June 6, 2016 1:30 PM, EDT

Freight Broker Report Shows Margins Still Improving

Freight brokers’ profit margins continue to improve, based on the latest report from the Transportation Intermediaries Association, which showed both year-over-year and sequential progress in the first quarter.

The trade association reported a year-over-year improvement for all types of shipments to 16.1% from 13.7% that reflected improved margins on truckload, less-than-truckload and intermodal freight. The sequential gain to 16.1% from 15.6% was attributed to truckload and truck/rail freight, as LTL margins declined.

The results reported in the survey were consistent with earlier commentary from publicly traded brokers, whose margins improved between 1.1% and 2% on a year-over-year basis and also were better in the first quarter than the fourth. Margins are improving as brokers leverage the imbalance between supply and demand that currently gives more advantage to shippers as carriers cope with excess capacity.

“Members total shipments decreased compared to the fourth quarter of 2015, while an increase in gross profit margin percentage balanced the lacking freight volume,” the report said.

The truckload first quarter profit margin was 16.9%, an improvement of 0.7 percentage point over the fourth quarter and 3 percentage points on a year-over-year basis.

In the intermodal sector, margins inched up to 10.4% from 10% in the fourth quarter and on a year-to-year basis. The less-than-truckload freight margins were down 0.3 percentage point from the fourth quarter, but were 0.7 percentage point above the first quarter of 2015.

Total shipments fell 1.9% sequentially in the first quarter for truckload, which represents 68% of the shipments reported. Intermodal freight, which accounts for 20%, dipped 1.6%. The smallest category, LTL, was 2.6% higher.

On a sequential basis, revenue fell 10.3% to $1.99 billion.