn out, you also can be sighted. Like there are definitely some ones that I think are a little bit nitpicky and kind of missing the point.

SPEAKER_01 14:17

But yeah, there was one. Um, I think this was an hours of service one where having some you had to have a I believe you had to have like a certain I'm just gonna guess here. You have to have a paper log as a backup in case your ELD goes down. And if you like don't have that, you can be even if your ELD is working properly and you're you're operating within hours of service correctly, you can get a violation for not having a backup paper log. Yeah, there's some there's some really like nuanced administrative uh potential violations you can get there. So yeah. But yeah, it was oh, so there it is. 34% was the out of service percentage on the inspection.

SPEAKER_02 14:59

So here was the uh numbers from Dean over at DAT. Drive in, national drive in line haul rates surged 21 cents per mile to reach a seven-day average of 222 per mile. This is significantly higher than the past five years, 32% higher than the same week last year, and 30% above the five-year average. Reefers spiked 32 cents per mile, um, reaching 268 per mile, and flatbed were up 10 cents last week to an average of 279 per mile.

SPEAKER_01 15:35

Yeah, I mean this happens every year, right? You get a certain percentage of the carrier population that just, hey, I'm just not gonna, it's not gonna work this week because they don't want to deal with it, right? It's it's nothing new. So well, obviously we're in a post-Supreme Court ruling, and I it's what I kind of want to dig into today, and it it relates to this is a lot with like safety, carrier selection, things like that. We had a good conversation last week. If you didn't listen to last week's episode, check it out. We had Danielle Spinelli

Supreme Court And Texas Rulings Explained

SPEAKER_01 16:08

from Gen Logs join us. She was in DC meeting with uh folks from FMCSA about an unrelated, somewhat unrelated, yeah, un we'll just call it unrelated. They were talking more about like, you know, how they're screening uh motor carriers coming in the front door, if you want to call it that. And while they're there, the Supreme Court, and if you've never been to DC, if you're on Capitol Hill and it's like a, you know, got the giant Capitol Mall, which on one end is the Lincoln Memorial, in the middle is the Washington Monument, and on the other end is the Senate building, and literally behind it, behind the Capitol building is the Supreme Court building. So it's like it's like right there, along with like Library of Congress and other things. And I so like I've been, you know, in DC and um, you know, lobbying with members from Congress, and then you, you know, you're walking across, you know, the Capitol area, and you I like the first time I saw the Supreme Court building, I was like, whoa, this is like where all the big decisions happen. So they had, you know, she happened to be there and we kind of talked through a lot of the reactions. And I think we've seen more and more of it the last handful of you know days or week and whatnot. And I kind of think the people are less like afraid of what you know, less worried about the results of that ruling and more so focused on well, what can we do just to make sure that we're doing things right? You know what I mean? So I'm I'm curious. I guess that that's my my experience than you know what I've seen. Have you heard any seen anything different? Anyone going off the deep end?

