DAT Broker Benchmark Report

Brokers stayed profitable in Q3 despite tepid revenues

Gross margins edged down to 16.1% for freight brokers in Q3, down from 16.8% in the previous three months. Spot market rates continued to drift lower during the quarter, reducing the cost of purchased transportation. Top-line revenue declined as well, but the brokers' cost-cutting efforts preserved profitability.

Benchmark data is drawn from the TMS systems of nearly 100 freight brokers and 3PLs with average 2018 revenue of $13.8 million, a 16% increase compared to 2017. Prior year results, as well as the current report, have been re-stated as of the first quarter of 2019, to exclude outliers.

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Gross margins slip

Gross margins averaged 16.1% for the group in Q3, down slightly from 16.6% in Q2, but a marked improvement over the 15.0% margins of third quarter 2018. Margins remain healthy due to low spot market rates that reduced the cost of purchased transportation. Gross margin dollars are also referred to as “net revenue.”

Cost reductions support bottom line

Brokers' Q3 operating profit came to 32% of net revenue. Their average net operating profit beat Q2 results by 7%, but fell 18% below the record highs of Q3 2018. Cost reductions supported the bottom line, as brokers made substantial cuts in both labor and non-labor expenses.

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Per-employee profits rise

Profit per employee edged up 3% in Q3, compared to the second quarter, even though revenue slipped 7% on a per-employee basis. Compared to Q3 2018, revenue per employee lost 22% and profit per employee fell 20%, while the average number of employees held steady.

Load counts lose only 1% in Q3

Load counts were lower in Q3 compared to the second quarter, but only by 1%. Volumes declined 7% from the record highs of Q3 2018.

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Brokers profited $77 per load

Profit per load rose 8% compared to Q2. At $77 per load, profit dropped 10% compared to Q3 2018, however. Revenue per load lost averaged $1,511 in Q3, which fell only 2% below results in the previous quarter but dropped 14% compared with the high-water mark of Q3 2018.

Broker benchmark - revenue and profit per load - Q3 2019
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