CENTRO INTERNAZIONALE STUDI CONTAINERS
ANNO XXXVIII - Numero MAGGIO 2020
TIA REPORT: BROKER GROSS MARGIN WAY DOWN IN Q1 FROM A YEAR
While brokers are under attack from some quarters of the network
of drivers who are dealing with low truck rates, a quarterly report
spells out how the 3PLs took a hit in the first quarter.
The recently released report from the Transportation
Intermediaries Association shows a decline in most margins in the
first three months of this year compared to both the fourth quarter
of 2019 and the first quarter of last year.
The comparisons to Q12019 are particularly stark. Focusing on
truckload, the largest and most volatile of the three modes and the
one that has been the focus of driver protests, the TIA report said
the gross margins for truckload activity managed by 3PLs declined
210 basis points in 1Q2020 compared to a year ago. Intermodal
margins were down 140 basis points while LTL margins dropped 10.
The total truckload business in the TIA report - all 3PLs
aggregated - showed the gross 1Q2020 margin declining to 15.1% from
17.2%, though total shipments dropped just 2.7%. The average invoice
amount/load declined 8.4% to $1,628 from $1,778, the lowest point in
over two years. Overall total truckload revenue declined 10% in the
The drop in the gross margin percentage for all truckload
business at 210 bps was bigger on an absolute basis than the
individual bps declines in the various size categories that TIA
reported. For example, 3PLs with less than $16 million in revenue
saw their gross margin percentage drop to 16.7% from a year ago,
down 80 bps, though the drop dollar-wise was more than $80 off a
smaller invoice amount per load than the aggregate.
For the wide $16 million to $100 million category, gross margin
percentage declined 160 bps, to 14.8% from 16.4%, with an 18.3% drop
in the gross margin. For companies in excess of $100 million, the
gross margin percentage dropped to 15.2% from 16.4%.
Although markets started to deteriorate in the first quarter, it
wasn't all that bad compared to the fourth quarter. The total gross
margin in that comparison was down just 20 bps, to 15.1% from 15.3%.
In the smallest category of 3PLs, less than $16 million in size,
the gross margin percentage declined to 16.7% from 17.9%. The $16
million to $100 million category rose 70 bps, to 14.8% from 14.1%.
The category with the largest revenues , more than $100 million, saw
a decline of 60 basis points, to 15.2% from 15.8%,
Noël Perry, the TIA's chief economist, said in his
introduction to the report that the decline in margin percentage
across all modes was surprising. "One disappointment is the
drop in margin per-cent, something that has not happened on the
approach to recession before," he wrote. "I suspect it
results from the flood of new brokerage and truckload capacity that
entered the market in response to the very good times of 2017-2018.
Such a precedent is disturbing given the deterioration in market
prospects attendant to the COVID-19 pandemic."
The total activity summary for all modes - truckload,
intermodal, LTL and some other small categories - showed a gross
margin percentage of 15.8%, down from 15.9% in the fourth quarter of
last year. But compared to the first quarter of last year, the drop
in gross margin percentage was far bigger, to 15.8% from 17.5%.
Although the full report is for the first quarter, TIA just
completed a special survey for April 2020 comparing total revenue to
April 2019. The impact of COVID started hitting all modes of
transportation by mid-March. Total revenue in April declined over
18.3%, a sharp decline from Q12020 performance and down 16.7%
compared to March 2020.
- Piazza Matteotti 1/3 - 16123 Genova - ITALIA
tel.: 010.2462122, fax: 010.2516768, e-mail