History of Freight Brokerage and Deregulation

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Explore the fascinating history of freight brokerage and deregulation...

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At the dawn of the millennium, freight brokerage firms were relatively insignificant entities, commanding a mere 6% of the trucking sector. Fast forward to the present day, and these entities handle over a fifth of all trucking freight. This astounding growth is largely attributable to the deregulation of the trucking industry and the consequent rise of freight brokerages.

The Emergence of Freight Brokerages

At the turn of the century, freight brokerage firms were largely considered a niche sector within the broader trucking industry. They were typically involved in handling freight that asset-based carriers found unprofitable or difficult to manage. It was uncommon to see a freight broker at the helm of a shipper’s routing guide.

However, as these firms began to invest heavily in advanced technology and customer service, they started to offer more attractive services than their asset-based rivals, leading to an increased role in routing guides. In 2023, it’s not uncommon for multiple freight brokerages to occupy primary positions in shippers’ routing guides, often outperforming their asset-based competitors.

The Quality of Freight Managed by Brokerages

The quality of freight managed by brokerages has also improved significantly. In the early 2000s, freight brokers were often tasked with handling undesirable, low-priced freight. Today, freight brokers often manage highly sought-after, carrier-friendly freight.

The reason for this shift is that shippers, both big and small, now rely heavily on freight brokers’ extensive databases of reliable carriers to ensure their loads are transported and delivered timely. Even carriers, particularly smaller ones, depend on the business and leads that freight brokers provide.

The Growth of the Trucking Industry

According to data from the Federal Motor Carrier Safety Administration (FMCSA) and insurance registrations, as of April 2023, there were over 531,000 active trucking fleets in the U.S. that own or lease at least one tractor[^1^]. This figure is a stark contrast to the 1980s, where there were only around 18,000 trucking companies in the country.

This exponential growth in the number of trucking companies can be traced back to the deregulation of the trucking industry, an event that paved the way for the rise of freight brokerages.

The Role of Deregulation in the Emergence of Freight Brokerages

The Motor Carrier Act of 1980 marked the beginning of the deregulation of the trucking industry. Prior to this, the trucking industry was heavily regulated by the Interstate Commerce Commission (ICC). The ICC not only set the rates and routes of interstate carriers but also determined the type of freight that trucking companies could transport. Backhauls were mostly not allowed.

However, this changed with the deregulation of the industry. The Motor Carrier Act of 1980 made the trucking industry much more competitive. While many trucking companies went out of business due to the increase in competition, thousands of new ones emerged. This led to lower shipping rates and a greater use of backhauls.

[^1^]: Carrier Details, which provides trucking authority intelligence using data from the Federal Motor Carrier Safety Administration (FMCSA) and insurance registrations, available on SONAR.

The Success of Early Freight Brokerages

The deregulation of the trucking industry saw the emergence of successful freight brokerages such as American Backhaulers, which commenced operations in 1981 and was subsequently acquired by C.H. Robinson in 1999.

Following deregulation, motor carriers began to operate wherever they could find profitable freight. However, rates were significantly lower due to the increased competition. Many carriers required backhaul freight to generate sufficient round-trip revenue, a need that brokers were able to meet.

Evolution and Growth of Freight Brokerages

As more carriers began to rely on freight brokers, a new breed of professional freight brokerages emerged. Several of the larger carriers even started their own in-house brokerage divisions.

In most cases, these in-house brokerages provided an additional revenue stream for their carrier owners. They also created a demand pool that was controlled by those trucking companies. These brokerages supplied freight for their own trucks in lean times and could sell excess freight to other carriers when their fleets were fully booked.

The Role of Brokerages in Supporting Small Carriers

Freight brokers serve as the bridge between shippers and carriers. They act as “traffic managers” for shippers and “sales agents” for carriers. Today, brokerages facilitate thousands of daily freight transactions.

When operating at their most efficient, brokerages can reduce transportation costs for shippers while also increasing carriers’ revenue.

The Impact of Brokerages on the Freight Cycle

The current freight cycle differs significantly from previous ones. In past cycles, when freight rates were low, many of the weakest carriers would leave the industry. However, in 2023, many small carriers managed to stay in the market for much longer than expected, even as rates declined. This is largely due to the role played by freight brokerages in providing these small truckers with quality load opportunities.

The Changing Landscape of the Trucking Industry

A decade ago, during the 2008 freight recession, freight brokerages accounted for just 10% of the total freight in the market. This figure has doubled since then.

It’s also worth noting that the capacity of the trucking industry has grown significantly. The number of trucking companies in the market increased by 28% from 2019 to 2022. Nearly all of these new companies are small, attracted to the market by the high rates induced by the pandemic.

The Future of the Freight Market

Historically, when capacity tightens and drives up rates, new players enter the market, flooding it with capacity and driving down rates. While reductions in capacity have occurred in past cycles, the process has been much slower than anticipated. A key reason for this is the proliferation of freight brokers.

In past down cycles, freight brokers would lose a significant percentage of their volume as shippers narrowed down their list of core carriers. However, over the past decade, freight brokerages have positioned themselves as core carriers, enabling them to maintain load volumes, even in down markets.

The freight market currently has 63,000 more fleets than the 2010-2020 trend line would suggest. Until there’s an acceleration in revocations, the market is likely to take another 78 weeks before capacity aligns with historical trends.

While it’s possible that freight rates could increase in anticipation of a capacity reset, many analysts, including FreightWaves, don’t expect freight rates to increase until at least the second quarter of 2024. As a result, it’s likely that the attrition process will continue as the market slowly weeds out the weakest players.


The freight brokerage industry has come a long way since its inception. The sector has evolved from a small, niche industry to a major player in the trucking sector. This transformation has been largely driven by the deregulation of the trucking industry and the increasing reliance of shippers and carriers on freight brokers.




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