Frieghtwaves recently published two commentary articles with opposing viewpoints regarding the economic effects of freight brokers on carriers, and shippers. The Demise of the Freight Brokerage is an asset-based carrier\’s piece claiming asset-light / 3PL brokers are dead, or need to partially die, because they\’re driving asset-based carriers out of business. Are Brokers Really Gouging Carriers? is a rebuttal, detailing some economics and accounting principles that debunk the claims in the first, and call out the selective interpretation of the 2 data points to make the arguments. Summing up the second:
1. Supply and demand dictates carriers would go elsewhere for freight if one/many brokers were injuring the free freight market.
2. Brokers must have been giving margin back to carriers in heady freight markets of \’17-\’18 for the argument to work.
3. Though brokers\’ (relatively fixed) margins naturally grow as a % of total $ revenue in a soft market, same as they shrink in a tough one, their per-transaction revenue was actually flat in the given example.
Back in my world, I helped a carrier in an awkward area fill their trailer completely with on-route freight, ie: gravy, and helped a shipper by not deadheading a truck 150 miles for a partial load at a higher rate, and saw it through to delivery. I made money.
Do you see anything wrong with that? What\’s your position on the commentaries?
#freight #freightbroker #3PL #truckingcompany #truckingindustry #shipping #transportationindustry #logistics