10,000 New Freight Brokerages Created During Pandemic
Explore the pandemic-driven rise of freight brokerages, the challenges they face, and what experts are saying about the industry's future.
Data from Carrier Details LLC and Brush Pass Research shows the rapid influx of new freight brokerages created over a short time during the COVID-19 era's surge in freight. Expert Kevin Hill and others share their analysis.
- Explosive Growth: From Jan 2020 to Nov 2022, an incredible 10,006 new freight brokerages sprang up – that’s a 47% increase in just three years.
- Decline Begins: Despite this, the YoY growth of new freight brokerages is now down by 5.6%. As we move forward, we’re witnessing a trend where these brokerages are shutting down. Whether this trend will reach pre-pandemic levels or stabilize remains a looming question.
Community Chimes In
- MC Numbers: Bill Robinson, a Director of Carrier Relations, questioned the validity of many MC#s. He points out the tactic of Double Brokers churning multiple MC#s in short periods and how an increase of 48% in MC#s in 2023 raises eyebrows in the transportation industry.
- Diverging Data: Supply chain professor Jason Miller indicates that BLS's data aligns with these figures, showing a 19% increase in unique establishments since the COVID-19 onset as of Q1 2023. But there's a catch. Many single-establishment firms, primarily trucking, also have brokerage authority. See the data here.
The Aftermath of License Granting
Dale Prax, a freight rate analyst, criticizes the FMCSA's process for issuing operating authority. The ease of license granting and lack of verification have led to an influx of new entrants. This process' laxity means the industry grapples with its aftermath, stressing more robust checks in the licensing process.
Source: Kevin Hill / LinkedIn