By all measures queried in the just-released fifth annual Transcore DAT Broker Benchmark Survey, 2011 turned out to be a second positive year in a row for non-asset based brokers, broker-carriers and 3PLs alike.
“Last year was a good year for brokers-- as was 2010— in terms of loads, revenues and profits,” David Schrader, senior vice president of operations for DAT told FleetOwner. “And for carriers,” he noted, “2010 also was a good year and we expect similar results for 2011 in our upcoming carrier survey.”
The survey found that in 2011 freight brokers moved 19% more loads and their total revenues rose 31%. Revenue per load went up 9.5%. Average gross margin per truck load was 15%, up 0.7% from the year before. Gross profits per load increased 10.3% and gross profits 11%. What’s more, brokers in business for at least two years saw an average 18.9% increase in loads per month last year.
DAT invited 5,000 brokers, broker-carriers and 3 PLs to answer its survey about their business and to compare their results from 2011 with 2010. Of the respondents, 62% were non-asset based brokers; 23% were asset-based broker-carriers, and 15% were either 3PLs or freight forwarders. Independent agents were not counted in survey totals.
Dry vans hauled the majority-- 54%-- of respondents’ loads with another 27% allocated to flatbeds, 14% to reefers and 2% to rail intermodal. Compared to last year’s survey, this year’s results showed a 3% decline in the load mix for both vans and reefers, with the combined 6% flowing to flatbeds. According to DAT, this “may be an initial sign of recovery in the flatbed segment, which suffered setbacks in 2009 and 2010.”
While respondents “expressed concerns” about their ability to find trucks in 2011, capacity shortfalls affected business results for fewer than 1 out of 4 respondents. Among the brokers who gave a reason for turning down loads, the most common causes were pricing and staffing-- not capacity.
DAT pointed out that brokers found that using load boards supported their profitability. Brokers on averageused commercial load boards to move 48% of their freight in 2011. The most frequent users grew their business by 11%, as measured by average loads per month. They posted between 75% and 100% of their freight on load boards. This included smaller companies that moved an average of 370 loads per month in 2011, up from 332 in 2010. They also increased profitability and enjoyed 15.9% margins, the highest of any group. By contrast, brokers who posted less than 25% of their freight on commercial load boards saw their monthly loads increase by 15%, but their margins declined to 14.1% in 2011.
DAT also looked at separately at non-asset based brokers that specialized in one trailer type. Turning down loads was most common (38%) among brokers that handled higher than the average share of reefer freight. Only 25% of van brokers and 22% of flatbed brokers reported turning down loads at some point during 2011. “This surprised us,” the survey author noted, “because all the talk in 2011 focused on flatbed capacity shortages in 2011, but the reefer segment displayed a normal seasonal pattern.”
The survey author pointed out that “industry analysts warned that fleet capacity could not keep pace with demand, and some freight shifted to rail intermodal, which rose 5.4%. The spot market also gained popularity, as demonstrated by a 36% increase in load volume compared to 2010.”
DAT said responses suggest that load boards enabled brokers to find trucks, even while others complained about capacity shortages. Only 10% of non-asset brokers reported turning down a significant number of loads in 2011.
Freight rates increased 7.4% on the spot market in 2011, including a seasonal spike in summer rates for all equipment types. Contract rate hikes lagged the spot market by several months, but ended the year with a 6.4% boost. DAT noted that the reference rates do not include fuel surcharges.
For vans, the spot market rate rose gradually beginning in March, leading to an increase of 6.6% for the year. Contract rates for vans did not rise substantially until June.
Spot-market reefer rates exceeded contract rates for the entire second quarter as a national average, indicating heavy demand during the spring and early summer produce season. Spot market rates rose 5.4% for the year, reflecting both cost increases and seasonal pressures. Contract rates for reefers rose 6.2%, a rate of increase that matched that of vans (6.5%) and flatbeds (6.7%).
Demand for flatbeds, and capacity shortfalls, drove the year’s average spot market rates up by 9.5% in this segment. For the year, the spot market rate for flatbeds was only 2.4% below the contract rate. The corresponding gap between spot and contract rates was 3.1% for reefers and 12% for vans.
DAT also found that because their costs continued to rise in 2011, rate increases did not necessarily improve carriers’ profits. Fuel prices averaged $3.85 per gallon at the pump, the highest in three years and 28% above the $3.00 average price of 2010. Compliance costs rose with the advent of the new federal CSA safety-compliance program and “persistent” driver shortages led to wage increases that also affected carriers’ bottom-line results and increased pressure on rates.
To download the survey free of charge from DAT, click here.
To review key freight trend and industry indicators from DAT's U.S. Freight Index, which is supported by 68 million loads and trucks listed each year on DAT's DAT Network, go to the company’s Trendlines page.