By Clifford F. Lynch
All too often, the term "freight broker" conjures up visions of Joe
Bob parked in a booth at the Flying Z truck stop with his cell phone, a pad and
pencil, and a generous potion of chicken fried steak. And that’s a shame. In a
few cases, the image may not be too far from the truth. But for the most part,
Joe Bob’s gone the way of the dinosaur. Today, freight brokerage – the
business of matching up shippers who have freight to be moved with carriers who
can haul it – has grown into a sophisticated multimillion dollar profession.
And it’s a profession with bright prospects, thanks to a shortage of trucking
For over a year now, the economy’s been gathering steam. Today’s DCs are
bulging at the seams with HDTV systems and digital cameras waiting to be moved
to store shelves. Problem is, there are fewer and fewer trucks available to haul
them. Hit by soaring fuel and insurance costs in the last couple of years
(insurance costs alone have risen 50 percent since 2000), thousands of truckers
have closed their doors.
In ordinary times, that would simply mean more opportunity for the survivors.
But these aren’t ordinary times. Truckers looking to expand quickly become
discouraged by equipment prices. Last year’s engine emissions regulations have
pushed up tractor prices to record levels. Then there’s the problem of finding
more drivers. The new driver hours-of-service regulations that took effect in
January have only exacerbated an existing driver shortage. Swift Transportation,
for example, reported that by the end of December, it had lost 150 to 200
drivers, who quit because they feared the new regs would mean a big loss of
As the smaller, poorly managed fleets are squeezed out of the industry and
the rest grapple with equipment and productivity constraints, shippers find
themselves caught in a capacity crunch. Many of these shippers will turn to
brokers and their expansive networks.
Freight brokers aren’t new, of course. They’ve been around as long as the
trucking industry itself; but today, they’re larger and more customer-focused
than ever before. In 2003, for example, C.H. Robinson, hardly a newcomer to the
industry, made 88 percent of its gross profit from managing over-the-road
freight, though it doesn’t own a single truck.
In the last few years, several entrepreneurs launched Internet-based
brokerage sites, but the idea never really caught on. Many logistics managers
still prefer more direct, personal negotiations with carriers, particularly for
their more service-sensitive customers.
That caution may be misplaced. As more asset-based industry veterans
concentrate on brokerage, shippers can use their services with confidence that
their shipments will be handled with the same dispatch and care they’d
experience through direct dealings with the carriers. A number of responsible
carriers are placing their reputation and credibility squarely on the line with
their brokerage operations. One of those is Schneider National. Schneider’s
transportation management operation includes more than 6,500 carrier partners
that are qualified annually, and it has established an electronic marketplace to
help carriers secure loads.
The one thing freight brokers can’t do, of course, is create more trucks.
But they can provide access to an expanded array of reliable hauling options.
Shippers just have to follow one simple rule: Exercise the same care in
selecting a freight broker as you would when buying any other logistics service.