Join President of Tallgrass Freight Sean Richardson as he shares quarterly insights and key updates on the freight market and on our company. This quarter, Sean discusses the freight recession, double brokering and fraud and the industry outlook as we move into the second half of 2024.
As we’ve moved through the first half of 2024, many of us have faced uncertainty, wondering when the freight recession will come to an end. The common theme is no one has a crystal ball. It’s impossible to predict when the market will return to normal, moving away from the supply and demand crisis that we’ve seen over the last two years. That said, we believe the outlook is strong. We’ve looked forward to the second half of 2024 as a light at the end of the tunnel, and I think we’re finally starting to see that.
Signs of Hope: the End of the Freight Recession
Now I’m not ringing the bell and saying everything’s going to flip overnight. But we’re starting to see some interesting data points leading us down a more hopeful path. For Tallgrass Freight Co. specifically, we’re seeing an increase in freight volume year over year, even when comparing to pandemic levels, when demand was at its peak. Other data points showing improvement include load count per day, load count per month, and capacity of truckload, van and flatbed ratios.
I always say, freight is a commodity. And as a commodity, the market will self-correct. We’ve been seeing that over the last 18 to 24 months. Currently, we have an oversaturation of capacity where there are almost too many trucks on the road, and that’s driving prices down as the need to restock due to COVID-19 port congestion issues is buffering out.
Double Brokering and Fraud in Freight
I’d be remiss if I didn’t mention another major trend in the freight industry today: double brokering and fraud. This seems to have been another byproduct of what we saw in the pandemic. We seem to come across more and more potential fraudulent shipments, stolen shipments or double brokerage shipments every single day. Carriers are regularly getting scammed into hauling loads for make-believe freight brokers who augment documents to look like they’re coming from Tallgrass or other legitimate freight brokerages, and then end up not getting paid.
To avoid fraudulent loads and double brokering, it’s vital for freight agents to take some extra time to vet carriers. At Tallgrass, we’ve got technology in place to help, as well as compliance departments to vet and monitor carriers. Combatting fraud also comes down to simple things, like checking emails and phone numbers associated with brokers or carriers, verifying the tractor-trailer number on a truck and confirming the driver’s name provided. Beyond that, regulating bodies such as the FMCSA and DOT have big roles to play in truly shutting the door to fraud and making it difficult for scammers to get away with their schemes.
The Potential Noncompete Ban
Noncompete agreements have long been a fixture in the freight industry. These agreements restrict an agent’s ability to seek new opportunities immediately after leaving their current role. But a dramatic change might be on the horizon, with the proposed ban on noncompete agreements.
If it takes effect, the noncompete ban could bring a new era of professional freedom. For example, if an agent currently at Broker A feels Broker B has more to offer, they would be free to pursue the best opportunities available to them, with no repercussions. As a result, we would see a more dynamic and competitive job market.
This could have far-reaching effects on the freight landscape. From an employer’s perspective, there would be more of a responsibility to hold up their end of the bargain. Freight agent programs would need to ensure they’re providing an environment where their talented agents want to stay and want to maximize their potential. We’ll be keeping our eye on this potential ban.
The Tallgrass Outlook
From my perspective as a leader in freight, I look at the next 12 months as an opportunity for growth. Month over month, our freight agents are increasing the amount of new business that they’re bringing on, compared to what they’ve done year over year. We see it every day: the demand for freight brokers is great.
At Tallgrass, the outlook of the company is as strong as it has ever been. Our new business count has not dropped once, in spite of the tumultuous market — and that’s really a testament to our agents. We have highly talented individuals running independent freight agencies at Tallgrass, and they’re constantly looking for new ways to grow and diversify their business. These agents are backed by our best-in-class back office team too, ensuring they have everything they need to thrive.
When freight professionals are looking to make a decision about developing their career or developing their freight agency, it’s important to partner with the right company. It’s important that partner has a strong track record of doing things the right way, has good credit and a long history of success. With more than 10 years of successful growth year over year, there’s no place quite like Tallgrass to maximize your potential. We invite freight agents to bet on yourself, join us and make the rest of 2024 their best yet.
