What was the cause of the never ending freight brokerage layoffs we’ve been seeing?

Having hired too many employees over 2021 and 2022, the tide is now turning and we are seeing massive job cuts.

As we are currently seeing record low unemployment through out the industry, there are currently a few crucial segments of the supply chain that are seeing massive job cuts. As a whole, freight brokerage companies have seen nearly 1,000 jobs cut during mass layoffs in 2023. In 2022, brokers slashed over 700 payrolls.

Now not everyone may know what exactly a freight broker is. A freight broker is simply an intermediary between the carrier and the shipper. Carriers are the ones who are providing the transportation such as a truck driver. Whereas a shipper is the one who is wanting the goods to be moved, such as a manufacturer or a retailer. Included in this category are also freight forwarders which work with customs in order to handle international shipment.

But for many who have been paying attention to supply chain news over the last few years, this news it not a surprise. All modes of freight transport had been un-characteristically high from mid 2020 to the end of 2021.

Outbound requests for trucking capacity in the first two months of 2021 and ’22 (top two green lines) were considerably higher than previous years and ’23. (Chart: FreightWaves SONAR)
Inbound ocean freight levels were far higher at this time in 2021 and ’22 (green lines) than this year. (Chart: FreightWaves SONAR)
The inventories-to-sales ratio measures how much merchandise retail stores have to cover two months of sales. It sharply turned down through 2020 and ’21, indicating merchandise levels were unusually low compared to consumer demand. (Chart: U.S. Census Bureau)
Freight Brokerages Getting Rich & Crisis Hiring

Because of the heightened demand for merchandise, freight demand also sky rocketed. As a result the number of shippers requesting more transportation capacity also shot up, which left many shippers who handle their transport in house off-guard. In order to combat this many shippers began panic hiring to match the increased demand and in many cases ended up outsourcing to various intermediaries. Intermediaries like freight broker Eden Prairie, saw their net income jump by 66.7% in 2021 compared to prior years.

Now that all of the demand has returned to normal there is too many brokers. We are currently experiencing a “crisis level” amount of freight brokers but with a volume of freight that is mimics pre-COVID buying patterns

Sadly what this means is layoffs.

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