Transportation & Logistics Summer Speaker Series: Highlights from Expert Call on Broker Liability with Scopelitis

Research evidence excerpt

Transportation & Logistics Summer Speaker Series: Highlights from Expert Call on Broker Liability with Scopelitis

rokers” which provide lower costs

and liability coverage but quickly fold when hit with a potential lawsuit and reconstitute

as a new legal entity which could be a focus of the FMCSA which has registration

authority.

• Spot market will be the early indicator of structural shifts. Feary and Kneller do not

expect contract rates to be reopened or surcharges pushed through immediately, as large

asset-based carriers are unlikely to reprice existing agreements on this ruling alone. We

believe the more likely path is that shippers increasingly direct freight toward asset-based

carriers while smaller brokers reject loads they can no longer profitably book, pushing

volume toward scaled carriers & brokers who initially absorb it at existing rates before

excess freight spills into the spot market. Tender rejections and spot rate strength would

be the early indicators of this dynamic taking hold although this could be offset if smaller

carriers lease on to large carriers rather than leaving the market.

• No clear options to offset new liability at this point. Feary handicapped the likelihood

of federal legislation overturning the ruling as low, given the difficulty of arguing against

safety in any political environment. Kneller noted the industry had previously pushed for

a federal safe harbor statute establishing a multi-factor carrier selection test, but that effort

never became law as resources were directed toward winning the preemption argument

in court. While this ruling may reinvigorate those efforts, neither speaker was optimistic

on timing. Feary also noted there is historical precedent for insurance surcharges (~2%