On the Road to Collaboration: Navigating Relationships of Carriers, Brokers, and Shippers

On the Road to Collaboration: Navigating Relationships of Carriers, Brokers, and Shippers

At 1% Logistics Inc., we are linked with excellent carriers and brokers on LinkedIn, and recently, we've been delving into the comments on various posts. It perplexes me to see this fight 'us versus them' mindset between brokers and carriers. With over two decades of experience working for both asset-based carriers and logistics firms, including companies overseeing both assets and logistics divisions, I understand the frustrations experienced by both sides.

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What in The Truck Is Going On?

Carriers allege that brokers are engaging in price gouging, claiming that up to 50% of the shipment value is being taken by brokers in the current market. They argue that brokers are manipulating the market to their advantage, resulting in carriers not receiving a fair rate per mile.

On the other hand, brokers contend that carriers themselves engaged in gouging during the pandemic, driving rates higher daily on the same lanes for their own benefit.

Both carriers and brokers seem to be misplacing blame on each other within their industry. The freight market operates on the principles of supply and demand, similar to any other industry. If a product or service is in high demand, its price will naturally increase. Instead of focusing on the actual challenges facing the market, carriers and brokers are engaged in a battle.

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The Reality Is

The reality is that during the pandemic, rate increases began at the first mile, with ocean providers significantly raising rates due to high demand and limited capacity. This trend continued through drayage rates, congestion fees, and wait time fees, all influenced by a lack of capacity and increased waiting times at ports.

Middle-mile trucking companies raised their rates in response to excess volumes and challenges in moving containers inland. Large courier services followed suit in 2021-2022, raising rates due to increased demand and a lack of capacity to accommodate new customers.

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Opportunities Are

Throughout these stages, if sufficient capacity had been available, rates would not have surged to the extent they did. The root cause of the challenges faced by both brokers and carriers lies in the market dynamics.

While acknowledging that some companies prioritize quick profits over long-term partnerships, it is crucial to recognize that brokers and carriers are not intentionally trying to create unfavorable markets for each other. The adversarial commentary online may not reflect the collaborative efforts needed to address industry challenges.

Whether one is an asset-based carrier, broker, 3PL, or 4PL, the transportation industry functions best when all parties work together. It should not be an 'us versus them' scenario, as everyone represents the transportation industry and has significant investments in their operations.

Collaboration is essential to improve the industry collectively and enhance the shipping experience for shippers, contributing to the overall improvement of the supply chain.