DAT Broker Benchmark Report

Improved Margins Shore Up Freight Brokers' Net Profits in Q1

Gross margins rebounded to 16% for freight brokers in the first quarter, largely because spot market rates dropped sharply. As a result, the brokers' average net profits increased year over year, even though load counts and revenues per employee dropped to the lowest levels in more than two years.

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 recover to 16%

Gross margins averaged 16.0% for the group in Q1, a big improvement over the 13.2% average in the first quarter of 2018. A sharp decline in spot market rates was the main factor in boosting margins.

Freight Broker Gross Margins and Spot Rates Q1 2019 - DAT Broker Benchmark

Cost control preserves net profits

Cost control was a key element in maintaining Q1 profitability, as the brokers cut labor expense by 8%, and reduced non-labor expense by 5% compared to the same period in 2018. Interest, taxes, depreciation and amortization costs rose 11%, and net operating profit rose 10% year over year. As a portion of net revenue, the group spent an average of 59% on labor, 24% on non-labor costs, and 1.6% on taxes, interest, depreciation, and amortization, to earn net operating profit amounting to 15% of net revenue.

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Division of Net Revenue Q1 2019 - DAT Broker Benchmark

Per-employee profit rises as revenue dips

Profit per employee rose 9% in Q1, even though revenue fell 23% on a per-employee basis. The average number of employees increased by 3.5% compared to the first quarter of 2018.

Revenue and Profit Per Employee  Q1 2019 - DAT Broker Benchmark

Load counts slip 13% lower

Load counts fell 13% in Q1 compared to the first quarter of 2018. Granted, 2018 was an exceptional year by any measure, but brokers moved 21% fewer loads in Q1 than they did in the same period of 2017, as well.

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Load Count Q1 2019 - DAT Broker Benchmark

Profit per load beats 2018 Q1 levels

Profit per load rose 31% to $36 per load in Q1, up from $27 profit per load in the first quarter of 2018, despite an 8% decline in revenue per load.

Revenue and Profit Per Load Q1 2019 - DAT Broker Benchmark
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