SPEAKER_02 17:42

No, I haven't even heard about it, even like anecdotally, or somebody just telling me about some other company that got super strict from any carriers or brokers. I did want to read the thing that I sent you, Brian Nelson. He's with the TIA, an attorney that works in our space, put that article out on the Texas Supreme Court that was related to this. It is I'm just gonna like literally read it verbatim. Brian Nelson, I'm gonna do something crazy and be a transportation lawyer on LinkedIn talking about negligent higher case other than Montgomery. And if you care to read, take on Montgomery. You can also oh, there's a larger I reposted this too if you go to my page on LinkedIn. While SCOTUS is what happens to you while you're busy making other plans, the Texas Supreme Court was doing just that, making other plans. As detailed in oral arguments of Montgomery, SCOTUS made clear that depending on state law, shippers need to sleep with one eye open. And for those Virginia Tech fans out there, Bill Letkos, I don't know. That warning could include gripping your pillow tight, Metallica reference. Fortunately for those shippers in Texas, the Texas Supreme Court brought a comforting light to bedtime. Okay, I'm gonna skip that piece. In home in Home Depot, a motor carry a motorcycle driver crashed into a tractor trailer operated by Werner Enterprise. As we typically see in these cases, the plaintiff alleged Home Depot was negligent in entrusting ordinary cargo to Werner because it knew or should have known that Werner hired reckless or incompetent drivers. Despite these assertions, the Texas Supreme Court notes under Texas law, one generally has no duty to control the conduct of another. And one who hires an independent contractor is generally not liable for the contractor's torts. The court continued. With respect to the facts, Home Depot had no duty to investigate Werner's competence because the shipment did not say, okay, did not present an unusual risk or hazard. And Home Depot neither controlled the actors nor created the risk that materialized. And the court put a bow on it and said if Werner's authority to operate as a motor carrier did not come from Home Depot, which we talked about last week, it comes from the DOD, then Home Depot cannot be said to have put Werner's trucks on the road in any legally meaningful sense. Those trucks would be on the road regardless, carrying Home Depot's goods or other cargo, or nothing at all. And neither the shipment nor the identity of the customer altered the risk posed to motorists. Which is literally the summary of our conversation last week. Like the authority to drive this vehicle comes from the Department of Transportation at a state level, not the company that hired them.

SPEAKER_01 20:54

Yeah. Yeah. The uh well, it's the authority comes from the the federal level. The the license driver's license comes from the state level. But regardless, I think the the takeaway there is that Home Depot literally is not the one saying, yes, you are fit to drive or not fit to drive. That comes from, like you said, the state issuing a CDL and the federal government issuing an operating authority, right? And that's where, again, people you got to remember with this Montgomery case, what we had access to and you know, in 2017, 2017, whenever it was, very different than what we have access to today. Further, what we have access to today that is different than then is not provided to us for free by the government. It's a pa these are paid for third party services like gen logs, highway, MCV, right? These are very, very different um situations. So like we talked about it last week, but w we, you know, before all the vetting and onboarding and the details of what you could see today, right, you would See, you know, you'd have a maybe a safer integration, or you might go right to Safer's website and you would see if they have an operating authority, if they have a safety rating, and some violations and safety metrics from the CSA, right? That's it. Whereas now we have access to a lot more. But here's what we still don't have access to, and it's the driver level level data. And I think you you could potentially get yourself into a risky situation as a broker if we're vetting, if we're uh, if we're getting nitty-grade down to the driver level, it almost feels like we're asserting control. It could be argued at least, right? That we're we're we're asserting a certain level of control that a motor carrier would on their drivers, but as a broker. So I get it, right? Like if you're gonna do if like one example of driver level vetting right now that a lot of brokers are doing is is CDL verification, right? You want to make sure if like let's say you're gonna look at a non-domiciled or limited term CDL, or you want to make sure the driver's CDL is valid, or your customer requires it for check-in and you're gonna get a copy of it, right? But as far as like a motor vehicle record MVR for a driver, we don't have access to that. So we don't know, you know, if I'm booking ABC trucking and they've got eight drivers, I don't know the driving history for each one of those individual drivers. So yeah, I guess that's kind of the big thing.

SPEAKER_02 23:27

The and furthermore, right? Like one, because we look I we looked into this a while ago. I can't remember what the instance was, but like you can't get them. Like the only way the trucking company gets the employment or driver records for a driver is the driver signs a form, you pay money, send it off to the FMCSA, then they send it to you. So like you can't even request it without the driver's permission. And then the other thing, too, at the driver level, which is the one that is going to be argued caused or was negligent in any of these cases, right? Not only can we not get that, but we can only see the company level. And we talked about it last week, which is like, okay, there was a driver that used to work there that had these violations that are still showing up on the company, but the company may have let that driver go. And now the company's still being penalized for doing the right thing after they found out.

