This article was originally published on the ReloRoundtable website.
Hey movers! In case you haven’t noticed, there’s an elephant in your front room. And that big pink pachyderm sitting on top of your industry interests is squishing the profitability out of your business.
What’s worse is that he’s got a whole lot of relatives standing in line waiting to invade the same shrinking piece of your market space.
How’d this happen?
Back in 1999, Congress directed that the General Accounting Office (GAO) study the effectiveness of the Department of Transportation’s (DOT) consumer protection activities for the interstate household goods moving industry. They wanted them to identify alternative approaches for providing consumer protection within this deregulated but highly specialized transportation service environment. The legislatures interest was in response to an increased number of complaints from the relocating public after the Interstate Commerce Commission was terminated in 1995.
On March 5, 2001, the General Accounting Office released its report No. GAO-01-318 to Congress entitled “Consumer Protection: Federal Actions Are Needed to Improve Oversight of the Household Goods Moving Industry”.
The GAO findings on the Federal Motor Carrier Safety Administration’s (FMCSA) household goods program included the following observations:
- The Department of Transportation has done little to oversee the Household Goods moving industry;
- Consumer education activities have been minimal;
- The Department does not know the extent to which it has examined carriers’ compliance with Household Goods rules; and
- The Department has not determined whether its level of enforcement is appropriate.
FMCSA is an agency established under the DOT in January 2000 to regulate the trucking industry in the United States.
On June 11, 2003, the FMCSA issued a formal notice explaining the purpose behind the new Consumer Protection Regulations. They were adopted as part of the DOT’s final rule (68FR 35064) for the Transportation of Household Goods in Interstate Commerce (49CFR part 375) which can be found here.
According to the FMCSA, the purpose of the new household goods regulations was to:
- “Increase the public’s understanding of the regulations with which movers must comply, and
- Help individual shippers and the moving industry understand the roles and responsibilities of movers, brokers, and shippers, to prevent moving disputes. Individual shippers — many of whom are either relocating for business reasons or have retired — may use for-hire truck transportation services infrequently.” (emphasis added)
FMCSA justified the new oversight regulation by saying “consumers may be poorly informed about the regulations movers must comply with and thus have little understanding of how moving companies operate.”
“The consumer pamphlet Your Rights and Responsibilities When You Move — Appendix A to part 375–is intended to help individual shippers understand the regulations so that they can make informed decisions in selecting a mover and planning a satisfactory move. Section 375.213 of the Consumer Protection Regulations requires movers to furnish the information in the consumer pamphlet to prospective customers.”
So…what makes a mover?
But household goods motor carrier is defined. According the FMCSA (§ 375.103), it means:
- In general, a motor carrier that, in the ordinary course of its business of providing transportation of household goods, offers some or all of the following additional services: (i) Binding and nonbinding estimates;(ii) Inventorying;(iii) Protective packing and unpacking of individual items at personal residences;(iv) Loading and unloading at personal residences.
- The term includes any person considered to be a household goods motor carrier under regulations, determinations, and decisions of the Federal Motor Carrier Safety Administration in effect on the date of enactment of the Household Goods Mover Oversight Enforcement and Reform Act of 2005 (August 10, 2005).
- The term does not include any motor carrier providing transportation of household goods in containers or trailers that are entirely loaded and unloaded by an individual other than an employee or agent of the motor carrier.
So…while everyone in the moving and storage industry knows what a mover is, inexperienced and often uninformed consumers challenged with arranging a local, long distance or international relocation themselves probably DON’T – unless, of course, a professional from inside the full-service industry explains it to ’em!
To everyone else, the difference between a company providing transportation of household goods and a household goods motor carrier seems to be nothing but smoke and mirrors!
Any guesses as to which service is cheaper?
