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Editor’s Note: This is a guest blog from our friends at Bryant Surety Bonds where they discuss the current, potentially fragile state of the freight broker industry.

Yes, you read that correctly. According to data provided by My Carrier Resources, more brokers leave the industry between September and November than during other months of the year. But what does that mean and why could brokers be quitting in larger numbers during those months?

We want to find out! But let’s first look at the numbers.

Is the Freight Broker Industry in Decline?

Does the fact that more freight brokers leave during these three months signal that the freight broker industry is declining? This is what you might think at first. So let’s begin by clearing the air with what we already know from the data provided.

No, not only is the industry not declining, it is growing on a yearly basis, as you can see from My Carrier Resources’s data presented in the graph below.

freight brokerThe total number of licensed freight brokers between January 2014 and September 2016 has risen from 13,565 to 16,932. That’s a total increase of 3,367 active brokers. However, according to the FMCSA register, there are more than 7000 newly registered freight brokers during the same period. The difference between the number of newly registered brokers and the increase in the number of active freight brokers comes from the number of brokers who went out of business during that period.

The data shows that in the last two years, during the months of September, October and November there is a sharper rise in the number of freight brokers that leave the industry than during the remaining months of the year.

freight broker

Since the rise of freight brokers who decide to leave the industry during those months is so pronounced, we are expecting to witness something similar during this time of the year as well. A more tangible uptick is already visible in the numbers for August and September.

But the question remains – what could the reason for that be? Why are more freight brokers leaving now than during other months?

Regular Turnover or Something Else?

There are a few possibilities. Of course, one possible and straightforward explanation is that those are just the numbers of regular turnover within the freight broker industry.

The majority of brokers have licenses which expire during these three months because of the changes that took place in October 2013. So if any of the brokers registered prior to 2013 is leaving the industry, the change will be reflected in these months.

At the same time, given that the FMCSA bond increase in 2013 caused a lot of controversy because of the higher bonding costs, some might look for the reason there. A small number of brokers was indeed put out of business back then because of the tighter regulations, but this served to improve the overall reputation of the industry. Since then the number of brokers has been steadily growing.

Which takes us to yet another option is the increased competition caused by the influx of new brokers. A likely source of competition is also the new digital solutions aiming to establish a direct relationship between shippers and carriers

Some of these scenarios sound plausible, but how can we find out the real reason?

Poll: What Do You Think?

While a number of licensed freight brokers is on the increase and figures of quitting brokers are not drastic or dramatic, we are still surprised and even slightly concerned by this trend. 

To get a fuller picture, we have created an ONLINE POLL which current or former freight brokers can answer, in order to help us understand the situation better.

We would be happy to hear your take on this issue. Please follow the link to the poll provided above and let us know what you think is the reason for the yearly decrease in freight broker numbers during the period between September and November.

Feel free to also leave a comment below and start a discussion!