SPEAKER_01 24:18

Yeah. So I had this conversation quite a bit in the last few working days about what we can do as an individual brokerage, and also what do we think the industry is going to shift? How is it going to shift, you know, based off of potential liability on our part for hiring unsafe carriers? I s and I saw a funny post this morning that was like breaking news from the Supreme Court, hiring unsafe carriers is bad. And then it said, next up, water is wet and double brokering is bad. So it's kind of like, yeah, that's very clear and obvious that hiring a safe or hiring an unsafe carrier is bad. So what do we what do we look at and how do we change things to focus on safety? And I I think when you look at CSA categories, right? So you have like hours of service, vehicle maintenance, driver fitness, to name a few, right? So so uh safety, driver safety, or what's is it uh what's the category called? Vehicle maintenance, right? So if you look

Reading CSA Scores Without Blind Spots

SPEAKER_01 25:23

at so this is talking about like if they have a safe truck with, you know, you're looking at brakes, uh tire tread, looking at your like your lights being out, things like that. They throw a lot of things into one big bucket and call it vehicle maintenance. But so like if you're gonna use a my carrier portal or highway or whatever, right? And you're going to say, hey, I'm gonna have rules based around these CSA categories, right? And if you want to say, for example, if a carrier is over the federal threshold for vehicle maintenance, right, we want to automatically fight that carrier. Well, first of all, the CSA program and what the federal threshold is has been a mystery to like myself and anybody I talk to, because depending on what size carrier you are, they kind of they they get like judged differently against their peer group of similar type and size companies. Further beyond that, and we kind of alluded to this before, not every violation is created equally. So, like if I'm a compliance rep and I see that a carrier has had safety violations for in vehicle maintenance from inspections, I want to know like is there a trend of a certain type of violation or are they kind of one-offs? So, for example, if I see like I look at what are the clear and obvious issues you can have that are preventable, right? Tire tread. Tire tread is never gonna like sneak up on you, right? It is very predictable, you're going to wear down your tires the more miles that you drive. All right. Brakes, predictable, right? You know that when you're when your brakes have a certain amount of usage, they are going to need maintenance and or repair replacement. Now, if you have one of those aesthetic lights that goes out, right? I am, you know, that is not necessarily predictable. I would argue that it's not predictable at all. Sometimes a light just goes out, right? Think about in your house, like your lights don't all go out at the same time. Like a bulb goes out in one room and then another bulb a couple months later goes out in another room. So I'm also like differently.

SPEAKER_02 27:30

You don't, you can't like replace light bulbs on like a predictable schedule. Just any light bulb, right? Like you know when to replace it because it's gone out, not because, like, hey, I've driven so many miles on these tires and I need to put new tires on, or I've driven so many miles and I need an oil change, or I've driven so many miles and this needs maintained, like it just goes out and then you replace it. And if you're driving, you might not know it's gone out until you notice it. And if you're driving, you might not see it. Like some of them, to your point, like are in no way indicative of a safety risk.

SPEAKER_01 28:04

Yep. So I think the the question you gotta be able to ask yourself is when you're selecting a carrier as a broker.

SPEAKER_02 28:11

Go ahead. Hold on. I the because I'm just thinking about all the comical ironies with all the government and everything, right? Of just like how you can't sue the government, but they just never do their job, which is like this is one example. The FDA related to like food that poisons us, drugs that created the opioid crisis that were mislabeled, DePont basically putting Teflon for 50 years and carpets and cookware that we they knew was toxic, dumping plastics and poisons in all of the water everywhere, and just being completely negligent and oversight of anything, but yet we're reliant on them to make sure that trucks are safe, which is to me like laughable, right? Because the other thing that I was just thinking of is just like the whole thing is just somewhat comical. That like I saw the other day, this was the one that made me laugh. Did you see? Does your car have the auto stop and start in it that you have to push a button to turn it off?

SPEAKER_01 29:05

Yes, and it's by just turned on.

