CHATTANOOGA, TN — While the majority of carriers are continuing to move away from using brokers, there has been — conversely — a significant increase in carriers moving towards brokers, reported Transport Capital Partners' (TCP) in their Q1 2012 Business Expectations Survey.
In both February and August of 2011, the percentage of carriers using more or less broker freight services was similar — around 12-15 percent for those using more and around 82-86 percent for those using less. But from August 2011 to February 2012, the number of carriers that indicated they are using more broker freight services doubled, from 15 percent in August to nearly 33 percent in February.
“Load boards are indicating that spot freight rates in lanes are above long term rates, and that the first quarter seasonal slowness may also have induced carriers to seek broker loads to keep drivers and equipment busy,” explained Richard Mikes, TCP partner.
TCP also noted that large carriers are using brokers more than small carriers, but the difference isn't a large; 34 percent and 28 percent, respectively.
“While some carriers might use brokers to increase freight," said Lana Batts, TCP partner, "TCP believes that most of these carriers are attracted to the spot market due to higher rates.”
Yet despite the increase in the use of brokers, the amount of freight that makes up a carrier's total revenue is small, with 47 percent indicating it is less than 5 percent. Larger carriers are taking more advantage of spot market rates than smaller carriers, TCP said — a trend that challenges the thought that small carriers predominate in broker use, Mikes said.
“In a period of tightening capacity however, the slightest change in the spot market can adversely affect a shippers' ability to attract capacity. Historically, contract rates have been significantly lower than the spot market in times of tightening capacity,” Batts said.
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