Carrier-broker relations shouldn’t be so adversarial

I’m connected on LinkedIn with some great carriers and brokers, and lately have been spending time reading the comments on many posts.

I have been struggling to understand why there is such an ‘us versus them’ mentality between brokers and carriers. I have worked for both asset-based carriers and logistics companies for more than 20 years – as well as companies who manage both an asset and logistics divisions – and I understand the frustration on both ends.

Carriers believe brokers are price gouging and taking as much as 50% of the shipment value in the current market. They are complaining that brokers are influencing this market in their favor, and that the result is that carriers are not getting paid a fair rate per mile.

Brokers, for their part, are commenting that carriers themselves gouged brokers during the pandemic, and that they drove rates higher from day to day on the same lanes, for their own gain.

Carriers and brokers are misplacing blame on their industry counterparts. The freight market is driven by supply and demand, same as any other industry. If your product or service is in demand, the rate or price for your product or service will go up. Why are carriers and brokers battling each other, rather than focusing on the real challenges facing the market?  

The facts are:

During the pandemic, the rate increases started on the first mile. Due to high demand and lack of capacity, ocean providers increased rates from roughly $900-$1,200 to $15,000- $20,000 for containers to the U.S. West Coast from East Asia.

Following ocean, drayage rates increased, congestion fees were implemented, wait time fees increased due to a lack of capacity and excess waiting time at ports.

Middle-mile trucking companies then raised their rates based on demand, with excess volumes at all ports and ocean vessels restricting inland moves of containers (get the empties back to improve capacity) meant middle-mile trucking companies dealt with an increase of transloaded freight.

Due to increased demand, large courier services raised their rates in 2021-2022, but they did not have the capacity to add any new customers.

Some opportunists

In all these stages, if the capacity had been available, the rates would not have increased to the extent they did. The markets are the root cause of both the favors or misfortune of brokers and carriers.

However, I don’t want to disregard the fact that some companies are valuing making a quick dollar over long-term sustainable partnerships, and these companies are fueling the carrier vs. brokerage fire.

Nonetheless, it’s just not possible to create a favorable market, and I don’t think brokers and carriers are actively attempting to inflict these markets upon one another, and I don’t get the adversarial commentary occurring online.

Whether you are an asset-based carrier, broker, 3PL, or 4PL, we all work together as an industry. This should never be an ‘us versus them’ scenario. We all represent the transportation industry. We all have investments that are significant to operate our businesses.

We need to work together to build to improve our industry and provide shippers with a great experience that complements and improves their supply chain.