DAT Broker Benchmark Report

Higher Gross Margins Boost Profits in Q2, Despite Lower Revenues

Gross margins reached a two-year high of 16.8% for freight brokers in the second quarter, as spot market rates continued to drift lower, reducing the cost of purchased transportation. All financial indicators improved for the benchmark group, compared to Q1, and they nearly doubled their net operating profit, quarter over quarter. Compared to the extraordinary results of Q2 2018, however, total revenues fell 17% and profits dropped 11%.

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 set 2-year record

Gross margins averaged 16.8% for the group in Q2, the highest mark in more than two years. First-quarter gross margins of 15.7% set the previous record. In Q2 2018, the group averaged a slim margin of 12.1%. The main reason for increased margins is the persistent decline in spot market rates, which reduces the cost of purchased transportation. Gross margin dollars are also referred to as “net revenue.”

DAT broker benchmark - gross margins and rates Q2 2019

Cost reductions support profitability

Brokers cut labor expense by 8% compared to Q1, supporting increased profitability quarter over quarter. Compared to Q2 2018, labor expense declined but non-labor expense rose, however, and net operating profit dollars fell 11% year over year. As a portion of net revenue, the group spent an average of 44% on labor, 23% on non-labor costs, and 2% on taxes, leaving a solid 31% in bottom-line net operating profit. Net revenue, also called gross profit, is the money that remains after the broker pays the carrier.

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DAT broker benchmark division of net revenue Q2 2019

Brokers double profit per employee

Profit per employee more than doubled (up 105%) in Q2 compared to the first quarter, while revenue added 15% on a per-employee basis. Compared to Q2 2018, revenue per employee lost 15% and profit per employee slipped 10%, while the average number of employees edged down 3%.

DAT broker benchmark profit per employee Q2 2019

Load counts hold steady in Q2

Load counts edged up 1% in Q2 compared to the first quarter, but declined 6% compared to Q2 2018. The year-over-year delta narrowed in Q2. In the first quarter,by comparison, load counts dropped 13% from Q1 2018 levels.

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DAT broker benchmark - load count Q2 2019

Profit per load rises to $79

Profit per load declined only 5% year over year, to $79 per load in Q2, up from $42 profit per load in the first quarter. Revenue per load fell 12% compared to Q2 2018 and rose 8% quarter over quarter.

DAT broker benchmark profit per load Q2 2019
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