SPEAKER_02 29:08

Correct. Well, they like federally mandated that by the EPA something like 10 years ago. They just removed that and they admitted that it absolutely doesn't save any gas, and they required it with seemingly no study and no actual stats that that actually reduced pollution. So they just made all these companies put this thing in the car that seemingly did nothing but irritate people, and now they just removed it. Like to me, it reminds me of like the light bulb thing of like we just require cars to have this thing because a bunch of lobbyists all agreed that this seemed to be helpful, but nobody actually checked to see if it was.

SPEAKER_01 29:43

No, yeah, you're you're absolutely right. So I want to give you an example. I'm gonna pull up. I'm in uh I'm in a carrier vetting platform right now. And so for your really the two we can look at here, two categories, unsafe driving and vehicle maintenance. I want to pull up here and give you an example of different violations. I pulled a random carrier up that had at least 100 trucks because I wanted to get a good sample size here. So I'll do vehicle maintenance first, right? Brakes, tires, tires, brakes, brakes, right? These are those are the top most recent violations. In my opinion, all preventable. Three out three out of those five instances that carrier was put out of service. If I continue on down, lighting, brakes, brakes, brakes, brakes. Moving on, brakes, brakes, tires. So you're seeing a trend here with this carrier, right? And they've been put out of service, they fail my company's requirements, and no surprise as to why. But then you see things like this emergency equipment, fire extinguisher uh not properly rated, right? So it could be that you know how a fire extinguisher has to be inspected or certified periodically. You get a violation for that. Is it gonna put you out of service? No, but you still get points. And you get reflective sheeting. And this is the one that my the my boss, the owner of Pierceful Wide, was arguing last week. He's like, he's like like the reflective stuff that they can get you out of, you know, get you dinged on, you know. Drivers typically, even when they're doing a regular preventative maintenance checks, like that's one that like doesn't really egregiously change your level of safety as a driver and as a truck. And you really, you know, probably aren't going to notice it unless it goes in for like a full, a full like shop top-to-bottom inspection. But if you're in, you know, Blitzweek and they're looking for any kind of violations, you know, that's one of them. Is so like this one is the cons conspicuity systems. Basically, we want to make sure this truck is clear and obvious so it has reflective things on the side of it. The truck tractor lower rear retro reflective sheet is missing on a vehicle manufactured on or after July 1st of 1997. That is a that is a rule. But then you keep going on here brakes, tires, brakes, brakes, right? So, you know, though that's where you can see the difference between like brakes and tires. Huge, right? They they are never gonna be a surprise. Now let's move over to unsafe driving. All right, so and again, I haven't pre-vetted this carrier, I just picked a random one. Lane restriction violation, pretty low weight. It's a state or local law, and that is it ended up in you know, nine total points. It's probably like they were not staying in their lane, okay? Right below it, speeding 15 or more miles per hour over the speed limit, a total of 30-point violation. And you've got unlawfully parking or leaving a vehicle on the roadway for a total of three points. That's a pretty it's a pretty nitpicky one.

SPEAKER_02 32:39

I would say that's not as nitpicky. And here's the only reason is that like I've definitely heard in the news more than once of like fatalities because of vehicles parked on the side of an interstate that have caused accidents. Like to me, that's so.

