Small Freight Brokers Outperform on Volume; Margin Pressure Mounting

Freight brokerage firms are navigating sustained financial pressure, with key performance indicators showing a clear trend: shrinking gross margins and weakening revenue per shipment.

According to new Q1 2025 data shared by Tim Higham, CEO of AscendTMS, and sourced from TIA, the past two years have marked a steady downturn in profitability, even as shipment activity has varied significantly by brokerage size.

Key Takeaways from TIA’s Q1 2025 Report:

Overall Sector Trends:

• Gross Margins fell from over 16% in Q2 2023 to just above 15% in Q1 2025.

• Invoice Amount Per Shipment hit a low in Q3 2024 before a slight recovery.

• The data reflects a prolonged period of pricing pressure and margin compression industry-wide.

Performance by Brokerage Size:

Small Brokers (< $16M)

• Revenue: +12.6%

• Shipments: +30.8%

• Gross Margin: -4.7%

• Invoice per Shipment: +62.6%

• Interpretation: Strong top-line and volume growth, but margin decline suggests rising costs or a pivot toward higher-service freight.

Mid-Sized Brokers ($16M–$100M)

• Revenue: +14.0%

• Shipments: +13.3%

• Gross Margin: -11.6%

• Invoice per Shipment: +0.6%

• Interpretation: Shipment growth offset by steep margin erosion—reflecting pricing inefficiencies.

Large Brokers (> $100M)

• Revenue: -13.8%

• Shipments: -10.4%

• Gross Margin: -1.4%

• Invoice per Shipment: +2.3%

• Interpretation: A drop in both volume and revenue with only minor relief from invoice pricing.

Industry Outlook:

• Total Industry (YoY):

  • Shipments: -9.6%

  • Revenue: -11.0%

  • Margins: -3.5%

What This Means:

While smaller brokers are outperforming on growth, no segment is immune from declining profitability. Technology, particularly AI and automation, is expected to continue eroding margins in the long term.

Source: Tim Higham/LinkedIn | TIA

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