The invasion of the PSEUDO movers
Back in 1997 (before either the Consumer Protection Regulations or the Household Goods Sections of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Public Law 109-59 were adopted), ABF Freight System, a growing national interstate regular route less-than-truckload (LTL) common carrier launched ABF U-Pack Moving, a household goods “moving service” for consumers.
This new “affordable” do-it-yourself (DIY) transportation option allowed individual customers relocating both interstate and across the international border into Canada to load and unload their household goods and personal effects using the company’s fleet of spring-ride freight trailers.
Previously established national and regional common and contract motor freight carriers had accepted used household goods for transportation – but only if they had been containerized by a full-service mover and tendered at their company dock under National Motor Freight Classification (NMFC) tariff rules.
Shortly after ABF began dropping their high-profile 28′ “pup” freight trailers in residential driveways, apartment parking lots or at city street curbs throughout the country, several other national and super-regional motor freight carriers followed their example by clogging America’s busy metropolitan neighborhoods and thoroughfares with their unattended (and unattractive) equipment.
Nationally, Yellow Freight Systems, once a formidable competitor, began offering residential customers a new type of DIY moving service similar to ABF. Meanwhile, Yellow’s biggest adversary, Roadway Express, Inc., expanded their moving service options by accepting both palletized and crated household goods (HHG) under a variety of different NMFC tariff classifications.
ABF purchased Albert Moving and Storage, a small independent household goods carrier, move broker, and military approved transportation service provider, or TSP, based in Wichita Falls, Texas.
The nationwide freight company acquired the family owned moving and storage business for $4 million after working with their unregulated MovingStaffers (a/k/a Albert Container Concepts, L.C.) labor service company. MovingStaffers has supported the operation of ABF’s growing U-Pack Moving service for several years.
After the economy stalled in 2007, more and more price-conscious consumers and corporate entities abandoned their use of full-service movers. Instead, they turned to cheaper DIY moving services after the recession to manage their depleted family budgets and scaled back relocation benefit packages.
The Albert purchase was announced just days after the Military Surface Deployment and Distribution Command (SDDC) release their new Code 2 containerization rules. SDDC is the executive agent of the United States Transportation Command. USTRANSCOM owns the government’s new $2.2B automated Defense Personal Property System, DPS.
The International Association of Movers, a global association of comprised of over 2000 household goods movers and freight forwarders, estimates that the military services will increase their use of the DOD’s specialized new domestic HHG containerization program by 5-10% in during the 2012 peak moving season.
Meanwhile, Old Dominion Freight Line, the sixth largest LTL firm in the U.S., decided to follow both ABF and YRC Freight into the household goods transportation business in January 2012, when they announced their OD Household Services, a new self-moving service where consumers only pay for the truck space that they use.
In today’s highly competitive virtual marketplace, doesn’t it sorta make you wonder why household goods motor carriers are required by the federal Consumer Protection Regulations (49CFR§ 375.405) to charge by weight ONLY?
Second assault: Mobile Portable Storage Containers
In 1998, Pete Warhurst, a Florida self-storage operator introduced the first Portable On Demand Storage (PODS) moving containers. Like the ABF pups, these large, boxes were designed to be delivered unattended to customers homes or clients businesses so they could easily move themselves.
The concept not only caught on nationally but the PODS franchise quickly expanded to include 48 states, as well as Australia and Canada. Realizing the tremendous profits that could be made in DIY moving and storage products and services, hundreds of local, national and international competitors sprang up during the next decade.
By 2005 competition had become so strong for their U-Pack trailer placement program that ABF introduced a smaller, more attractive (and more “affordable”) self-moving container which they dubbed the ReloCube.
This new DIY “moving service” allowed the company to avoid the increased scrutiny of city, state, and municipal traffic codes that prohibited the placement of unattended trailers on public access thoroughfares. Transportation service provided in ABF ReloCubes is a whole lot more expensive than the same DIY service charged by linear floor capacity used when arranged in their hi-profile freight boxes.
Compromise or surrender?