SPEAKER_01 32:56

We also don't know what interstate, where it was, how high traffic it was, how close to the like we don't know, right? It's very, it's a very subjective situation. It could be that they were literally, you know, like sometimes by an interchange, they have a a side area that's meant for like trailers to um drop and hook, for example. And let's say somebody parked there overnight and slept in their cab, and it's not an authorized, like, you know, overnight parking area, and you get a violation for it. So we don't know. Then they've got failure to obey a traffic control device, so you know, rolling through a stop sign, running through a red light. What else do we have in here? Speeding, lane restriction violation, speeding, lane restriction violation, using a cell phone while operating a commercial motor vehicle, speeding, speeding, unlawful parking. Like, this is the thing, is like, and when you when you see these violations, I think of if you just try to set a basic rule and let your you know, your brokers or your carrier sales reps just say, like, oh, okay, this carrier passes or this carrier fails, and they're not doing any more digging into it, that's where you might leave yourself a little exposed. Versus, do you have a compliance rep that they're gonna look through every carrier in detail, know what to look for? Because ultimately, what you want to be able to say is to defend yourself is that given the information I had available to myself, I feel that I did my due diligence to select a carri that is deemed to be safe to operate, right? Now, if you get a carrier that has a conditional safety rating and has a repeated amount of violations for brakes, tires, speeding, hours of service, you know, and they've they're out of service a lot. They've got a lot of because crash history is reportable too. So, like if you see all this and you still select them, you're taking on some inherent risk there. And that's where you know, you've got to make a decision on what your level of comfort is. I really think you're gonna start to see like conditional carriers are unless you got a really good reason, probably gonna see a lot of brokers that are opting out of using them altogether.

SPEAKER_02 35:08

And I think that kind of makes sense too. Hey, dude, this is somewhat related, but it was super funny because it just happened like last week and it reminded me of this other story. It's related to driving. So somebody backed into our palm tree at the end of our driveway, and it was caught on like our door camera. So, like, we literally watched this car back up and not slow down, literally into a palm tree, then pull forward and then parked at my neighbor's house. So my wife like walks next door to the neighbors, like, hey, just like let you know, like we fixed the tree, it wasn't that big of a deal, but just like, hey, to like let our neighbor know that their friend that was at their house backed into a tree and maybe didn't realize it to just make sure everything was okay. And our neighbor goes, Oh yeah, she doesn't see very well. She's 96, and I don't want to upset her, so we're like, we're not gonna tell her. And in my head, I'm thinking, okay, like I understand not wanting to upset your 96-year-old friend about them being embarrassed that they backed into a tree. However, are you not a little concerned that your 96-year-old friend might be risking her life driving around every day and everyone else's? Yeah. And like the other part of that story that reminded me of this was like, there was a Seinfeld episode about that a long time ago where Seinfeld basically said the Florida state flag should be two hands on the top of a steering wheel, but you don't see anyone's face because of just all the elderly people driving. And I remembered I there was a congressman I was friends with in Pittsburgh, and I remember asking him this. I was like, why is there not like an age restriction for just people driving their cars? And he goes, Oh, it's super simple. Like, who do you think shows up to vote? Everybody that is elderly. So, like, if anybody proposed a restriction where you needed to be retested at whatever age, 60, 70, 80, even 90, like everybody would come in and vote that person out of office. So, like, that's why no politician anywhere has ever even proposed it. I'm like, so everybody is just okay with the fact that, like, once you get this license, you're just good indefinitely. Because another one of my wife's clients, her mother is literally 102 and will not let her daughter sell her car. She doesn't drive it anymore, but wants it. And it's just like, at a certain point, like, shouldn't we not all be concerned on who is driving on our roads, whether it's an 85,000-pound truck or even just a 7,000-pound vehicle? Like, it's kind of terrifying when you look at these things that are happening, whether it's safety violations for like commercial vehicles, or even just who is on the road in general, of like, it's super unsettling.

SPEAKER_01 37:37

Let me ask you this. So, because there's a lot of there's a lot of methodologies when it comes to compliance, right? On one end, and I've seen I've seen both ends of the spectrum. I've seen on one end where the only person that can onboard and approve a carrier is

