The Rise of Freight Brokerages

Photo: Jim Allen/FreightWaves

The rise of freight brokerages over the past two decades has transformed the trucking industry. In 2000, they represented only 6% of the market, but by 2023, they handle more than 20% of all trucking freight. Initially, freight brokers took on unwanted or low-priced loads, but their investment in technology and customer service allowed them to compete with asset-based carriers and secure top positions in shippers' routing guides.

The trucking industry's deregulation in 1980, thanks to the Motor Carrier Act, set the stage for the growth of freight brokerages by fostering competition. This led to lower shipping rates and increased backhaul opportunities for carriers. As a result, more professional freight brokerages emerged, helping small carriers survive by providing them with quality load opportunities and acting as sales agents.

Despite market fluctuations, freight brokerages have played a crucial role in maintaining load volumes, even in down markets, helping carriers cover their monthly expenses. It's predicted that it will take about 78 more weeks to reach a balance in capacity in the trucking industry, indicating that the market is only halfway through the current downturn. Freight rates may not increase significantly until at least the second quarter of 2024.

Read the full article at freightwaves.com.