Transport Capital Partners LLC conducted their Business Expectations Survey for the first quarter and the results are not looking up for brokers.
According to the survey, carriers are gradually drifting away from brokers, whom they relied on to fill their empty lanes/trucks, with 87% of those questioned stating a decrease in their broker usage within the previous months, an article in The Trucker notes.
When compared to past surveys, the number of third-party shipments has decreased drastically, with two-thirds of carriers relying on brokers back in May 2009, the site explains.
As the survey demonstrates, “40 percent of the carriers report that broker freight services account for less than 5 percent of their revenues…35 percent report 6-15 percent” and “only a quarter of carriers rely on brokers for more than 16 percent of their revenues” (http://www.thetrucker.com/News/Stories/2011/4/20/TCPsurveyCarriersshiftfrombrokersascapacitytightens.aspx).
These decreases include smaller trucking companies as well, who previously relied on brokers moreso than large carriers due to their smaller service areas. They too, according to the site, decreased their usage of brokers at the same level as larger carriers did.
What is the reason for this change?
As you may have guessed it, tight capacity issues currently facing the trucking industry are playing a large role.
Carriers are facing shortages not only in trucks, but drivers as well, finding that they do not have the capacity to accompany all customers’ requests. Therefore, carriers are going to choose to service their current customers before going through third-parties.
With rising diesel prices, carriers are looking to cut costs and will profit more by transporting the freight with their own customers, whereas a typical broker
“achieves gross margins of 15 to 20 percent,” cutting into the amount carriers can make off the shipment.
But, then again, can it be that shippers are realizing the benefits of choosing an asset-based carrier over a third-party?
Both carriers and brokers operate within a framework that is based on distance, time, and rate. But here is the difference. It is the carrier, not the broker, who is constantly managing inventory and making sure freight gets transported to where it needs to be, on time, taking on a responsibility that far surpasses the framework of brokers.
Ask yourself this, do you know who is hauling your freight? Better yet, do you know when their equipment was last inspected? Neither does the broker. Luckily, you don’t have to worry about equipment failing with Road Scholar. We never had an equipment failure due to newer models and daily inspections.
And for when something goes wrong, are you covered? Did you know that the typical broker has no cargo or liability insurance? Compare that to a company like Road Scholar who provides the proper insurance, which you can view at http://www.roadscholar.com/certifications.php.
Not to mention Road Scholar’s high security shipping and premium services. Check it out for yourself at www.roadscholar.com.
Do you think shippers are gradually choosing to transport their freight via a trusted carrier instead of a broker due to security and safety issues?