Nobody in transportation saw the disruption of 2020 coming, but it verified a few things that we all knew.

As the trucking market reacted to extremely volatile freight demand, shippers were left plugging holes in routing guides built before the coronavirus hit newswires or store shelves. This flooded the spot market with goods that needed to move, and digital load boards and brokerage stepped in to meet that need in a big way.

But, as these short-term capacity solutions proliferated, they exposed the underlying limitations of a marketplace over-reliant on the quick fix. Although useful in a pinch, brokerage and spot market solutions are costing both shippers and carriers millions when overused. And a broken RFP (request for proposal) process makes this misuse the norm.

The rise in brokerage usage: convenience vs. cost

Throughout the year, dramatic swings in consumer demand left shippers with misalignments between freight and carrier capacity. This was particularly painful throughout the pandemic, but it’s a phenomenon that impacts shippers every year—and it almost always ends up in the spot market.

Under normal conditions, a national shipper tends to use brokerage to cover 5-10% of its freight. In recent years, Breakthrough network data has trended higher, hovering around 15%. When the pandemic first hit the U.S. in March and April 2020, that number spiked to about 30% before normalizing in May and June.

To put it bluntly, the radical shifts in transportation needs sent everyone’s pre-pandemic transportation plans out the window, and brokers provided one of the best ways to move freight quickly and efficiently.

And while short-term spikes in brokerage use are expected when disruption hits the freight market, shippers continued to go back to the well repeatedly over time, opting for brokers and spot market coverage long past what their networks dictated. This longer-term exposure crept up to 51% at its peak across shippers in April 2021.

Rising brokerage use is not problematic on its own but it does coincide with a near-50% price premium at its peak in 2021—and the average can range between 5%-35%. That difference can easily translate into millions of unplanned dollars spent. Overreliance and long-term brokerage and spot market use is expensive and unsustainable.

The benefits of stronger, more diverse transportation relationships

This challenge is exacerbated by freight brokers who act as a middleman making those matches while muddying underlying data that can benefit both sides. Over time, a shipper could be using the same partner over and over, while also paying a premium for the broker’s service, and never know it.

Pursuing direct relationships with a diverse portfolio of large national carriers, mid-sized regional players, and even much smaller trucking companies is a better approach. The key is to find balanced and diverse portfolio that allows for flexibility in times of uncertainty.

This allows shippers to be nimble as they move goods to market and puts the right carriers at the forefront of the right freight relationships. At the end of the day, let the use of trustworthy brokers thrive in their sweet spot, and avoid making cost premiums the elephant in the room when analyzing your past year’s strategy.