Carrier-broker relations shouldn’t be so adversarial
I’m connected on LinkedIn with some great carriers and brokers, and lately have been spending time reading the comments on many posts.
I have been struggling to understand why there is such an ‘us versus them’ mentality between brokers and carriers. I have worked for both asset-based carriers and logistics companies for more than 20 years – as well as companies who manage both an asset and logistics divisions – and I understand the frustration on both ends.
Carriers believe brokers are price gouging and taking as much as 50% of the shipment value in the current market. They are complaining that brokers are influencing this market in their favor, and that the result is that carriers are not getting paid a fair rate per mile.
Brokers, for their part, are commenting that carriers themselves gouged brokers during the pandemic, and that they drove rates higher from day to day on the same lanes, for their own gain.
Carriers and brokers are misplacing blame on their industry counterparts. The freight market is driven by supply and demand, same as any other industry. If your product or service is in demand, the rate or price for your product or service will go up. Why are carriers and brokers battling each other, rather than focusing on the real challenges facing the market?
The facts are:
During the pandemic, the rate increases started on the first mile. Due to high demand and lack of capacity, ocean providers increased rates from roughly $900-$1,200 to $15,000- $20,000 for containers to the U.S. West Coast from East Asia.
Following ocean, drayage rates increased, congestion fees were implemented, wait time fees increased due to a lack of capacity and excess waiting time at ports.
Middle-mile trucking companies then raised their rates based on demand, with excess volumes at all ports and ocean vessels restricting inland moves of containers (get the empties back to improve capacity) meant middle-mile trucking companies dealt with an increase of transloaded freight.
Due to increased demand, large courier services raised their rates in 2021-2022, but they did not have the capacity to add any new customers.
Some opportunists
In all these stages, if the capacity had been available, the rates would not have increased to the extent they did. The markets are the root cause of both the favors or misfortune of brokers and carriers.
However, I don’t want to disregard the fact that some companies are valuing making a quick dollar over long-term sustainable partnerships, and these companies are fueling the carrier vs. brokerage fire.
Nonetheless, it’s just not possible to create a favorable market, and I don’t think brokers and carriers are actively attempting to inflict these markets upon one another, and I don’t get the adversarial commentary occurring online.
Whether you are an asset-based carrier, broker, 3PL, or 4PL, we all work together as an industry. This should never be an ‘us versus them’ scenario. We all represent the transportation industry. We all have investments that are significant to operate our businesses.
We need to work together to build to improve our industry and provide shippers with a great experience that complements and improves their supply chain.
Have your say
This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.
Bill I truly respect the fact that you’ve been doing this for a long time and most of what you say has merit however, there’s a missing part that I would like to share.
First and foremost, the broker has no clue for the most part of how much it cost to run a truck today and frankly, I haven’t met one that really cared. All you have to do is consider how many brokers or third-party logistics companies have popped up over the years to understand that I am correct because they’re taking easy money from them trucker that the country needs way more than they need the broker..
Now I just said the broker doesn’t understand how much it cost to run a truck today and I must that neither do most truckers especially the single Owner Operator or Trucking copy with just one to 305 trucks for the most part they don’t have a clue how much they should charge either. Most truckers, and on awful lot of larger carriers something run their business on what they think the market will bear and that can be a fatal mistake.. if it’s not a fatal mistake, it’s one that will cause those truckers to struggle with however, Long there around.
Another issue is detention. If the broker really cared about the carrier, they would make sure that they paid a fair rate for their detention time, but I have found nothing to do..
Last but not least my 58 years of experience in this business as a driver as an independent Owner Operator , and eventually as a large fleet or a larger fleet of 72 trucks, it took me decades to learn that rating by the mile is antiquated and needs to change. It took me decades to understand and then build up the courage to rate by time not by the mile and once I did that my business changed for the better, the life of my drivers, my dispatcher’s, my mechanics all my back office people all changed for the better.
Bill, good article but you missed the point here. In my opinion with 30 plus years experience. the reason there is a ‘us vs them” mentality is because there are too many “us” and too many “them” in this industry. There are absolutely no barriers to entry as either a carrier or broker. Meaning there are too many people in this industry that don’t belong and are entering the marketplace for the wrong and misguided reasons. The trucking industry as a whole needs regulation now more then ever for both Carriers and brokers. The industry needs minimum financial fitness tests to allow new carriers and for brokers they should need to post a minimum $100,000.00 bond to be a broker. That’s just the start. Getting rid of Driver Inc trucking companies would be a good idea too.
This article makes a lot of sense. Reminds me of the age old battle between dispatchers and drivers that often exists, even though it shouldn’t. Or the battle between safety and operations.
Thanks Bill, I enjoyed this.