Small Carriers Face Broker Cutoff After Supreme Court Ruling

Will small carriers lose broker access after the Montgomery decision?

Yes, and it is already happening. Greg Feary, president of Scopelitis, the firm that represents the largest carriers in the country, said he is seeing five-truck operations with their own authority watch freight dry up as brokers decide they are not sure they want to deal with small carriers anymore. He expects large carriers to recruit these four- and five-truck operations within the year, offering them the option to run under a larger carrier's authority to keep the doors open.

The Supreme Court's May 14 ruling in Montgomery v. Caribe Transport answered one question: do brokers have a duty to select carriers that operate safely? The Court said yes, 9-0. That closed the door brokers used to walk out of negligent-selection lawsuits early on preemption grounds. Brian Nelson, a partner at Taylor Nelson Slattery Bernard who spent years as general counsel inside a broker and motor carrier, explained that brokers can no longer file a motion to dismiss and get out quickly. They now have to go through discovery and potentially all the way to summary judgment. That longer, more expensive path is why insurance companies are raising rates, because they know they will pay defense costs deeper into every case.

What changed for small carriers after Montgomery?

Carrier selection policies, once loose guidelines a dispatcher applied on the fly, have become formalized red-light, green-light systems that are discoverable business records. Every broker now has one, and they differ from one another. Nelson said a carrier now has to worry not only about 50 different states' rules but about every single broker having a different carrier selection policy, and whether the carrier can qualify under each one. Your salespeople are now selling your company to brokers week after week, trying to stay qualified enough to keep getting freight.

The ruling's language about conditional carriers created a trap. Nelson said the Court took the plaintiff's characterization of conditional carriers and dropped it into the opinion without defining it or qualifying it, and that language is now so strong and so feared that many brokers are simply stepping back from conditional carriers altogether. He called this a disservice, pointing out the inconsistency: the government itself said in a 2015 settlement that the underlying BASIC scores were unreliable and pulled them from public safety determinations, yet a conditional rating now carries enormous weight while a satisfactory rating means almost nothing.

Feary pointed out that the vast majority of carriers in the United States are small carriers, and the vast majority of those have never been rated at all. Less than 10% of carriers carry a safety rating, he said, and if the FMCSA tried to audit and rate every carrier that exists today, it would take an estimated 23 years. That leaves the enormous population of small, unrated carriers in a gray zone, judged not by a clear government rating but by whatever vetting criteria each individual broker chooses to apply. A small carrier getting freight from five sources today may find tomorrow that only two of them still consider it qualified.

Why do brokers prefer large carriers now?

Shippers deciding who to do business with will want larger carriers, larger brokers, older carriers, older brokers, the ones they see as more reliable, more financially secure, backed by technology, and able to stand in front of them if a lawsuit comes. Feary said the Montgomery decision is not going to hurt the large carriers. It is likely to benefit them.

He noted that authorities with one to six trucks are declining in a way that looks like the downslope of a mountain, while carriers with 15 or more trucks ticked up slightly. There may be a friction point somewhere around 15 or 20 trucks, where a carrier is big enough to keep getting business. As small carriers drop off, the larger ones absorb their freight, recruit their drivers, and gain economies of scale on fuel and insurance.

Nelson also flagged a structural unfairness that hits carriers harder than brokers. A broker that gets hit with a judgment can close down and start up again tomorrow, he said, because there is no such thing as a chameleon broker in the regulations. A carrier cannot. The safety record, the reincarnated-carrier rules, all of it follows the carrier. So the carrier carries a risk the broker does not: lose big, and you may not be able to start again.

How does causation work in negligent-selection lawsuits?

Nelson was careful to note that causation still matters. A plaintiff still has to prove that the specific thing the broker was negligent about, say, selecting a carrier with poor vehicle maintenance, actually caused the crash. But he explained how plaintiffs get around that requirement using what is called the reptile theory. The argument runs that if a carrier is bad at one thing, hours of service for instance, a jury will believe they must be bad at everything, including whatever actually caused the wreck. The practical consequence is that a carrier can no longer afford to be excellent at four things and poor at one. In Nelson's words, you have to take a holistic approach and treat every single thing like it is the most important thing.

Should an owner-operator get their own authority right now?

Feary's assessment was blunt. Between the cost of insurance, which he expects to keep rising, the thinning number of brokers willing to work with a brand-new authority, and rising insurance minimums, he said that if you are starting with one truck, it could be tough sledding, and that this may not be the right time to jump into the small carrier market.

For the owner-operator already running under their own authority, Feary offered three steps. First, find out how the sources where you normally get freight actually see you, safe or unsafe, and if they do not have a sense of you, proactively give them the credentials that show you are safe. Second, if you cannot make that work, sit down at the kitchen table and honestly do the math on whether operating as an owner-operator under a larger carrier's authority might actually mean lower costs and more reliable freight in the geographies you want to run. He framed that not as surrender but as a legitimate business calculation. Third, reframe the job itself so that safety comes first and on-time delivery second. A trucking business built around a genuine safety culture, he argued, is the one that survives, because hours of service, safe driving, driver qualification, all of it follows from that culture, and it is exactly what the shipping community and the courts now reward.

What can a small carrier control?

Nelson's practical guidance centered on control and knowledge. A carrier can only control what it controls: its driver qualification files, its maintenance records, its hiring practices, its paperwork. He stressed that a defensible file is one that is complete and up to date, with nothing past deadline, no missing pre-employment drug test, no skipped driving-history check, because in litigation you do not get gold stars for doing what you were supposed to do, you only get deductions for what is missing. He compared it to competitive cheer, where you start with the maximum score and only lose points, and to team sports where you can make up for a mistake on the next play. A carrier does not get that luxury. Its paperwork has to be right every time.

His single most important step for the operator listening at a truck stop: get a copy of the federal regulations and actually know them, because this is your profession and your business. Nelson also advised carriers to find out each broker's red lights, the things that will get a carrier rejected, since those are discoverable business records the carrier is entitled to understand, and to start local. Target brokers you can physically visit, he said, because brokers are terrified of cargo theft from carriers they cannot see or touch, and being the carrier down the street who can be looked in the eye is a real advantage in the new environment.

What this means for the one-truck operator

The picture is hard, but it is not hopeless, and what an operator does now matters. Nelson offered a reminder that cuts against the doom: brokers do not move cargo. They need you, your truck, your drivers, your professionalism. Somebody will use you. But Feary's warning is the one to carry: if small carriers do not find a home with a very large carrier, or at least the next carrier up in size, they may struggle. He would not predict for how long.