Building A Practical Carrier Approval Process

SPEAKER_01 37:56

a compliance rep who that's all that's the only thing that their team does. Five years of experience, they don't sell to customers, they don't book trucks, they just review and say yes or no on a carrier, which pros and cons, right? The pro is you're you're gonna have an expert in that field that's saying yes or no to a carrier, all right. The con is it can lengthen your broker or operations process to to submit a request, see if it gets approved, and you know, move on with your day. The other end of the spectrum is that the broker or operations person is doing all of their own onboarding, and they usually have a set of rules that, you know, to get the carrier approved, it's got to meet X, Y, and Z objective rules in your like RMIS, highway, my carrier portal, etc. Pros to that, it's a faster process. Cons to that, there's a couple, right? You could have you set your rules so strict that because you want to protect the company, you're losing capacity. Yep. Or on the other end, you don't set them strict enough, and you're putting the decision to use a carrier on someone who's might have, well, definitely has a conflict of interest because they want to get the load covered and they might overlook certain safety things. So, and then everything in between, right? There could there could be some level of like escalation required. I'm curious, when you started at a big box, do you remember what their carrier approval process was? Who did it, how long it took, and did it change at all?

SPEAKER_02 39:30

It was a department that was centralized at TQL for sure. So the carriers went through that process. I wasn't like intimately familiar with how they did it, but it definitely I mean, I had plenty of conditionally safety-rated carriers that I used.

SPEAKER_01 39:46

But you didn't have to think about it yourself. There was a different team that would you'd say, Hey, here's the carrier I'm looking to use, and they would they do a deep review and say yes or no.

SPEAKER_02 39:54

Yeah, correct. And also because it was tied to the safer system, and like none of that everyone knew was not really necessarily up to date or that the inspections were. And here's where this came into play for me. When I onboarded Maersk, their contract stipulated we could not use conditionally rated drivers, right, for drayage. However, during the ELD crunch, when nothing could get moved, I got it waived immediately. I basically went to TQL and to them because I needed both of them to sign off on it. I'm like, like, what's the justification? And the justification was it's just always been this way. And I was like, well, you do realize like none of these carriers can even get inspected that used to be conditional, can't get it upgraded. Like they can't even request that to be done. And I'm like, I've got good drivers that are experienced that are under MCs that have this, that you need. Is there a reason we can't, or some risk I'm unaware of? And when I when they had to make a decision because they needed the capacity, all of a sudden that went right out the window and nobody cared anymore. Which is usually what happens. Once they need them, all of that goes out the window. When it costs money, if you don't use them, then all of a sudden businesses go, oh, sorry, like we need this and we're just gonna waive this. It always comes down to the incentive. Are we making money or losing money? We're losing money, all of a sudden this gets super lax. If we have the ability to choose from a bunch of good ones, don't use the risky one. But as soon as you're losing money, businesses just immediately drop these things down to where money rules the day and will deal with the risk later, is usually what I've seen practically speaking, even at big companies.

SPEAKER_01 41:28

Yep. And I think, and I've seen this at a couple of different companies now, is finding somewhere. I gave kind of gave my you know my two ends of the spectrum, is finding that happy medium in the middle, and there's not like a one area on that sliding scale that's the right way to do it. It depends on your company, it depends on the level of you know, your confidence level in your compliance and your brokers and your carrier sales reps, um, how experienced they are, what technology and processes that you're using, et cetera.

SPEAKER_02 41:58

And what I what I think I've found that is Can I add something to that too? Because the only thing that I've ever seen actually change this was the loss risk related to theft. Then all of a sudden companies are like, oh, we need to pay to make sure we're not getting robbed. It was mitigating the downside that made these tools adoptable. It was never safety. It was always just we don't want to get robbed and we're getting robbed. So like let's not get robbed. That's why they got adopted.

SPEAKER_01 42:23

Why did Highway get so popular? It's because they sold their big sell was like, we're gonna prevent double brokering and cargo theft.

SPEAKER_02 42:31

Yeah, correct.

SPEAKER_01 42:32

Like if you were to summarize it in a nutshell, right?

SPEAKER_02 42:34

Yeah, it's the sign in your yard that says I have an alarm on my house. Correct.

