Freight Broker Revenues Decline 18% in 2019

Q4 2019 results were a disappointment for freight brokers. For small and mid-sized brokerages, quarterly load volumes were lower than they had been in more than two years, based on Broker Benchmark data from DAT Broker TMS.

Spot market rates remained low, which reduced the cost of purchased transportation. That was a mixed blessing. Average gross margins held up pretty well at 15.8%, but top-line revenues slipped well below $1,500 per load.

Benchmark data is drawn from the TMS systems of nearly 100 freight brokers and 3PLs with average 2019 revenue of $11.4 million, a 18% decline from the record highs of 2018. Prior year results, as well as the current report, were re-stated in 2019, to exclude outliers.

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Load counts fall 8% year over year

Load counts were the lowest in two years, with an 8% decline compared to Q4 of 2018. Revenue per load fell 14% year over year, while profit per load lost only 1%. Compared to Q3 2019, load counts edged down 2%, revenues lost 5%, and profits plummeted 23%, sequentially.

2019 Load Broker Benchmark

Revenue per employee drops 24%

Profit per employee fell “only” 13% in Q4, and revenue per employee slipped 24% year over year, on 4% higher headcount. Compared to Q3, revenue per employee lost 7% and profit per employee fell 23%, while the average number of employees held steady, quarter over quarter.

2019 Load Broker Profit Per Employee Chart

Gross margins stay healthy at 15.8%

Gross margins averaged 15.8% for the group in Q4, down slightly from 16.1% in Q3, and about even with the 15.7% margins of fourth quarter 2019. Margins remained healthy due to low spot market rates that reduced the cost of purchased transportation. Gross margin dollars are also referred to as “net revenue.”

2019 Load Broker Average Margin Rates Chart

Cost reductions support bottom line

Brokers realized Q4 net operating profits of 24% of net revenue, which amounted to 3.9% of gross revenue. Although net profits were 9% lower than in Q4 2018, the brokers preserved positive bottom-line results by reducing labor and non-labor expenses.

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2019 Load Broker Benchmark
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