Recognizing that they’d been outflanked (and undermined) by interstate general freight common carriers and local DIY big box franchises hawking cheap intra- and interstate moving and storage transportation services, several companies specifically licensed by the Federal Motor Carrier Safety Administration (FMCSA) (and various state regulatory authorities) to handle HHG and personal property introduced or acquired their own DIY moving and storage options.
In 2006, St. Louis, MO based UniGroup, Inc, a $2 billion privately held transportation and relocation service powerhouse and parent company to two of the largest full service national van lines in the U.S. – United Van Lines and Mayflower Transit, Inc. – unveiled their own Store and Move (SAM) containers at 92 locations in 65 cities. Now branded as United Mayflower Container Services, SAMs originally allowed their subsidiary agents to compete in the local and long distance DIY portable moving and storage market that was being dominated by PODS.
By 2007, however, PODS was struggling in the marketplace, hurt by the slide in the U.S. economy and the number of low-cost competitors offering cheaper DIY moving products. Warhurst sold the company to Atlanta-based Arcapita for $450 million. The real estate holding company is wholly owned by the Bahrain-based Arcapita Bank which was initially formed in 1996 as the First Islamic Investment Bank.
Meanwhile, Atlas World Group, the nation’s second largest licensed household goods carrier, got into the DIY mobile/portable container market in June 2009 when acquired the assets of the struggling Denver-based Smart Move, Inc. Smart Move’s 5000 unit container inventory and lift assets were redeployed to nearly 70 Atlas Van Lines’ agents located on major metropolitan areas throughout the country as the company’s new SmartVault brand. Since then, Atlas has discontinued the use of Smart Move portable storage containers (SmartVaults).
After experiencing a dismal peak moving season in 2009, UniGroup teamed up with PODS to offer a new type of ‘hybrid” moving service. Under the terms of the marketing alliance, the two competitors agreed to an exchange of portable moving and storage containers for professional moving expertise and range of accessorial services normally offered only by full-service movers.
Each of the budget-conscience clients at UniGroup’s two van lines had access to PODS’ fleet of 138,000 portable moving and storage containers at 166 locations. In exchange, PODS customers unable or unwilling to move themselves were granted the ability to arrange packing, loading, and unloading services traditionally offered by the network of United and Mayflower agents at nearly 750 locations.
The alliance lasted little more than a year. The agreement was suspended by both parties after the full-service moving industry experienced a tumultuous peak season in 2010.
DOD death knell
What’s really killing the moving industry in the United States?
Some of the more experienced, tenured, and now retired (or displaced) captains of the industry might argue that the first critical injury occurred when Congress passed the Household Goods Transportation Act of 1980. The goal of Public Law 96-454 was to reduce regulation of and increase competition in the household goods moving industry. The number of licensed “professional movers” in the U.S. virtually quadrupled overnight.
Some blame Public Law 104 – 88, otherwise known as the ICC Termination Act of 1995. Once feared by the entire transportation industry, the oversight and consumer protection functions of the ICC were assumed by offices in the Federal Highway Administration and the newly-created Surface Transportation Board, both elements of the U.S. Department of Transportation. At one point after 911 there were only two (2) FMCSA ‘cops’ policing over 20,000 newly licensed interstate motor carriers, household goods movers, and personal property brokers.
Meanwhile, the explosive growth of the Internet allowed unscrupulous brokers and non-asset ‘move managers’ to prey on unsuspecting customers online. The U.S. Senate Committee on Commerce, Science, and Transportation is currently investigating the practice of moving companies and brokers conspiring to hold their customer’s household goods “hostage” to extract additional money mid-way through their moves.
Others believe that FMCSA’s requirement that “movers” must offer their customers fixed price binding estimates combined with the industry’s own introduction of the ‘guaranteed-not-to-exceed” variation of the actual weight alternative by competing national van lines is what chased the more experienced small business owners and well-trained independent van operators away from the moving industry.
