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Friday, April 16, 2021

More Carriers Balancing Brokers as Spot Market Rises

(April 9, 2012) — Motor carriers are continuing to move away from the use of brokers compared to years past, although not as much as they did in 2011, reports Transport Capital Partners’ (TCP) in its First Quarter 2012 Business Expectations Survey report.

In both February and August of 2011, the percentage of carriers using more or less broker freight services as a percentage of total revenue was similar – around 12-15 percent for those using more and around 82-86 percent for those using less.

The number of carriers that indicated they are using more broker freight services has doubled, from 15 percent to almost 33 percent in February of 2012. Likewise, 67 percent of carriers surveyed said that they were using less brokers.

“Load boards are indicating that spot freight rates in lanes are above long term rates, and that the first quarter seasonal slowness may also have induced carriers to seek broker loads to keep drivers and equipment busy,” says Richard Mikes, TCP partner.

More large carriers ($25 million or more in revenue) are using brokers than smaller carriers, but there is not a large difference – (34% and 28% respectively).

Despite the increase in the use of brokers, the amount of freight that makes up a carrier’s total revenue is still relatively small, with 47 percent indicating it is less than 5 percent.

Larger carriers seem to be taking more advantage of spot market rates than smaller carriers. “This trend, if continued, challenges thoughts by many observers that smaller carriers predominate in broker use,” says Mikes.

In a period of tightening capacity however, “the slightest change in the spot market can adversely affect a shippers’ ability to attract capacity,” says Lana Batts, TCP partner. “Historically, contract rates have been significantly lower than the spot market in times of tightening capacity.”