Executive Briefings

Freight Brokers See Profits Surge on Shipping Rush

Freight middlemen are seeing a surge in business as growing economic demand and tight capacity sends companies rushing to find shipping space.

Financial results from brokerage businesses, which connect retailers and manufacturers with trucking fleets, show fourth-quarter revenues soared as companies paid far more to keep their goods moving. Record-breaking holiday sales in a resurgent U.S. economy drew larger volumes into domestic shipping networks at the end of 2017, just as tough weather conditions and new regulatory demands for truck safety technology sidelined many big rigs.

“The market is strong and capacity is tight,” Chief Operating Officer David Menzel of Echo Global Logistics Inc., one of several freight brokers recently reporting big earnings gains, said in an earnings conference call last week.

Echo’s net revenue, or the money brokers keep after paying transportation costs, soared 34.2 percent in the last three months of 2017, and overall revenue rose 34.6 percent from the year before, to $547.7m. “Bottom line, the market is in the process of adapting to the impact of tighter measurement and compliance to the hours-of-service rules and this is impacting both shipper and carrier behaviors,” said Menzel.

Connecticut-based XPO Logistics Inc. reported last week that revenue at its freight brokerage segment rose 33 percent in the fourth quarter from the year before, well above the company’s 14.1-percent increase in overall revenue.

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Financial results from brokerage businesses, which connect retailers and manufacturers with trucking fleets, show fourth-quarter revenues soared as companies paid far more to keep their goods moving. Record-breaking holiday sales in a resurgent U.S. economy drew larger volumes into domestic shipping networks at the end of 2017, just as tough weather conditions and new regulatory demands for truck safety technology sidelined many big rigs.

“The market is strong and capacity is tight,” Chief Operating Officer David Menzel of Echo Global Logistics Inc., one of several freight brokers recently reporting big earnings gains, said in an earnings conference call last week.

Echo’s net revenue, or the money brokers keep after paying transportation costs, soared 34.2 percent in the last three months of 2017, and overall revenue rose 34.6 percent from the year before, to $547.7m. “Bottom line, the market is in the process of adapting to the impact of tighter measurement and compliance to the hours-of-service rules and this is impacting both shipper and carrier behaviors,” said Menzel.

Connecticut-based XPO Logistics Inc. reported last week that revenue at its freight brokerage segment rose 33 percent in the fourth quarter from the year before, well above the company’s 14.1-percent increase in overall revenue.

Read full article