Gross margins and revenues were down for freight brokers in the third quarter of 2019, however, cost reductions and lower rates still allowed them to stay profitable. - Source: DAT Solutions

Gross margins and revenues were down for freight brokers in the third quarter of 2019, however, cost reductions and lower rates still allowed them to stay profitable.

Source: DAT Solutions

Gross margins and revenues were down for freight brokers in the third quarter of 2019, but cost reductions allowed brokers to stay profitable, according to a report from DAT Solutions.

Gross margins were down to 16.1% for freight brokers in the third quarter, down from 16.8% in the second quarter, but they were up compared to the 15% margins of a year ago. Margins remained healthy due to lower spot market rates, which lowered the cost of transportation for brokers.

Operating profit was at 32% of net revenue, beating Q2 results by 7%, but was down 18% compared to the record highs experienced during Q3 of 2018. Cost reductions supported the bottom line, according to DAT, due to brokers cutting labor and non-labor expenses.

The quarterly average load count has remained mostly steady in 2019, with load counts decreasing by just 1% compared to the second quarter. As with most of these metrics, load counts peaked in Q3 2018 at 7% higher than Q3 2019.

Overall, brokers averaged $77 of profit per load, only 2% down from the previous quarter, but 14% below the highs of Q3 2018. Revenue per load averaged $1,511 in the most recent quarter.

DAT’s benchmark data is drawn from the TMS systems of nearly 100 freight brokers and 3PLs with average 2018 revenue of $13.8 million, a 16% increase compared to 2017. Prior year results, as well as the current report, have been re-stated as of the first quarter of 2019, to exclude outliers.

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