Freight broker revenue doubles in July

Freight brokers doubled their monthly revenue in July compared to last year, to set yet another record. Despite lackluster gross margins of 13.3%, the group achieved a 93% increase in gross profit.

Labor and overhead costs did not rise as fast, so the brokers retained 3.9% in net operating profit, after labor, overhead and taxes. This report is derived from the monthly financial results of more than 100 freight brokerage companies. Their 2017 average annual revenue of $19.5 million has risen 75% in the first seven months of 2018, year over year.

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July’s net operating profit was a solid 29% of net revenue, a vast improvement over a net loss of 1.5% in July 2017. The percentage did not set a record — April’s was higher at 31% — but the dollar amount in July was the highest net profit in more than two years. Labor expenses came in just above 52% of net revenue, while overhead was held below 16%, and another 2.6% of net revenue went to interest, taxes, depreciation and amortization. Net revenue is the amount that’s left after the broker pays the carrier. It can also be called gross profit.

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Profit per employee more than doubled (up 112%) in July, even though revenue increased only 2% month over month. Compared to July 2017, revenue increased 42% while profit soared to $3,181 per employee, from a $123 loss in the previous year.

Record profits of $65 per load doubled June levels, and posted a vast improvement over a $2.68 net loss per load in July 2017. Revenue per load held steady compared to June, but jumped 33% year over year. Load counts added 4% month over month and a whopping 50% compared to July 2017.

Average gross margins of 13.3% were a disappointment in July. While that was an improvement over an 11.9% rate in June, it did not quite measure up to the 13.8% rate of July 2017. Spot market rates remained elevated in July, so the cost of purchased transportation was 20% higher than prior-year levels. That contributed to margin compression, which may persist through the end of the year.

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