Assessment of Rising Freight Brokerage Closures: 11.5% Year-Over-Year Decline

The freight brokerage industry has seen its fair share of declines over the past couple of years. With the "freight recession" coming to an end from the points of views of some in the industry, there has been a steady decline the operations of freight brokerages in the past month and year. Here's what you need to know:

• 284 brokerages closed in July 2024 alone
• 3,420 fewer brokerages than August 2023
• 11.5% decrease year-over-year

Market Trends:

• Consistent monthly closures throughout 2024
• Biggest drop: 512 closures in January
• August 2024: 249 brokerages shut down

What's Driving the Decline?

Kevin Hill, from Bush Pass Research , points to the boom-and-bust cycle. Here's a response to a comment on his LinkedIn post:

“First thought is on the 25k plus new MC's issued from June 2020 to Nov 2022. Only a third of those are still active and more are closing each day. So, it would probably be the rush of new brokerages that were created when rates were high. Most didn't have the discipline or the expertise to be long-term entities. If they did make some money in that short window, it didn't last.”

Key Factors:

1. Post-pandemic surge in new brokerages
2. High rates and potential earnings attracted inexperienced operators
3. Lack of long-term sustainability
   1. 13.8% fewer brokerages than two years ago
   2. 1.4% fewer than three years ago

What's Next?

The industry continues to consolidate. With 13.8% fewer brokerages than two years ago and 1.4% fewer than three years ago, one could say that inexperienced brokerages are simply falling out of the industry. Well-established brokerages may benefit with the decline in competition. Is it really the weak being weeded out, or does "recession" still have its iron grip on the industry?

Source: LinkedIn/Kevin Hill