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Freight Brokerage Continues as an Important Role for Carriers

April 11, 2013

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Results from Transport Capital Partners’ First Quarter 2013 Business Expectations Survey found that while some carriers are reporting an increase in brokered freight services in the last three months, a majority of carriers (62%) are using fewer brokers than six months ago.

The percentage of carriers reporting an increase in brokered freight services doubled between August 2012 and February 2013, from 16% to 35%, a reflection of seasonal freight fluctuations last year and this year.

“Freight brokers continue to provide loads that improve asset utilization and effeciency as customer demand fluctuates,” states Steven Dutro, TCP partner.

Thirty-five percent of carriers state that they are using more broker
freight services, however, brokerage freight still amounts for less than
5% of volumes for almost 50% of the carriers.
Thirty-five percent of carriers state that they are using more brokerfreight services, however, brokerage freight still amounts for less than5% of volumes for almost 50% of the carriers.

Brokerage spot market freight still amounts for less than 5% of volumes for almost 50% of the carriers, about the same as February 2012, traditionally one of the highest quarters for the use of broker services.

“The first quarter has a lower freight demand and this leads to idle trucks chasing scarcer loads, with spot market rates represented by brokers declining,” states Richard Mikes, TCP partner.
 
Smaller carriers rely on brokers more often than larger carriers as they have lower lane density and marketing staff.

“The importance of brokers to smaller carriers is often significant, although we seldom hear of rate levels that are adequate to sustain a carrier,” says Dutro. “Often it is a case of: a little can help, but too much can be deadly.”
 
The increase in the number of carriers reporting the use of broker services could also be tied to overall optimism for volume and rate increases. 

“We see carrier optimism along with their drive to balance freight networks building interest in acquisitions. Gaining customers and capacity in key lanes will improve carrier profitability,” notes Mikes.

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