Freight brokers call market bottom, look for spring tightening

For freight brokers, the story in the first quarter of 2019 was one of relatively normal freight volumes, loose capacity and margins that widened even as brokers bid aggressively on contract freight and undercut asset-based carriers.

Take J.B. Hunt’s (NASDAQ: JBHT) brokerage, Integrated Capacity Solutions (ICS), as an example. Hunt reported first quarter earnings on April 15. ICS posted volume growth of 15 percent year-over-year in the first quarter, but revenue per load dropped 11.5 percent to $1,041. In other words, ICS grew its volumes by cutting prices by double-digits. Still – and this is why market conditions were so favorable for brokerages this past quarter – ICS was able to widen its gross margins from 14.4 percent in the first quarter of 2018 to 16.5 percent in the first quarter of 2019.