💵 The $160B Freight Brokerage Industry

Happy Hump Day. In today's newsletter, we take a look at the $160B freight brokerage industry, where the top dogs hog around 80% of the revenue. Graphics from Brush Pass Research reveals the breakdown. In tastier news, Twinkies and Jif have a $5.6 billion handshake, while Tesla's Semi trucks are put to the test. And keep an eye out–booting scams are on the rise.

🤔 Trivia Question of the Day: What is the average number of cargo thefts per day in the US for Q2 2023? Answer at the end of the newsletter.

Today's Newsletter is Brought to You By AscendTMS (TheFreeTMS.com)

In today's email:

Three Freight Headlines: Smucker acquires Hostess; Tesla Semi validates range claims; Freight Alley sees surge in truck booting scams.
The Freight Brokerage Landscape: Key graphs explore growth, revenue, and leadership.
Around the Freight Web: US truckload demand climbs, Mexican cargo thefts surge, UPS rates to rise in December, plus more.
Freight Meme of the Day

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🐔 WHAT’S COOKIN’ IN FREIGHT

🥜 Twinkies & Jif Unite. J.M. Smucker Co., known for its iconic Jif peanut butter and Smucker's jelly, is expanding its snack kingdom with a whopping $5.6 billion acquisition of Hostess Brands, the producer of Twinkies. The deal, which includes Hostess's $900 million net debt, brings along with it well-known brands like Donettes, CupCakes, DingDongs, and more. While Smucker's shares dipped 8.6% after the announcement, Hostess enjoyed a surge of 18.9%. Hostess, established by the famous Twinkie in 1930, has had its shares leap 27% since rumored sale interests in late August. This union comes as American snacking makes a comeback, with sales reaching $181 billion last year, an 11% rise from the year prior.

🚚 Tesla Semi Data Shows Real-World Performance. At the recent Run for Less event, PepsiCo's Tesla Semi trucks showcased their prowess: Truck 1 ran 335 miles with 17.5% battery remaining, Truck 2 did 227 miles with 27%, and Truck 3 achieved 377 miles, though nearly depleting its battery to 1.6%. These results validate Tesla's range claims. While the 350-mile range seems viable, charging infrastructure will be pivotal for extended journeys, considering variables like load weight and weather.

🚓 Crime Alert: Booting Scams on the Rise in Memphis and Beyond. The Freight Alley is dealing with a spike in freight truck booting scams. Truckers, while parked briefly, are confronted with illegal booting, exorbitant fees, and sometimes violence from armed criminals. These con artists often pose as legitimate company representatives, pressuring truckers with increased charges, threats, and potential towing. Trucker awareness is paramount, as one driver's suspicion recently led to the arrest of a fraudster in South Fulton, Georgia.

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THE FREIGHT BROKERAGE LANDSCAPE

**The top 1,000 freight brokerages represent roughly 85% of the entire transportation management market.**

In a $160b freight brokerage industry, the cream truly rises to the top. While there are 30k active freight brokerages registered with the FMCSA, the top 3% commandingly generate 80% of the gross revenue, with the elite 20 representing a third of the entire market.

Kevin Hill, host of Put That Coffee Down and founder of Brush Pass Research, has shared a series of insightful graphs, painting a clearer picture of the industry's evolution, revenue structure, and leadership.

Growth of Authorized Freight Brokerages since 2001

2020 & 2021: Double-digit growth of 10% and 20%.
Post-Jan 2022: Growth slows to 1.6%.
Active Bonds: 28,943 brokerages, but active bookings remain unknown.

Gross Revenue by Freight Brokerage Cap

Top 20 Brokerages (Over $1 Billion in Revenue): The largest freight brokerages, specifically the top 20, together make a whopping $53.733 billion a year.
Large-Cap Brokerages ($100-999 Million in Revenue): The next tier, those considered "large-cap", have yearly revenues between $100 million and $999 million. All of these brokerages combined make about $46.065 billion.
Total Market Size: The total money made by all freight brokerages is estimated at $160 billion.
Number of Brokerages: Only 800 to 1,000 brokerages make more than $10 million each year. An additional 3,000 brokerages make at least $1 million each year.

Brokerage Revenue Distribution in the Top 1000

The above graph shows the breakdown for freight brokerages doing over $10m a year in gross revenue between Large-Cap, Mid-Cap, and Growth-Cap.

Growth-Cap brokerages making $10-$50m in revenue account for 63% of the top 1000 brokerages.
Mid-Cap ($50m-$100m): 24%.
Large-Cap (Over $100m): 13%.
Highlight: The middle-tier segment is vast and competitive, while a compact segment is punching above its weight, dictating the market's pace.

Decision-Maker Job Roles in Top 1000 Brokerages

A business's decision-making trajectory greatly depends on its leadership. What job roles do they hold in the top 1000 brokerages?

Sales Role Dominance: Over 30% decision-makers.
Combined with Carrier Sales/Operations: More than half of all roles.

Geographical Distribution of Decision-Makers

Where do these decision-makers reside?

Midwest Hub: Chicago leads.
Hotspots: Dallas & Southern California.
Freight Corridor: Atlanta > Chattanooga > Nashville ("Freight Alley").

So, what can we learn from all of the data? While challenges like market saturation and fierce competition loom large, opportunities in the form of regional hotspots and the vast middle-tiered market segment are bright spots. These insights act as crucial guideposts for businesses, marketers, and stakeholders.

TOGETHER WITH ISOMETRIC TECHNOLOGIES (ISO)

Today's newsletter is also brought to you in collaboration with ISO, the industry leader in delivering unparalleled transparency and reliability in logistics performance through their one-of-a-kind scoring system.

AROUND THE FREIGHT WEB

📈 Truckload Trend. US truckload demand rises for four months, making a positive turn year-over-year in July. While supply saw an 11% boost between 2021 and 2022, it only witnessed a 1% rise year-over-year, with demand remaining flat.

🇲🇽 Mexican Cargo Thefts. Q2 sees 58 daily cargo thefts in Mexico, a 6% year-over-year increase. For comparison, a total of 240 cargo thefts occurred across the U.S. in the first six months of 2023.

📦 UPS Rates Surge. UPS announces 5.9% rate hike from December 26; peak season surcharges to rise starting October.

🤖 California's AV Stand: Senate bill mandates human safety operators in autonomous trucks; Governor Newsom's decision awaited.

🚗 Automotive Alert: A prominent car-hauling carrier has signaled concerns over a looming UAW strike. As car inventory hovers around 50 days and a dip in EV sales leads to a 130-day supply, significant ripple effects are anticipated in Mexico's automotive market.

FREIGHT MEME OF THE DAY