DC Velocity in their current issue has an article about the challenges traditional truck brokers have in the current market, found here: http://bit.ly/1ocNZjC. For the shipper these challenges means market changes and additional risks.
For decades, a person could start a business going to the local truck stop and brokering out loads to truckers there. Up to recently, all that person needed was a truck surety bond of $10,000. With truck supply meeting demand for the most part, a reasonably commission and business could be had.
But the market and regulations are changing. Now a $75,000 surety bond is needed (more on this in a bit). Several thousand brokers have been pushed out of the market with this change.
Truck supply is tight, shipper budgets are tight, and it is leading to lower commissions to those brokers who are strictly making money on brokering truck loads. 3PL’s who do transport brokering also, but are much larger operations can generate revenue by changing shippers for additional services such as storage options, and IT services. As an example of the IT services, the 3PL can provide information on the load enroute which shippers and receivers need and want with their software, which the basic truck stop can not provide.
So the little guy is being pushed out the market and some will go out of business. When that happens, many times trucking bills for brokered loads go unpaid by the broker when he leaves the market. If the trucker has legal resources, shippers can be made to, legally, pay the trucker again after already paying the broker, causing double payments for the shipper or the receiver, whomever is responsible for the freight. The surety bond is insurance that freight bills will get paid. $10,000 which covered alot in the 1940’s covers almost nothing in the 2010’s. $75,000 is somewhat improvement but probably still will not pay most freight for brokers who end their business and disappear.
Shippers will need to consider this risk in choosing their transportation vendors.