According to the American Trucking Associations (ATA), “trucks move roughly 72.6% of the nation’s freight by weight.” That reflects about 11.5 billion tons of freight in 2022. With numbers that large, you might think that truck fleets are predominantly big businesses — however, the ATA also notes that, of all fleets, nearly 96% operate fewer than 10 trucks.

These small fleets, and especially owner-operators, operate on the margins and are most sensitive to changes in freight demand and industry capacity. The “post-COVID” demand spike was a favorable environment for small fleets, but this gave way to a severe downturn in rates that persists today. Forecasters are hopeful that late 2024 will see a turnaround; however, ACT Research has noted that the for-hire sector might not reap the benefits. ACT’s 2024 trucking industry forecast report states that “private fleets have added more than the industry’s net capacity growth in the past year as the for-hire sector has contracted.”

Low rates and higher costs are creating increasing challenges for for-hire fleets, leading to a contraction that is most acutely felt by small carriers.

Do Small Fleets Have to Depend on Brokers?

Brokers are the proverbial matchmaker in the freight business. Shippers need to find carriers to deliver loads to their destination; carriers need to find loads to deliver. Both want to get the best deal possible for their respective needs. The broker’s strength is its network of vetted carriers and the ease with which shippers can rely on a broker to manage all aspects of freight movement.

The benefits of the traditional broker do come at a significant cost, however. Typically, the broker’s revenue model is to take the shipper’s offered amount ($5,000, for example), then advertise the load to its network of carriers at a significant discount ($4,000, for example). The broker in this example keeps $1,000 (20% of the shipper’s offered amount). For smaller carrier fleets and owner-operators, even single-digit differences in margin are consequential, so the traditional broker keeping upwards of 20% is a difficult — but often necessary — part of the business.

Banking on Backhauls

Once a truck arrives at its destination and unloads, it obviously has to move on, either to another location or back to home base. An empty truck returning home still incurs fuel, toll and other cost-per-mile expenses for maintenance and repair.

Filling the truck on the return trip (backhauling) is an especially key factor in the economics of small fleets and owner-operators. Even if the return load is not as profitable as the outbound trip, backhaul revenue can at least offset return expenses and make the overall round-trip worthwhile for the operator. Ideally, the broker would set a driver up with both the outbound and backhaul loads before the trip, but this is often not possible if the broker lacks shipper connections at a far-away destination. If a broker does connect the driver with a backhaul, they will again pocket a significant percentage of the revenue.

Is there a viable alternative to the traditional broker? Specifically, is there an alternative that preserves the benefits of the broker (network connections, vetting the parties, managing the administration) but at a lower cost for both shippers and carriers?

There’s an App for That

The Internet has enabled small companies of all kinds to thrive in a variety of ways, including providing access to potential customers these companies might not otherwise know. That now holds true for carriers as well. Platforms, known as no broker freight load boards, exist that are essentially digital freight marketplaces that directly connect shippers with carriers to eliminate broker fees and put more money in drivers’ pockets while enabling shippers to save money and control their own relationships.

These online platforms give carriers the information they need to select a load close to their current location. They’ll know how far they are moving that load, and the parties can negotiate directly with each other on the rate – with no one in the middle. As with the traditional broker, many of these platforms perform comprehensive vetting of all carriers, provide insurance to the shipper and manage all back-end administrative paperwork.

The process is simple, quick and easy: a carrier searches for a load on the mobile app, then requests a specific load. The shipper accepts the carrier and sends a contract which the carrier signs. All of this happens on the driver’s mobile device.

Another plus to using these platforms is the ability to more easily find backhaul loads. A driver can check their phone to find out if there’s a load on the route back home and exactly what that load rate is.

A ‘Win-Win’ When it Comes to Costs

Small fleets operate under small margins; this is where no broker freight load boards truly make a difference. Whether the platform uses a monthly fee (based on volume) or a per-shipment fee, the cost is considerably lower than that charged by a broker.

Corcentric has partnered with one of these no-broker freight load board companies. Riteload, a Pennsylvania-based company, has real-time geotracking technology that lets shippers know exactly when the load will arrive, with the goal of reducing detention time. Corcentric, in its partnership role, pays the carrier within 48 hours of completing the load movement. For smaller fleets and owner-operators, the timing of payment is crucial to covering expenses.

Because shippers and carriers are negotiating directly with each other, and since both know the fee that is being charged, there is complete transparency in the transaction for both sides, and, ultimately, shippers can offer less for a load than they would through a broker. Since the broker isn’t taking a large cut of the shipper’s offer, the carrier actually receives more than it would if it accepted the load via a broker. This arbitrage savings is crucial for small fleets and owner operators, especially in today’s depressed rate environment.

Companies like Riteload have leveled a playing field that has often operated to the small carrier’s disadvantage, putting more money in drivers’ pockets and enabling shippers to save time and money while controlling their own relationships.