DAT Broker Benchmark Report

Pre-payments eat into year-end profits

Strong December revenues capped off a banner year for freight brokers, who enjoyed 56% top-line growth compared to 2017. The brokers ended up with subpar gross margins and a net operating loss, however, because they moved as many expenses as possible into December as part of a year-end tax strategy. 

This report is derived from the monthly financial results of more than 100 freight brokerage companies. Their 2018 average annual revenue increased to $30.5 million from $19.5 million in 2017.

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Labor cost exceeds net revenue

Labor expense ate up more than 100% of net revenues in December. Net revenue, also called gross margin, is the money that's left after the broker pays the carriers. Non-labor expense absorbed another 32%, and 3% went to interest, taxes, depreciation, and amortization, leaving the brokers with a net operating loss of 36%. The group has recorded a net operating loss in December for at least the past three years.

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Annual revenues soar 56%

Profit per employee rose 20X higher in Q2 on 25% more revenue, compared to the same period in 2017. All per-employee metrics showed dramatic improvement, even though average headcount rose 35%, year over year. Compared to Q1, profit per employee quadrupled, and revenue rose 8%, on a per-employee basis.

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Gross margins drop to 11%

Gross margins fell to 11% in December from 12.8% in November, in what appears to be an intentional tax strategy of paying as many expenses as possible in December. In the same month last year, gross margins were a more respectable 14% but yielded a lower dollar amount than in 2018.

Revenue per employee edges up

Revenue per employee edged up 2% in December month over month, on a 4% increase in the average headcount. Compared to December 2017, revenue per employee dropped 12%. The brokers incurred a net loss per employee, which is a recurring feature of December results. That loss was more than twice as steep this year than it was in December 2017 on a per-employee basis.

Brokers moved more loads than last year

Year over year, load counts were up 9% and revenue per load added 19%. Compared to November, load counts were off by 7% and revenue per load rose 17%. Brokers sustained a net loss per load in December of the past three years, which appears to be an intentional strategy.

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