The freight and logistics industry is once again preparing to comply to another new Federal Regulation – this time focused on hiring practices of carriers. This new regulation is an amendment within the Federal Aviation Administration (FAA) Reauthorization Act which was passed through the US House of Representatives in April 2018. Although it has not officially been approved by the US Senate or enacted into law, there are a few items within the present bill that are raising questions on how the new national carrier hiring standard will impact the daily operation of FTL, LTL and 3PL carriers.
Noted below are a few of the facts about this upcoming hiring standard for carriers and how it possibly will impact the logistics and supply chain within the USA.
For those not aware or looking for FACTS about this upcoming legislation – House Resolution 1120 is the reintroduction of a bill that was introduced last year. The National Carrier Hiring Standard is part of this resolution that would require that before hiring a motor carrier, a shipper, broker, forwarder, and/or receiver ensure that the motor carrier complies within the following standards:
• They must be properly registered with the Federal Motor Carrier Safety Administration (FMCSA)
• The carrier must have obtained the minimum insurance listed in the resolution
• The carrier must not have given an unsatisfactory safety rating
The National Hiring Standard is intended to standardize industry best practices for hiring a motor carrier that is operating with safe and ethical business practices. The bill was introduced as many “industry experts” has stated that there currently exists confusion with shippers as to which companies are reliable and ethical – since there is currently no Federal Standard on the books. While the concept of a National Carrier Hiring Standard appears to be needed, there are several questions as to how the standards will be set.
Within the resolution, the standards are supposed to be monitored and set forth by the Federal Motor Carrier Safety Administration. Since most professional or large-scale LTL, FTL, and 3PL carriers are currently members of this organization – this new standard is not expected to impact them. The real victims of a new National Carrier Hiring Standard are independent owner/operators.
Here are a few items that smaller carriers should consider as this proposed legislation enters the Senate for final approval.
A major hurdle for smaller carriers is the growing costs of becoming members with organizations. However, the FMCSA is one of those groups that any professional carrier should not have fears of joining. The biggest issue with the current legislation is not the involvement of the FMCSA – but the language within the resolution itself. In most cases, when a bill starts in the House of Representatives, it is intended to be vague in the activation or enforcement of the law. This is where the US Senate comes into play. They work to refine the language by holding meetings with stakeholders to determine the feasibility of enacting new legislation.
However, regardless of what the Senate does – one thing that will not change is the FMCSA’s involvement in this new legislation – so if you’re not currently in – join soon to avoid future issues.
If you are concerned about falling into the category of an unsafe carrier, the best way to reduce this potential is to improve safety standards or reduce the potential of accidents occurring. Some ways a carrier can improve their safety standards include:
• Stay on top of routine maintenance. Many accidents involving a single vehicle carrier are due to worn out or components that fail.
• Complete driver defensive driving training. Defensive driving has been shown to significantly reduce the potential of on-road accidents – especially in logistics.
• Complete better background checks. While it’s hard enough to find qualified CDL drivers, being strict on hiring proven and safe drivers is the best way to stay in compliance with safety standards.
The biggest segment that is expected to see an impact if this resolution becomes law are brokers. In fact, a major reason for the proposed legislation is that many brokers have been sued in the past due to choosing inferior carriers on behalf of their shippers. One section in this new bill suggests a limitation of liability of brokers and shippers regarding their choice of the carrier. A new Federal Hiring Standard for Carriers would likely make things less complicated for brokers but would also weed out those who operate unethically in this segment.
As stated above, the National Carrier Hiring Standard is not an official law. It has quite a way to go within the legislative process and must finally be approved by the President of the United States. However, this type of legislation has been needed for quite some time, so carriers of all size should be proactive about complying with the proposed standards to ensure a smooth transition when it is finally enacted into law.