The latest survey from Transport Capital Partners (TCP) indicates that broker use is gaining ground as carriers seek to fill gaps in their freight lanes.
TCP’s First Quarter 2012 Business Expectations Survey shows that 33% of carriers surveyed indicate they are using more broker services in the past three months over the previous three months. That is up from 15% in the August 2011 survey, TCP said.
The latest survey, conducted in February, asked carriers if they have used more or less broker freight services as a share of their total revenue over the past three months. In both February and August of 2011, the percentage of carriers using more or less broker freight services was similar – around 12-15% for those using more and around 82-86% for those using less.
“Load boards are indicating that spot freight rates in lanes are above long-term rates, and that the first quarter seasonal slowness may also have induced carriers to seek broker loads to keep drivers and equipment busy,” said Richard Mikes, TCP partner.
Larger carriers (more than $25 million in revenue) surveyed used brokers more than smaller carriers, but only by 6%, with 34% of larger carriers indicating they used more broker services vs. 28% of smaller carriers.
“While some carriers might use brokers to increase freight, TCP believes that most of these carriers are attracted to the spot market due to higher rates,” said Lana Batts, TCP partner.
Even as the use of brokers is increasing, their percentage of overall revenue remains small. The survey found that 47% of carriers report brokered freight makes up less than 5% of total revenue. Again, the survey found that larger carriers are able to take more advantage of spot market rates better than smaller carriers.
“This trend, if continued, challenges thoughts by many observers that smaller carriers predominate in broker use,” said Mikes.
“In a period of tightening capacity however, the slightest change in the spot market can adversely affect a shippers’ ability to attract capacity,” added Batts. “Historically, contract rates have been significantly lower than the spot market in times of tightening capacity.”
Click here to view the first quarter 2012 graphs of carriers’ expectations for volumes and rates.