Spot Broker Margins Slip to 14.7% as Pricing Index Moves Into Balanced Territory
Freight brokers kept less on awarded spot loads in August, with awarded margin falling from 16.5% to 14.7% on a four-week average basis, according to the August edition of the Tabi Pricing Pressure Index (TPPI) from freight quoting software company Tabi Connect.
The index tracks weekly pricing pressure in spot freight quoting on a scale of 0 to 100. A rising reading signals a market moving in shippers’ favor, and a falling reading signals brokers regaining pricing power. The TPPI stood at 47 in its latest weekly reading, down 4 points from the prior week. Its four-week average of 50 is running above the eight-week average of 38, which Tabi reads as a move from broker-favored conditions into a balanced market. Contract freight is not included.
The quote-to-market spread, which measures how far submitted quotes sit above the market rate whether or not they win the load, narrowed 5.4 percentage points month over month, from 18.8% to 13.5% on a four-week average. Spot quote volume was flat, up 1.7% against the prior four-week average. Average haul length held at roughly 689 miles, and the report says lane mix played no meaningful part in the margin decline. Tabi measures awarded margin against broker baseline pricing rather than spot truck rates.
“Margin fell and the spread narrowed, so brokers are pricing closer to the market to stay competitive,” said Ricky Gonzalez, CEO and co-founder of Tabi Connect. “Quote volume was flat, so demand didn’t cause that. Brokers are repricing against each other, not responding to a shift in freight availability, and that gets harder to absorb with margin already this thin.”
Tabi’s release ties the margin squeeze to the $604 million verdict a Dallas County jury returned against C.H. Robinson in July. The company said the verdict “has raised the visible cost of carrier-vetting failures industry-wide.” It argued that brokers “now absorbing thinner margins have less room to invest in the compliance work that verdict has made newly urgent.” C.H. Robinson has said it will appeal. The verdict followed the Supreme Court’s unanimous May decision in Montgomery v. Caribe Transport II, which allowed state-law negligent-hiring claims against brokers to proceed.
The report also breaks out shippers by quoting volume. Enterprise shippers average more than 1,000 quote requests a week. The 48 in the report generated 55.6% of spot quote volume but awarded just 0.26% of their quotes. Regular shippers, at 10 to 100 quotes a week, awarded 4.67%. Awarded margin barely changed by shipper size, ranging from 14.2% for enterprise shippers to 15.2% for regular shippers. The share of quotes converting to awarded loads rose 4.9% month over month in August.
Van freight made up 62.6% of spot quotes, with a 2.10% win rate and 13.2% awarded margin. Reefer margin was nearly identical at 13.3%, though reefer quotes converted less than half as often, at 0.88%. Flatbed accounted for 3.4% of quotes and drew the widest spread of any equipment type, 18.6% above market, yet produced the thinnest margin at 10.5%.
