Freight Brokers and Regulatory Reform in Trucking

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Freight Brokers and Regulatory Reform in Trucking

T. A. Brown

This report describes the role of licensed freight brokers in surface transportation. Licensed freight brokers operate as middlemen in the general commodity trucking industry: they find shipments for motor carriers and provide convenience and expertise to shippers looking for transportation at attractive price/service levels. Although data are scare for a regulated industry it is clear that the number of brokers has grown rapidly: although fewer than 70 existed in 1975, today there are over 900 in existence. The primary reason for this growth is relaxation of transport regulation by the ICC. Interviews of nine licensed freight brokers indicate that the brokers are small but growing. They typically do most of their business in truckload (TL) lots but they also handle less than truckload (LTL) shipments. Also, most of the brokers interviewed utilize private/contract carriers (in addition to common carriers) and expect to use more of this type of carrier in the future. Freight brokerage exists because it offers economic advantages to truckers as well as shippers. Based on current trends, the industry is expected to continue growing, particularly in the 'over 5,000 pound' LTL market.