Freight conditions are tough, but are brokers really to blame?
While truckers are widely being feted as heroic frontline workers by a suddenly adoring public, there’s a growing sense they’re being taken advantage of within the industry by opportunistic or predatory brokers.
Accusations of price gouging by brokers, while difficult to quantify, have even attracted the attention of U.S. President Donald Trump, who said during a recent appearance on Fox & Friends it’s his belief that brokers are gouging truckers. When truckers took their rigs to Washington, D.C. in protest of low rates, Trump tweeted “I’m with the TRUCKERS all the way.”
Meanwhile, it wasn’t only the U.S. president taking to social media to voice his opinion, as the tensions between trucks and brokers mount. An email making the rounds from one freight broker taunted a trucker, fueling the fire.
“I’m not a salary paid employee. I’m commission, I determine what I make,” it read. “I average around $200,000 a year…I know what I’m doing. I paid you $800 and had $1,300 from customer. Tell me how smart you are. Oh and I put a new truck in your place for $650.”
Did that opinion reflect the way brokers widely feel about their freight-moving partners? Or was it simply a tone-deaf, vile missive from a frustrated broker? Are brokers padding their margins while exploiting desperate truckers?
Robert Voltmann, president and CEO of the Transportation Intermediaries Association, dismissed any idea brokers are to blame for low rates.
“Brokers don’t set prices, the market does,” he pointed out. “When there are too many trucks chasing too few loads, rates go down, and since mid-March rates have plummeted. Nobody has gotten pre-virus rates.”
He says broker margins average 16%, but acknowledged both shippers and brokers will test the market.
The Owner-Operator Independent Drivers Association (OOIDA), for its part, called for greater transparency of broker pricing, but stopped short of accusing brokers of price gouging. Instead, it called on government to better enforce U.S. federal regulation CFR 371.3, which requires brokers to keep transaction records and make them available to carriers.
I asked TransCore Link Logistics to drill into its data to see if there was any evidence of price gouging by Canadian brokers. It uncovered nothing out of the ordinary, except for a supply-demand equation that favored shippers.
As an example of how rapidly conditions were changing, and how quickly the pendulum was swinging in the favor of shippers and brokers, TransCore Link Logistics highlighted the busy Quebec-Ontario lane. It went from an outbound truck-to-load ratio of 1:1 in the third week of March – a perfect balance – to 6:1 for the month of April. There were fewer outbound loads from Quebec to Ontario in all of April than in the third week of March, and instead of one truck for every load, there were suddenly six trucks per load.
That imbalance goes a long way to explaining rapidly falling rates. It’s not necessarily because a greedy broker is padding his or her pockets.
The spot market story was similar south of the border, where most of the bad broker allegations were emanating from. When I approached industry analyst Avery Vise, vice-president of trucking for forecaster FTR, he reasoned: “It’s not a broker’s job to save a carrier from its own poor decisions. Sure, there are bad brokers just as there are bad carriers, but fundamentally what we are seeing is a tough freight market that unfortunately will not recover as quickly or consistently as it collapsed.”
So, don’t expect Trump to come to the rescue of truckers and hold big brokers’ feet to the fire, demanding they reduce their margins to keep truckers viable. You’re on your own here. You can help your cause by leaving cheap freight at the dock.
I’ll leave the last word, as unpopular as it may be, to Voltmann. “It’s the motor carriers that accept it. If carriers don’t accept the rate, both shippers and brokers will offer higher rates until the load is accepted. That’s the free market economy.”
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The brokers are not the problem. We need to set a online freight match system. The American owner ops ass and the trucking companies need to work together where you can post truck locations and where you would like to go. Shippers can post loads as well the minimum rate for dryvan loads is $1.85 us or $2.40 cd per mile reefer and flatbed at $1.95 us or $2.53 cd per mile plus dock time pay of 65 cents u s per minute after 1 hour or 90 cents cd. The load board costing each side 4 percent the employees could get a base wage plus 20 percent of the commission on the loads processed. The load board would be setup as a nonprofit with 25 percent of the net margin (profits )going to good works the rest to making transport better for truck drivers and shippers and receivers. We need No load except oversized would be over $4.00 us per mile in even a disaster.
There are probably a few brokers that are actually gouging trucking companies. There’s always a few rotten apples in every barrel. More likely what is happening is that shippers, now realizing that there is over capacity in the marketplace, and fuel is cheap, are taking every advantage they can get to renegotiate contracts at a time when truckers are vulnerable.
It’s not odd that they would take this tact now, but what is odd that many of those same shippers are the ones that asked carriers to hold the line when the market was upside down the other way a couple years ago. One of the worst offenders to date has been Rayonier/Tembec. They’re busy gouging everyone from truckers to brokers to railroads.
