Broker usage increases, TCP survey finds

A recent survey by consulting firm Transport Capital Partners (TCP) found that percentage of carriers using brokered freight services doubled between August 2012 and February 2013, from 16% to 35%, although the majority of carriers (62%) report that they are using fewer brokers compared to six months ago.

However, Steven Dutro, a TCP partner, stressed that uptick in freight broker usage is a reflection of seasonal freight fluctuations last year and this year.

“Freight brokers continue to provide loads that improve asset utilization and efficiency as customer demand fluctuates,” he said, pointing out that brokerage spot market freight still amounts for less than 5% of volumes for almost 50% of the carriers participating in TCP’s first quarter 2013 business survey – which is roughly the same amount compared to February 2012, traditionally one of the highest quarters of broker service usage.

“The first quarter has a lower freight demand and this leads to idle trucks chasing scarcer loads, with spot market rates represented by brokers declining,”added Richard Mikes, another TCP partner.

Dutro also noted that smaller carriers tend to rely on brokers more often than larger carriers as they have lower lane density and marketing staff. “The importance of brokers to smaller carriers is often significant, although we seldom hear of rate levels that are adequate to sustain a carrier,” he explained. “Often it is a case of a little can help but too much can be deadly.”