Why are freight brokers going out of business?
The decline in demand, along with decreased freight rates and rising fuel costs, have led to the market crashing, Uber Freight CEO Lior Ron said in November, according to CNBC. There has been a 78% decline in the national freight market since its peak, Miller said.
Compared to trucking carriers, freight brokerages can avoid shutdowns even during nasty freight recessions. But, since new capacity flooded the trucking industry and consumers stopped buying as much stuff, third-party logistics companies have seen an unusual threat to their business operations.
Prediction: The truckload market will remain stressed through the first half of 2023, but it's still a great time to be a broker. Prediction: Higher expectations for visibility. Prediction: Freight brokerages will focus on operations to mitigate supply chain volatility. Prediction: Growing interest in cybersecurity.
The trucking industry is a highly competitive and unforgiving space. According to Tank Transport, 31,278 trucking companies either shut down or shifted their services to larger fleets within the first four months of 2023, due to falling freight rates and rising fuel costs.
High Demand and Growth
According to the U.S. Bureau of Labor Statistics (BLS), industries that hired the most cargo brokers include: Freight transportation arrangement (52,450 jobs) Couriers and express delivery services (7,570 jobs)
One of the biggest downsides to using a freight broker is not having total control over the shipment. Once the load is given over to the broker, the shipper's ability to manage that load may be hindered. Freight brokers must make money somehow. They do that by charging more for a load than they're paying the carrier.
Becoming a freight broker is a relatively easy and low-cost way to start a business. Still, from there, you're facing a steep learning curve, a fiercely competitive industry, and tight margins—a perfect storm for two-thirds of new brokers who fail in their first year.
With a net revenue of around 2.2 billion U.S. dollars, C.H. Robinson is the largest freight brokerage firm in the world in terms of net revenue in 2022. Total Quality Logistics ranked second with a net revenue of some two billion U.S. dollars.
It takes a great deal of resolve and persistence to overcome the daily obstacles. It's the reason burnout and turnover for freight brokers are so high. To avoid the stress that eventually causes freight brokers to burn out before reaching their goals it is important to realize what's important and what isn't.
Further, the W2 model of freight brokering shows an even more dramatic statistic. Nearly 95% of newly hired brokers turnover within the first 6 months.
What will replace trucking?
autonomous trucks will become available in four separate phases, differentiated by how much autonomy the truck has. Phase Two: technology will have developed enough to have a human driver in only the lead truck while a convoy of autonomous trucks follows closely behind. Expected by 2025.
Yellow, one of the nation's largest freight and trucking companies, announced it is shutting down, leading to one of the largest mass layoffs in recent history and potential shipping cost increases. The company is in bankruptcy just three years after getting a $700 million loan from taxpayers.
Watchful Eyes Remain on the Trucking Economy
The bleakness of the "freight recession" has made analysts hesitant on whether or not relief will be on its way. However, some glimmers of hope from this past year indicate chances of a potential market rebound, particularly in the second half of 2024.
- Landstar System.
- Total Quality Logistics.
- Echo Global Logistics.
- Nolan Transportation Group.
- Coyote Logistics.
- Arrive Logistics.
- Ascent Global Logistics.
- RXO Logistics.
- Little Rock, AR. $88,519 per year. 6 salaries reported.
- Portland, OR. $79,102 per year. 6 salaries reported.
- Houston, TX. $69,268 per year. 67 salaries reported.
- Wichita, KS. $68,715 per year. 16 salaries reported.
- Chattanooga, TN. $57,197 per year. ...
- Show more nearby cities.
| Annual Salary | Hourly Wage | |
|---|---|---|
| Top Earners | $98,500 | $47 |
| 75th Percentile | $75,000 | $36 |
| Average | $66,677 | $32 |
| 25th Percentile | $48,000 | $23 |
While freight brokers generally are not liable for cargo claims (i.e. loss or damage to cargo), there are several ways brokers can become liable for cargo claims. The primary ways a broker can become liable for cargo damage are: The broker agrees to be liable for cargo damage via contract with its customer.
Freight agents have less liability in comparison to a freight broker. Freight agents need freight brokers to operate, whereas freight brokers can operate without freight agents. A freight broker will have a more consistent brand look and feel across its office(s) versus freight agents that operate under the broker.
Freight brokers make their money in the margin between the amount they charge each shipper (their customer) and what they pay the carrier (the truck driver) for every shipment. Although it varies from one transaction to the next, healthy freight brokers typically claim a net margin of 3-8 percent on each load.
The answer is of course! Many of my students them have went on to grow 6, 7 and even 8 figure businesses. Today I am sharing a freight broker success story from one of my past students, including how he started with NO EXPERIENCE and went on to do over $4.8 million in sales in 2019.
What is the average age of a freight broker?
The average age of freight brokers is 40+ years years old, representing 54% of the freight broker population.
- A Good Knowledge of the Trucking Industry. ...
- A High Degree of Professionalism. ...
- An Impeccable Degree of Honesty. ...
- Eagerness to Please Their Clients. ...
- Excellent Organizational and Computer Skills.
The terms "freight broker" and "freight forwarder" are often used interchangeably when people are discussing the movement of goods.
| State | Annual Salary | Hourly Wage |
|---|---|---|
| California | $71,405 | $34.33 |
| Maine | $69,342 | $33.34 |
| Idaho | $68,598 | $32.98 |
| Washington | $68,063 | $32.72 |
| Stock Brokerage Firm | Assets under management* |
|---|---|
| Charles Schwab | $8.5 trillion |
| Fidelity Investments | $4.4 trillion |
| JPMorgan Chase & Co. | $3.9 trillion |
| Merrill Wealth Management | $1.3 trillion |