SPEAKER_01 42:38

Yeah, yep. So, but finding that happy medium. So here's here's what I've seen work fairly well. And this is where you've got cradle to grave brokers in both of these scenarios. So if you have a a different, you know, if you have the Chicago model where you've got carrier sales versus account management, it might look a little bit different. But basically, when when you're setting up your carrier approval process, finding a way to make it as frictionless as possible to let the good carriers in easily and quickly, and then setting some sort of a threshold where if it's in that gray area, they we they can't pass through quickly, they're gonna require some sort of you know escalated review. And then you have some sort of a hard stop of like, no matter what, no one can, you know, approve this carrier. You know, you kind of have those three buckets. So, like I was telling someone yesterday about like on highway, if you log into your company's highway account, you can see like, oh, out of all your carriers, here's how many fail, here's how many pass. Right. And I said, based on how our rules are set now, and we continuously revise them and based on what the threats are and what we need to focus on, maybe we need to adjust a rule, add a rule, remove a rule, et cetera. But at any given point in time, out of all of our carriers in our network, fifty percent of them probably come through. With the broker being able to uh, you know, approve them themselves. And then out of the 50% that fell, you're gonna have, you know, I'll just make up, I'll just estimate, maybe 25%, so half of the remaining half can get approved with further escalation and review and additional processes. And the remaining 25% probably are just gonna be garbage. We'll just call them, you know, garbage carriers. They might not be even in service anymore or operating. They might be, you know, you you name it just egregious safety vehicle maintenance, et cetera. And that tends to work for us, and we can kind of see what are the most common areas that were requiring escalation. And then you, you know, you kind of review regularly and say, all right, we're doing a lot of overrides and uh, you know, escalated reviews on this one metric and rule that we have right here. Is that really a big threat? And then you say, and then maybe you look at like, what are we, what are we maybe letting through too easily that might need to be added for review? And that just kind of changes based on the landscape and what the threats and risks are that are out there. But that process itself has tended to work well because, again, the good carriers come through quickly and easy, and then the ones that require additional review are going to have a compliance rep who has no incentive to get this load booked and will truly scrutinize and look through that carrier's list of you know, their history of their violations, the crash history, you know, et cetera, if we're talking about a safety-related issue, and then say yes or no. And they're ultimately the way that we teach them at least is like if you're gonna say compliance rep, if you're gonna say yes to this carrier, do you think that you've done enough review, you know, yourself with what we have access to that you can defend our company and your decision if we ever got sued? And if they can say yes, there that carrier usually is let through. And if they if the answer is no, that carrier would not come through to so to summarize it, basically.

SPEAKER_02 46:00

Yeah, and I think you guys have one of the better, if not best, procedures for this that I've come across for sure. The second thing is like making sure you have a paper trail of that process. So if and when something does go wrong, just like with a claim on a load, you've documented everything that has occurred and who's looked at it and why the decision was made, because that is what actually mitigates the risk. Not that it happened, that you can prove that it happened, which is the important part of that, right? And I think that's where you're gonna see most companies move

Paper Trails, SOPs, And Closing Thoughts

SPEAKER_02 46:29

to or should at the very least. The thing I always kind of laugh do in the back of my head is I'm like, how would I really solve this if I like, what are the like those games you play with little kids? Like, if you ruled the world or like you could just make decisions, how would you solve this? I'm like, I think the head of the DOT, the head of the secretary of transportation, the head of the FDA, all of those organizations were like responsible for actually making sure things are safe. I would make sure they got paid a market rate because all of them get paid low, then go get a real job right after, so they don't care where they actually make a salary. Pay them all like 500 grand, but make them liable, where like when things go wrong, they can be sued. That's what I think would actually fix.

SPEAKER_01 47:06

I'm gonna want that job.

SPEAKER_02 47:08

Well, you're gonna make $500,000 or $700,000 a year, but you don't get your job done. You are responsible for the bad things that happened, like every CEO of every other company. To me, like that's how you create the accountability. Is like you need the upside, but you also need the downside and the risk where if you aren't doing what you're doing, there's not just upside where you throw your hands up and there and go, sorry, government, you know, can't sue us. It wasn't our fault. We kind of tried.

