It's time to talk about perspective and reality. What is the truth about the tension between brokers and carriers, and what is simply just content?
The tension between brokers and carriers realistically began in the 80's when brokers first started appearing in the transportation landscape. Some carriers felt they were an unnecessary addition to the market. Still, it was carriers that created the opportunity for Brokers to exist. Many were happy to partner with a company that would help secure them freight that worked best for them while they focused on operating their fleet. Further, most carriers in North America were and are small, with fewer than 20 trucks on the road (FMCSA 2017). Brokers helped bundle quality carriers into a neat and dependable package for shippers to utilize.
It appears on the surface that everybody wins, and over the plus 20 years I have been in the industry the relationship between carriers and brokers generally has been a partnership as I've described. In many cases throughout my career, relationships were so positive that carriers would provide a broker they liked with shipper leads. (Hard to imagine right now, I know!)
So what changed? What is causing tensions today?
The carrier complaint: Brokers control or manipulate the market. They take advantage of carriers, and they do not treat carriers as partners, or with respect.
I will say that I believe this to be 100% true. However, I will also say that I believe this is a small percentage of brokers.
The broker complaint: Primarily back solicitation, where carriers enter a relationship with a shipper through a broker's introduction, then later begin business directly with the shipper and without providing any remuneration to the broker. Essentially, cutting out the broker once the broker-established relationship is working effectively.
Once again, I think this is also 100% true. Still, I will qualify that I believe this is a small percentage of carriers.
In both cases, there's a very small population of businesses participating in these practices. I have seen firsthand brokers who do not work with carriers as partners, respect, or pay them. These brokers have not lasted and will not last IMO. In addition, Carriers who back-solicit will suffer as partners and industry insiders will share this information quickly. I doubt they will easily hide from their own reputation and the tarnish they brought to their brand.
And yet, it's what dominates mine and many others' feeds on LinkedIn.
And are the tensions being written about on social media as bad as some would have you believe?
Is social media like LinkedIn perpetuating and creating undue tensions? Do we put too much stock in a post from an individual who has thousands of followers? Do we even stop to vet the person on LinkedIn (like we would a carrier) before believing what they say or what we are reading? If we cannot validate the companies they work for, ex. their MC# is not valid or they do not even have one, why would we put any credence into their posts?
I consider these very important questions to ask. I encourage you to even ask them about my own writing.
The facts as I know them:
This is a data-driven business for shippers, they have access to data showing lane volumes, rates both spot and contracted by lane, and equipment type. They have their RFP processes which provide additional feedback with respect to the market. They use 3rd party companies that manage the RFP process, the 3rd parties have additional data from other shippers of various verticals and volumes (generally all are larger shippers).
There are individuals and companies like Ari Ashe, Scooter Sayers, Ken Adamo, DAT, Internet Truckstop Group LLC, and NuLogX Inc. When you review all the data there is proof that shippers have contracted rates well above the spot market rates. They have established rates; they have established partnerships to ensure both the asset carriers and brokers they partner with are healthy. The good shippers are preparing for 2024 and want to receive value and service, at a sustainable rate.
Shippers are fully aware more carriers and brokers are leaving the market, again they have access to all the data carriers and brokers have. In many cases due to the size of the bankruptcies, they can see them on CNN or your favorite news network, never mind daily on LI. Shippers are doing more RFPs, and mini bids to determine market rates and to establish rates and capacity for 2024. Sustainability is a common word, and good shippers are using it with respect to rates and the financial strength of the supplier.
For these reasons among many others, I think most carriers understand that their broker partners are not manipulating the markets.
Tensions will continue, but this market will show those without integrity the door first:
Carriers on social media who are blaming brokers for the market while denying supply and demand are real, and if they survive they will continue to blame brokers for the bad market. Brokers taking advantage of carriers will continue too, but this short-sighted strategy will leave them with no relationships with shippers or carriers. Transportation businesses with integrity will show those who have been taking advantage of others the door if they haven't been shown it already.
Carriers that work with shippers and brokers as partners will succeed through challenging markets like 2023, 2018, 2010, and 2008. This happens as they focus on shippers, service, communication, and building partnerships. Brokers focused on long-term partnerships with both shippers and carriers will also succeed long term.
Carriers and brokers working together can positively affect rates. I strongly suggest we need one another, to reach out to Jeff Dickinson and attend the carrier broker summit in KC which will bring us together. Those who attended in FL have seen improvement working together already.
LI influencers write, BE KIND, BE NICE, I am not naïve to ask business owners to not protect their bottom lines by being nice. I am merely trying to point out that we can be respectful, value one another, and forge a stronger industry for SHIPPERS that allows carriers and brokers to both be healthy. Profit is not a 4 letter word.
