In March of this year, I wrote an article about Broker and Carrier tensions titled ‘Who’s gouging who? Are we seeing retaliatory rates?’ (Which you can find here).
It seems the tension and issues we talked about then are even more relevant now. I suggest reading that previous article before continuing with this one.
Months later, certain carriers that had been aggressive with their comments on LinkedIn about brokers gouging are no longer making these comments.
It was not due to a realization that brokers play a valuable role in their world and the market. I would guess their vocalization stopped as their public comments distanced them from brokers. It’s likely those who were most aggressively pointing the finger rode the spot market during the pandemic and don’t have much (or any) contracted freight to rely on. Now, they may have stifled their own chances at securing much-needed freight from the brokers they tried to blame.
Truth: There is not enough demand for the supply of trucks our market currently offers.
The reason I wrote on this topic initially was because of a few posts claiming that brokers were/are in control of the market and artificially causing rate inflation/reduction.
I understand this sentiment. Yes, there are brokers (and shippers) taking advantage of carriers who are desperate to keep their trucks moving. Yes, in the pandemic these same brokers were taking astronomical margins against shippers (so were the carriers). Yes, there is also criminal activity from brokerages affecting the reality of supply and demand.
It seems brokers always win.
Still, did brokers create the current market conditions?
No.
Are bad brokers abusing them?
Yes. And I do think they will pay for their lack of ethics and short-sightedness as markets change.
Another Truth: Brokers can’t operate without carriers.
Carriers are 100% accurate when they argue that they make the investment in trucks, trailers, and drivers, and brokers do not. We all agree that they have the cost of all the assets and the associated risks. Yet many carriers are small, and they are looking for brokers to bring them the freight.
If a brokerage is run with integrity, a carrier may actually grow its fleet due to a positive relationship with a broker. As they establish trust and fine-tune their operation, they can obtain more business. At Wellington Motor Freight (WMF) Chris West our VP of Operations says “We started with many of our carriers when they had 1-5 trucks, these same carriers working with our company and teams now have 30-40 tractors”. These carriers experienced growth alongside WMF’s brokerage operation, not in spite of it. In this exact tough market, their pre-existing relationship with WMF is an advantage that many carriers don’t have right now, and they have it because they didn’t take advantage of WMF’s shippers when the market was different.
Lie: Shippers have nothing to do with this tension.
Nobody wants to blame the shipper. Of course not, shippers are where the freight comes from and everybody knows it’s not wise to bite the hand that feeds. Brokers are a great scapegoat for carriers and shippers alike. As the literal middleman, carriers and shippers can easily point to brokers as the reason rates are not to their liking without blaming the other side of the relationship, which is part of the relationship they actually feel the NEED.
The Hard Truth: Shippers and carriers may not like to hear it, but they both need brokers, and as more than just someone to blame for the woes of the market.
The concept of a freight brokerage exists because shippers and carriers need connectivity. Freight networks are complicated and 99% of carriers operate 10 trucks or less (FMSCA 2017). Shippers can’t find and collect all the carriers they need, and most carriers can’t cover the breadth of services that shippers need. Of course, there are exceptions where this is not true. The fact of the matter remains: The viability of brokerages in today’s transportation world is because their services ADD VALUE to the market. If this were not the case, the market would fail out of its business model.
Final Truth: Strong relationships DO make a difference.
Going the extra mile is not a transportation saying for no reason. Today, those who went the extra mile for their partners are utilizing their relationship to navigate tougher times.
Carriers and brokers also need to work together to fight fraud to remove false capacity. We need to work together to increase rates to sustainable levels, work toward our common goal, improve our industry, improve profitability, and improve partnerships.
Shippers are sophisticated and understand their supply chains. The good shippers speak to partnerships and sustainability. These are the companies both carriers and brokers want to work with. We will not get there if we keep going after one another rather than address the market.
