Chameleon carriers remain a growing concern in the trucking industry, as existing or pre-existing carriers are registering under new company names and DOT#s in order to hide poor safety records, out-of-service issues, and to avoid paying fines.
The Federal Motor Carrier Safety Administration is cracking down on reincarnated carriers, issuing Out-of-Service Orders to those believed to have taken on a new identity.
So was the case last week with four Kansas carriers. Earlier this year, the FMCSA issued an Out-of-Service and Record Consolidation Order against Royal Transport, Nationwide, Inc., Freight, Inc. and Midwest A, Inc. According to the Final Decision on Petition for Administrative Review of Operations Out-of-Service and Record Consolidation Order document, Nationwide, Freight, and Midwest were found to be reincarnations of Royal in order to avoid negative safety and compliance reviews. The companies were also found to be utilizing the same drivers. Additionally, Freight, Inc. had safety scores of 98.2% (Unsafe driving) and 95.2% (Fatigued driving).
Although serving the orders to the companies in January, an administrative review was granted and, upholding the decision, the FMCSA ordered the companies to cease operations last week.
Chameleon carriers pose a large risk to everyone on the road as well as to your freight. According to the GAO, the risk of an accident is three times higher among chameleon carriers than other new carriers and with over 66,000 U.S. DOT number applications being submitted each year, 98% are not being cross-checked with those previously shut down.
So how are these chameleon carriers identified?
According to the FMCSA, there are 13 main factors used in identifying chameleon carriers. They are as follows:
-“Whether the new or affiliated entity was created for purpose of evading statutory or regulatory requirements, an FMCSA order, enforcement action, or negative compliance history” 1
-“The previous entity’s safety performance history, including safety violations and enforcement actions” 1
-“Consideration exchanged for assets purchased or transferred” 1
-“Dates of creation and dissolution or cessation of operations” 1
“Commonality of ownership among the entities” 1
-“Commonality of officers and management personnel” 1
-“Identity of physical or mailing addresses, telephone, fax numbers, or email addresses” 1
-“Identity of motor vehicle equipment” 1
-“Continuity of liability insurance policies or commonality of coverage under such policies” 1
-“Commonality of drivers and other employees” 1
-“Continuation of carrier facilities and other physical assets” 1
-“Continuity or commonality of nature and scope of operations, including customers” 1
-“Advertising, corporate name, or other actions through which the company holds itself out to the public” 1
Road Scholar Transport promotes the operation of only safe and qualified carriers on the road, that’s why we are giving you five ways in which you can help reduce the risk of hiring chameleon carriers:
-Research a carrier’s CSA (Comprehensive Safety Analysis) scores. This can be done by going to the FMCSA website (www.fmcsa.dot.gov) and clicking on Safety & Security, Company Safety Record, Safety Fitness Electronic Records System, Company Snapshot, and then entering the carrier’s DOT number, MC number, or name. By clicking on SMS Results, you will gain valuable information regarding the number of out-of-services and accidents a carrier had as well as citations, helping you choose a safe carrier.
-Receiving daily updated authority/insurance data from carriers through products such as CarrierWatch.
-Research the company’s background. How long have they been in business? Conducting business with a company who has been operating in the industry for several years and is well-established can help you avoid choosing carriers that are constantly re-incarnating themselves under new names to avoid penalties/out-of-service orders.
-Check the chameleon carrier database. CarrierWatch grants you the ability to view a list of trucking companies whose operating authority has been revoked.
-Ask around. Why not go directly to the source of who has experience using a particular carrier? Referrals are a powerful tool in receiving insider information about a carrier’s reputation.
What do you feel needs to be done to prevent chameleon carriers from operating under a new DOT number and dodging violations? Do you feel that shippers are not frequently vetting out carriers/checking safety scores?