Ask any professional driver, though, and they’ll tell you it was the steep discounting in the face of rapidly escalating operating costs that drove them away as third party relocation companies and ancient government contracts sucked the profit margin out of the full-service movin’ business.
And that unrealistic price competition started when the moving industry’s largest customer, the Department of Defense (DOD), decided to allow the DOD Business Process Reengineering Task Force to ‘re-engineer’ their internal household goods procurement process in 1995 – the same year that the ICC was terminated!
DOD embraces pseudo movers
If deregulation encouraged rogue movers and unscrupulous brokers to prey on the moving industry’s clients, and reengineering encouraged competing vendors to slit each other throats and rob from their drivers, then it was the SDDC that delivered the industry’s customer base to other non-licensed and unregulated transportation alternatives.
Most industry pros agree! Uncle Sam is the one who ushered the pink elephant into the room.
The pressure full-service movers feel in their pocket book is the result is what happened when the FMCSA decided to re-regulate part of an already deregulated moving industry with strict new compliance and consumer protection requirements.
And now the Defense Personal Property Program Domestic 400NG for 2012 takes advantage of the difference between companies that transport household goods and companies that move household goods with their ‘best value’ pricing model.
By constantly changing the tariff rules of their problem-ridden Defense Personal Property Program, DP3, and ignoring and undermining the financial interests of local moving and storage agents, DOD is essentially leading the pachyderms to their watering hole.
OK, Congress…What’s IS a mover? Really!
In today’s mobile, global marketplace, popular “consumer oriented” trash-your-mover forums and well-optimized rating and review websites provide disgruntled customers a convenient, free and often one-sided public platform to complain about the relocation product or service they used or transportation companies they hired.
Digitally connected, budget-conscious consumers often share their anger and frustration using popular personal and professional social media (SM) platforms like Facebook, Twitter, YouTube, Google+, Linkedin, when they think they’ve been ripped off or scammed by their mover.
Not only is it easy to give a company (or competitor) a virtual black eye, but experienced SM users can multiply the effects in the online marketplace if their digital punch goes viral.
Many new members, for instance, use the free platforms like MovingScam, MyMovingReviews, RipOff Report, and Consumer Complaints Board to anonymously heap the very same blasphemous comments on the moving industry that they’ve left at countless other online venues including the always popular Better Business Bureaus.
It’s amazing what kind of damage can be done to a reputable company’s reputation in the virtual marketplace with a few strategically placed incendiary comments and SEO tracking devices.
If local, state and federal officials browsed through the some of these comments, though, it would quickly becomes apparent some of those vehemently expressing their disappointment with their “mover” usually don’t have a clue on how to tell the difference between a licensed household goods motor carrier, a move broker, a motor freight transportation or portable storage container company, and a DIY moving service.
But guess which service industry individual customers or corporate client give the failing marks to when the motor carrier transportation company, labor contractor, or moving service provider they’re dealing with online:
- Refuses to send a representative to their home to provide them a fixed price, binding estimate, even though their freight terminal is within 50 mile of their home or office.
- Fails to include full-value insurance protection on their DIY service order or interstate transportation bill of lading.
- Won’t reimburse them for damage they did when loading or unloading their own personal property.
- Wants to charge for protective pads, tie-down straps and moving or dunnage material to secure the content in their trailer or container.
- Refuse to settle a property loss of damage claim caused by the local laborers they hired.
- Won’t respond their written complaints.
If the relocating public has little understanding or experience with how moving companies are supposed to operate today, it’s not because of the trained professionals who make up most of the local, long-distance or international household goods industry.
Maybe it’s time for Congress to instruct the General Accounting Office to take another look at what new federal actions are needed to protect consumers in today’s unregulated online marketplace.
Otherwise, it is going to become increasingly difficult to establish oversight of the household goods moving industry if no one even knows what a professional mover really is.
If no consumer protection oversight is good for the goose than it should be good the gander.