IN THE NEWS: The Unpopular Trends and Hiccups for the New Year | Check Call with Josh Allen

FreightWavesTV

January 21, 2025

Mary O'Connell

FROM THE INTERVIEW: Today, we welcome back Josh Allen, CCO at ITS Logistics. Welcome back, Josh," says O'Connell.

"Thank you, Mary. Glad to be here," replies Allen.

"I'm excited for today. I mean, we've done some looking into 2025, some kind of predictions for the market, but this one, this one we're getting, we're diving in really deep and getting some spicy takes, and I am here for it," says O'Connell.

...

“Well, now that we've kind of come out of a less-than-desirable freight market, it's still not going gangbusters. I have a hunch that this year, we'll see a lot of smaller freight brokerages really struggle. And it might be the year of a broker bloodbath—of some of those that came in in the pandemic, looking when the market was hot. I see [them] struggling to last throughout the year. Obviously, some of our legacies and some of our mega large brokerages, they're going to be fine. But this is more towards those smaller ones that said, ‘oh, we can make a lot of money doing this…’” says O’Connell.

“I understand what you're saying—is there an impending broker bloodbath?” Allen asks.

“Yes,” O’Connell replies.

"I think I read something else this morning that was something about 'carrier revenge' in 2025,” Allen recalls.

“That's kind of the general thing that fueled this, because I was like, okay, if all these carriers are going to come back and say, 'I'm not like, I'm taking all these increases, I'm not backing down any of my rates.' And shippers are like, 'Well, I'm not paying, I'm not taking the 13% increase.' That kind of leads brokers in the middle of like, 'But why can't we all just get along?'” says O’Connell.

“Yes,” Allen agrees. “So herein lies the point in the cycle for freight brokers where ‘the squeeze’ is on. It's just a matter of when it comes. It's going to come. There's just no challenging that. When is it and how long is it going to last? And what's interesting about this is time matters, okay? And folks need to think about this. We certainly are thinking about this at ITS, and we're preparing for it. You know, bid season is right now. Also Q1. How are you going to price? How are you going to price appropriately? Are you going to build in this idea that the recession, freight recession is over, and that everybody is basically projecting what they want into the environment of rates are going to increase? Well, maybe that's true. But I guarantee you that some folks will have a differing opinion, and will take a different direction. So then you tie back to freight brokerage economics, or just managing those P&Ls. There are many organizations out there that are struggling, or they are maybe just getting by, and they're kicking the can in terms of their financials down the path. And they need cash flows, they need margins, they need the ability to make payrolls, etc. And so there's an opportunity if somebody zigs towards raising rates, somebody else might zag and lower rates or keep it the same, so that they can keep freight for a little while longer. Inevitably, the squeeze happens, and how long can you withstand it?”

“So that's just kind of the traditional broker, you-haul, you-call, we-haul type of environment. What gets really interesting to me is you can withstand all of the squeeze if you've invested in the business,” explains Allen.

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