I’m curious to know if insurance companies are aware of this whole broker to carrier squabbling situation! And that brokers aren’t afraid to use the first come first served scenario to getting the load, after the broker hung on to the load too long to try squeeze every dollar out of the load! And now there is multiple trucks racing with tired operators at the wheel just to get a load paying barely enough to cover homebound fuel costs! And yet they (insurance vultures) still question the rise in commercial vehicle mishaps ! To me its like a team effort to drive up cost of ownership by the insurance vultures dud to risk, by oil dollar greedy creeps because a racing truck burns twice the fuel, and brokers leaving loads to the last minute to squeeze the best bang for their buck, not to mention having now almost closed the ontime delivery window, causing tired and overworked drivers!!! Maybe one day soon somebody in transportation will wake up to this reality too!
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Your excatly rite Adrian , we are all responsible in moving freight from point A to B that includes shippers , Brokers, drivers , owners, insurance companies, each one of us in this game or business relationships has a bottom line or business model that we should follow and not be taken advantage of every time there’s a swing in the market place .we need a balanced approach from all players in the freightmarket place if you can’t meet those protocols by continuing to rip each other off , then you have no business in being there in the first place.
Where is the Government oversight these bottom feeders are totally taking advantage of this situation. This system set up by the government should have regulated starting rates to at least allow the trucking companies and owner operators to cover their costs maintaining equipment and making a living wage for their sacrifices and risks! Very unfair system monopoly!
Good Morning James.
Interesting article regarding brokers – I work for a small local company doing both LTL & TL and we see the effects of dishonest brokers almost daily.
I will however take exception to the Loadlink response to your request keeping in mind a big percentage of their annual revenue comes from the brokers side of their business and so therefore their response to your inquiry would be biased to say the least.
We notice this through one of their new platform called “Freight Index” @ $175.00/month.
What’s interesting about this is apparently this information is given to them by the carriers. Not a bad concept except when they post the rates not one of them matches with what’s actually happening within the real world of transportation which begs the question of, how accurate is the information Loadlink posting and has a hint of – “it came from the carriers” and somehow this makes it right.
Maybe a question you could research on behalf of the carriers.
Appreciate your articles.
Frank
A Broker’s words to me “The market is in our favor right now, I know we hold the cards”. This article is astounding when it comes to the lack of understanding in the freight world. I as a broker can quote a low price, get the freight and then lord it over a truck in the area that has no other choices of freight. Eventually someone will take that freight to cover a portion of their fuel to get home; and has now set a precedence for the value of freight in that lane for the customer and for the truck.
It’s very very easy to drop pricing when the costs associated with the service are of no concern to you, and your only concern is the 15% (and often substantially more with a lot of brokers) margin; not paying your fuel bills or insurance premiums.
Are brokers really to blame? are you in the business at all? we deal with this day in and out and yes of course brokers are to blame, even other brokers that are good brokers are saying the same thing “Im not doing what those other guys are doing to you guys” that is what I hear on daily basis and brokers are destroying the rates and making a huge profit. when you bid on a lane you bid on it for a year not one lane from time to time its a one time thing but mostly its loads you get for the entire year. the rates are the same but the brokers are holding on to profits taking advantage of the situation. If carriers make it thru this by some miracle we will all be against the brokers
I’m gonna buck the trend here. Remember why Ontario scrapped the PCV license? They said it was an old boys club that kept newbies out.
If trucking is so crappy, and rates are so low, why do new companies keep popping up? There is no law that says you should be able to get rich in any career path you choose.
Brokers are a necessary evil. They give access to freight small guys wouldn’t otherwise get (john deere, komatsu, etc)
I’ve been in this game 38 years, and I’m tired of the whiners. There should be a shortage of trucks, not drivers, if the rates are so bad.
If you go on u ship where you bid on loads you won’t believe how low these carriers will go it’s the carriers that are their own worst enemy and there’s always someone that will haul it
The current market situation is not working for small trucking companies. In 12 months some companies will claim that there is a shortage of truck drivers ( and trucks) to haul freight. We had this in 2018 many truck drivers unhappy with their wages bought a tractor ( in some cases a trailer) and went on percent of the gross pay. Many of these owners-ops are now loosing their truck and in some cases with higher insurance costs in Ontario Canada the home that they and their family lives in. This model with extremes ups and downs costing taxpayers money for assistance and a health care fore the truck drivers. A better way is needed. We need to regulate rates and or drivers pay and fix insurance and parking before bringing in E-logs in Ontario and more foreign transport workers unless the trucking truck industry agree to pickup the costs of drivers that end up on the street or in the homeless shelter system and their extra health care and police costs in Canada.