Motor Freight Brokers: A Tale of Federal Regulatory Pandemonium

Most brokerage problems are traceable to the troubled history of freight brokers, which has been a constant struggle between regulation and deregulation. Arguably, brokers have been subjected to more extremist regulation than any other industry during the last fifty years. The pattern of extremism began when Congress imposed massive regulations on freight brokers as part of the Motor Carrier Act of 1935. The 1935 regulations completely stifled the U.S. brokerage industry.

Forty-five years later, Congress moved to the other regulatory extreme when it passed the Motor Carrier Act of 1980,6 which virtually deregulated the brokerage industry The eased entry controls of the 1980 Act have led to considerable broker abuse.8 Since deregulation, the industry has been inundated with undercapitalized, fly-by-night brokers who are preying on unsuspecting carriers and shippers.9 While the strict entry controls of the 1935 Act stifled the brokerage industry's development, the eased entry controls of the 1980 Act resulted in higher prices, financial instability, protracted litigation1' and an increase in bankruptcies."1 Due to this regulatorypandemonium, brokers present an exemplary microcosm of the intrinsic struggle between the forces of regulation and deregulation.