New TIA Q4 Market Report sees declines amid some positive trends

Challenging market conditions on various fronts, for freight transportation brokers and intermediaries, were the main themes of the new edition of the “3PL Market Report Fourth Quarter 2023, which was issued this week by the Alexandria, Va.-based Transportation Intermediaries Association (TIA).

This is the 61^st edition of this report, which is based on monthly data from more than 50 TIA member companies, focusing on analyzing shifts in broker activity, which it said is largely dominated by the truckload sector.

The report explained that, from the third quarter to the fourth quarter, as well as annually, there were myriad declines in shipments, invoice amount per shipment, and total revenue, including:

• total shipments, at 1,733,761, down 4.7% sequentially and 8.9% annually;
• total revenue, at 3,493,815, down 8.8% sequentially and 21.4% annually;
• invoice amount per shipment, at $2,015, down 4.3% sequentially and 13.8% annually; and
• gross margin percentage, at 15.6%, up 20 basis points sequentially and down 200 basis points annually

From a modal perspective, the report saw more sequential and annual declines, with truckload shipments down 4.7% sequentially and 9.2% annually, less-than-truckload (LTL) down 5.3% sequentially and 8.5% annually, intermodal down 3.1% sequentially and 5.5% annually; and “other” shipments down 12.5% sequentially and 17.2% annually.

In an interview with LM, TIA President & CEO Anne Reinke explained that even with the 35,000 carriers having exited the market over the last 18 months, capacity remains an issue, with excessive capacity driving rates down.

“There was some overall margin improvement, which, to me, is actually sort of a bad news story for carriers, meaning that their rates have been at the bottom, and I don’t think they will go much lower than they have been,” said Reinke. “However, that means there is some capacity that still has to leave. Along with the 35,000 carriers leaving, 2,000 brokers have closed shop since 2022 as well, with, obviously, there being more carriers than brokers. It was a heady time, and carriers were making money hand over fist and brokers were doing well. We are now in a different marketplace, though. And I do think as painful as it is for those individuals who are leaving the marketplace, it's probably a necessary market correction. Otherwise, we will not see improvement.”

And she added that spot market rates have not been very high, leading brokers to use contract rates to boost activity, with contract rates also being re-bid.

“Shippers really have had the leverage now, whereas it was the carriers over the last couple of years,” she said.

Looking at 2024 on a year-to-date basis, Reinke said that overall market conditions remain in line with how 2023 ended, noting that February not being a great month, as is typically the case. But, at the same time, she pointed to good signs of economic momentum, in the form of things like interest rates coming down, employment numbers rising, steady consumer pricing, and a strong dollar.

“The freight market is cyclical, and our members have ridden out these cycles and do it in a smart way by not overexpanding during the really heady times,” she said. “I am extraordinarily bullish on the logistics marketplace and part of that is that even really without supply chain dysfunction—and we really don’t have as much as before, save for the Panama Canal and Red Sea issues—you need someone to make the marketplace understandable. And if that's not your core business, and if your core function is not logistics, it's to produce goods or commodities or whatever it is, then you're going to rely on those experts that know how to maneuver and know how to handle it. The 3PL value proposition continues to grow, because there are always going to be shocks to the marketplace, even if there is not generalized dysfunction.”