Transportation August 10, 2018
DAT survey shows volume surge, cost controls offset impact of soaring freight rates.
U.S. freight brokers experienced a solid second quarter as load volumes surged to record highs and net operating profit jumped, according to a survey published today of 100 decent-sized brokers by spot market load board operator DAT Solutions, LLC.
However, gross margins, or the revenue left after paying for the costs of purchased transportation, came in at a somewhat disappointing 12.8 percent as brokers grappled with a powerful jump in spot, or non-contract, rates during the quarter, according to the company’s data.
Purchased transport costs for dry van services, the most common form of truck trailer, is up 37 percent since the second quarter of last year. Margin compression may continue to be an issue for brokers should rates remain elevated for the rest of the year, DAT said.
Net operating profit, defined as profit after expenses, taxes, depreciation and amortization, rose 23 percent in the quarter compared to the same period in 2017. This indicates the brokers involved in the survey exercised effective cost controls to more than offset the higher transportation expense, DAT said.
It helped that the surveyed brokers moved 38 percent more loads in the quarter than they did in the 2017 period, setting an all-time record in the process. Load volumes rose 18 percent from strong first-quarter levels, while revenue per load last quarter also surged, the firm said. The volume strength and vigilance on costs explained why net operating profits were so much stronger, on a percentage basis, than gross margins, DAT said.
Eileen Hart, DAT’s vice president of marketing and corporate communications, said today in an e-mail that brokers she’s spoken with are very satisfied with their current financial situation, and that they are adding staff to keep up with demand. “I don’t hear many complaining about margin compression, because they understand the reasons behind it,” Hart said.
The 100 brokers surveyed had an average gross revenue of $19.5 million. Gross revenue is revenue before purchased transportation costs.
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