In the not so distant past, just before the AOBRD/ELD mandate became enforceable, you may recall a capacity crunch coming to full fruition. Rates were high, freight was plentiful and the digital app brokerages came into town ringing their bells and blowing their horns. Building their carrier portfolios by paying out never before seen rates, even above the already high spot market rates. Many carriers, my fleet included, took advantage of their great rates and signed up to haul their loads and made quite a killing doing so. As true as time itself though, change is certain and within the trucking industry, change is one of the rare constants.
As these new digital app brokerages onboarded a seemingly endless stream of new carriers, in hopes of boasting to the shippers their high numbers to solicit new work, a funny twist in capacity began to take hold. Though the national economy was stable, a freight dip took place during 2019 that would affect both sides of the freight game, carriers and brokers alike. The reactions to it, in my dealings, seemed to be a slow decline of rates on the spot market and a flat condition in our dedicated work. Negating any annual increase, we would normally consider in any direct shipper lanes that we have. With the digital brokerages, however, perhaps the prior year’s overpaying had caught up to them because the reaction to their rates given this new capacity flood was more of a knee-jerk reaction. Lowering the rates seemingly overnight, to what most successful carriers couldn’t even squeeze a profit margin out of.
Whether this was a reaction to previously overpayment during the last capacity crunch, or just a case of them trying to “stock them deep and sell them cheap,” it has given these app-based brokerages a reputation now of catering only to the desperate. With rates that are unsustainable in a lot of cases, and the app rates only spiking in their own desperation to cover a last-minute fall-off from another carrier or getting a last-minute customer request covered. A lot of people are out there asking “Who wants to haul that cheap app freight anyway?”
Don’t get me wrong, I am not one of those “say no to cheap freight” truckers running around shaming people with low enough operating costs to run leaner on rates than their competitors. Even though we don’t haul stuff as cheap as what I’ve recently seen in the app-based freight marketplace, I understand that “one man’s (woman’s) trash is another man’s (woman’s) treasure” in a fair freight marketplace. One has to wonder, however, if the “race to the bottom” mentality that it seems these digital platforms are taking may bite them in the end?
With predictions by many of the major carriers for another capacity crunch this coming spring and summer. Could these app based brokerages be scaring away their premium carriers by touting the lowest rates in the spot market, biting themselves in the end with looming times of tight capacity on the horizon? I know I will think twice now before any of my trucks haul loads for any of these platforms, who appeared so quick to crank the faucet from a flood to a trickle and continue to “bottom-shop” their way onto their shipper’s load lists with no understanding of what it takes for their carrier clients to operate profitably. When another capacity crunch comes along, it may take a lot more to rebuild the bridges that they may have burned with the dependable carriers out there, whom they once relied so heavily on to build their success.
Follow Team Run Smart Pro Jimmy Nevarez on Instagram and Facebook