SPEAKER_01 47:36

Yeah. So I think ultimately, like to kind of summarize all of this, the the and I actually I want to double down on something you just said is documenting your processes because that's a big part too. We actually had we have an insurance claim from like feels like it was forever ago at this point, but they're now requesting like, hey, we want to see what your compliance and carrier vetting and selection SOP was at the time of this incident. And like the compliance rep was like, I'm gonna have to dig through. And I was like, hey man, I was like, I actually, every time we, you know, make an adjustment to our process and it's emailed out, I said, I file all those. I've got it right here. Here's the most recent one. So document your processes, right? Whether it's an you know, company-wide email or if you have like a SharePoint or some kind of like cloud-based drive where all your processes, maybe it's your website, you know, it's you just put in the TMS.

SPEAKER_02 48:26

Like, hey, the carrier went on the load, just put in the check call notes. We chose this driver, reviewed it, thought they were above our safety requirements, and put the initials of the people that looked at it, right? NC, BK both looked at it. You have the date stamped, it's in the load. If something happens, you're gonna go back and look at that load anyway. Like, you don't have to do this crazy overhaul pay for other stuff. Like just write it where you're already tracking everything as to like why you decided this.

SPEAKER_01 48:54

Yeah. And I think that um it's gonna be, you know, probably a mix of the technology that you use, so like the data that you have access to, and then how you're using it. So procedurally, how are you taking that information and making the decision, right? The the set it and forget it mentality is dangerous and leaves you vulnerable. And if you try to do set it and forget it and be really strict, you're gonna be losing capacity. So there's got to be some middle ground. But at some point in time, the person that's saying yes or no to a carrier, and that can be a mix of the compliance rep that overrid it or approved it, it could be the compliance director that you know created that rule set and the then the and the plus the broker that you know saw it pass and reviewed the additional details. But you've got to have enough combined, you know, confidence and experience and knowledge of when you're going through and looking at this carrier. Because when I was going through rattling off those violations before, I'd be willing to bet you that a lot of brokers, when they're new, aren't going that, you know, detailed and in depth on reviewing a carrier and looking at violations, what type of violation, how recent, is there a trend of certain types of violations? They might just be, you know, taking a compliance vetting software, setting some basic rules and saying, if it says pass, we're good. If it says fail, we're not good. You really want to have some sort of process in place that's going to make sure that potentially unsafe carriers aren't making it through without a thorough screening process. So I again, there's a lot of ways to do it. It's your it's up to you to decide what works best for your company. I talked to a girl yesterday who the company that she's working at now, she just sends an MC number over and they say yes or no. And clearly I kind of laid out how we do things and it's it's different. Some sometimes, yeah, you gotta you gotta send the MC number over to the compliance department. Sometimes you don't. So yeah, there's no right or wrong way. I know we mentioned it last week. TIA has a uh like they offer for their members a I forget what they call it, but it's a basic like their framework for what a what a best practice could look like for carrier selection. But I think you're gonna see a lot of this stuff change and evolve as we see more cases like that Texas case, right? Yeah. Remember, Supreme Court just pulled the blanket protection for brokers, although a lot of individual states already did not give that protection. So you think it's gonna be, you know, different you're gonna see different lawsuits in different states and how they're ruled, and that will probably set precedent. But again, a lot of this is subjective, right? You could have a broker that hired what appeared to be a very great carrier, and then you could have a broker that contracted a carrier that appeared to be extremely dangerous and unsafe when they were booked, and those are gonna be ruled very differently. So good stuff. Any other thoughts on safety, compliance, what what you can do as a broker to protect yourself?

SPEAKER_02 52:02

Just document it. I mean, I think that's the best you can do. I mean, absolutely.

SPEAKER_01 52:07

All right, final thoughts, Ben.

SPEAKER_02 52:09

Whether you believe you can or believe you can't, you're right.

SPEAKER_01 52:13

And until next time, go Bills.