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While the closure of the Jeff Bezos-backed Convoy has grabbed news headlines, the former digital freight broker is not alone. Using data from the Federal Motor Carriers Association (FMCSA), TruckInfo.net found that more than 1,500 freight brokers have closed shop in 2023.
To industry outsiders, this figure may not seem significant but there are a number of reasons this contraction in the freight industry is worrying.
Data from the Bureau of Transportation Statistics has found that a sharp drop in the freight market often precedes an economic recession. This suggests that the contraction of the freight broker market in 2023 could be a foreboding sign of an economic downturn.
While most of the economy suffered during the COVID-19 pandemic, the freight market experienced a boon. Many expected the industry to cool off in the following years but it’s the first time in the data provided by the FMCSA that more freight brokers have gone out of business than opened shop.
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The alarming trend of broker closures may not end here. If the industry returns to pre-COVID-19 levels, we could see thousands more freight brokers shutting down in the coming year or two.
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While freight broker closures have been felt across the nation, the impact has not been uniform. Georgia and Florida in particular have been impacted. While having fewer freight brokers than both California and Texas, both states have lost more freight brokers in absolute terms and as a percentage.
The above data was sourced from the FMCSA’s database on operating authority. Only property freight brokers based in the United States were included in the analysis.