How brokers manage working capital in a challenging freight environment

Sep 23, 2019 at 08:31 AM CST
Contract rates for trucking are still sliding while spot rates are flat to up, compressing freight brokerages’ gross margins. In a challenging freight environment for third-party logistics providers (3PLs) like the current market, brokerages that want to grow must figure out how to free up working capital. Commentary from the management at publicly-traded 3PLs confirms that tough conditions are expected to persist through the near-term. “We believe that CHRW is expecting the current challenging truckload and brokerage market conditions to persist for several more quarters,” wrote UBS analyst Tom Wadewitz in a September 10 investor note. “While CHRW’s truckload brokerage business performs well in the first several quarters of a softer freight market, falling contract rates eventually become a source of pressure on GM% and net revenue performance in NAST.”

Sep 23, 2019 at 08:31 AM CST

Contract rates for trucking are still sliding while spot rates are flat to up, compressing freight brokerages’ gross margins. In a challenging freight environment for third-party logistics providers (3PLs) like the current market, brokerages that want to grow must figure out how to free up working capital. Commentary from the management at publicly-traded 3PLs confirms that tough conditions are expected to persist through the near-term. “We believe that CHRW is expecting the current challenging truckload and brokerage market conditions to persist for several more quarters,” wrote UBS analyst Tom Wadewitz in a September 10 investor note. “While CHRW’s truckload brokerage business performs well in the first several quarters of a softer freight market, falling contract rates eventually become a source of pressure on GM% and net revenue performance in NAST.”