As you may have heard, today, the U.S. Supreme Court issued its decision in Montgomery v. Caribe. Unfortunately, the court set aside decades of legal precedent and ruled that brokers may be held liable under negligent selection claims for carriers’ on-the-road actions.

As you know, brokers do not employ motor carriers directly and do not have access to the records and data required to perform the safety functions that plaintiff lawyers contend they must. This decision places additional safety responsibilities on brokers that they do not have the capacity or information to fulfill adequately.

This ruling is perhaps one of the biggest decisions handed down in 50 years, and it basically means TL freight costs will go through the roof.

Why?

On the surface, it sounds like common sense: brokers should ensure they perform due diligence when selecting safe motor carriers.

Easy right?

So who and what determines whether a motor carrier is “safe”?  Isn’t that the job of the FMCSA? They approve motor carriers to operate and perform carrier inspections. And don’t think this applies only to brokers—shippers must also follow extremely tight vetting rules, just like we do or face significant liability if/when something goes wrong!

More will emerge from this, but know this—rates will rise because the risk has just gone through the roof. We can do all the vetting in the world, but that won’t stop truck accidents. When they occur, you’d better have your ducks all in a row.  Everyone gets sued now.

• Insurance costs for everyone are now going to skyrocket.
• The bottom 1/4, 1/3 of motor carriers will not be selected, effectively removing significant capacity.
• Each state may now have its own laws. Does anyone want to hire a motor carrier in California?
• A perfectly safe motor carrier may end up hiring a driver that isn’t qualified—how are you supposed to know that? Or anyone for that matter?
• Vetting for us is already very tight, but it’s going to get even tighter. Tighter vetting means more time, less capacity = higher rates. Tighter vetting means not just having a vetting policy that is followed, but attaching all evidence of that to every single load.

Make no mistake: the cost of doing business just went way up. And if you are handling your own carrier selection, you’d better have your world in order, or the courts are coming for you, too.

The good news? Reconex has had some of the best vetting standards of anyone, which is why we have basically 0 fraud and 0 insurance issues in our entire existence. Can your broker furnish you with the same?  Can you do the same internally?

We are here to help!