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Originally Posted by Dispatch_This
The depressions in the early 1900s attracted hardworking individuals who were able to start
their own business on a “shoe string” budget of a few hundred dollars.
Sounds familiar, just add a few zeros.
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Unfortunately, the growing abundance of trucks led to an oversupply of
transportation services that depressed prices and profit margins. Overzealous
salesmen aimed to take advantage of opportunities made possible in the
absence of regulation – often to the disadvantage of customers and the industry
overall. Unscrupulous operators skipped maintenance of their equipment;
operators discontinued freight services midway between load and unload
points to pick up more profitable freight; carriers avoided insurance coverage;
freight was stolen; drivers were pressured to work unreasonable and dangerous
hours.
Yup. Sounds familiar.
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During this period of lax regulation and fierce competition among
carriers, the need for brokers and freight forwarders grew substantially
particularly because these intermediaries offered carriers a method to
streamline their transportation services by facilitating communications between
shippers and carriers.
Unfortunately, “because there were no prerequisites to
entering the business, these agents were often shiftless and irresponsible.”
Can't disagree yet.
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Third party intermediaries often profited heavily by contracting carriage
services with dishonest and irresponsible operators who would offer low rates
in return for the broker’s blind eye towards lacking business practices.
BINGO!!!!!!!!
While today I doubt that most brokers even care about the business practices of carriers, it's clear that carriers are irresponsible by allowing brokers to peddle cheap freight. Which is why I place the blame squarely at the feet of the carrier, for allowing dishonest brokers to thrive.
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in 1935, Congress finally felt
compelled to provide for broad relief.
The solution appeared in the form of the Federal Motor Carrier Act of 1935
which gave the Interstate Commerce Commission the power to promulgate regulations for reigning in transportation
intermediaries.
Specifically, the policy underlying the Act was to “protect
carriers and the traveling and the shipping public against dishonest and
financially unstable middlemen in the transportation industry.”
Rigid regulation until 1980 met with only partial success.
So no regulation didn't work, and tons of regulation didn't work......
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While the 1935 Act and the ICC appeared to succeed in relieving shippers from dealing
with dishonest and corrupt transportation intermediaries, the regulations
imposed extreme regulatory burdens “that, among other impositions, required
anyone applying to become a broker demonstrate [that] their services would be
consistent with the public interest” and that its services would not
“unnecessarily duplicate existing brokerage services.”
At the height of this regulatory “bell curve,” federal oversight created virtual monopolies for select
intermediaries and consequently increased the cost to shippers for transporting goods.
Which is something I already predicted would happen if you regulated brokers - you'd have a select few brokers still in business, and everyone else would fall by the wayside. That would certainly do nothing positive in the long run.