How did Freight Transportation become so Broken?
The amount of Freight Fraud, Theft, and Carriers/Drivers not compliant with State and Federal transportation regulations is at an all-time high. How did we get here?
We can start with deregulation in the 1980s. Deregulation opened the market — lowering costs but also fragmenting it into hundreds of thousands of small players, which is viewed as both a good thing and most recently, a bad thing.
In the past 10 years or so, especially during covid, the industry saw explosive growth in load boards, digital brokers, and online dispatch services. Fraudsters exploit the system by double brokering (reselling a load without the shipper’s permission). Others use identity theft, stealing a legitimate carrier’s MC number and collecting a load payment or even the load itself.
These types of scams exploded once transactions moved fully online, because verification became much harder while volume ballooned.
During this time the basics of moving freight, a Shipper (Owner of Freight) hiring a Carrier (Owner of Conveyance of Freight) to transport goods become convoluted.
Everyone points the finger…yet ALL parties are responsible for the mess.
Let’s Start with the primary target - Freight Brokers, since they are the trusted “middle man” who coordinates the freight movement.
Freight Brokerage was a $50B market in 2025 with the biggest brokerage bringing in $17.7B. But the market is primarily small to mid size brokerages. There are many small players in the Freight brokerage market and I happen to be one of them.
The pressure to scale (Grow revenue) has caused many Freight Brokerages to convolute the management of their freight. Traditionally a business grows by adding employees, buildings, computers etc and the company owns the process. That takes investment, resources, and training that cost the company money so to avoid these liabilities and still grow quickly Freight Brokerages started “Agency Models”.
I know a lot of Freight Brokers who grew their business simply by adding other Freight Brokers as agents. Do you know that there are Freight “Agencies” of Brokerages that also hire outside “Agents”?
So these are agents of an agent of an agent! lol
So now who is managing the freight?
Freight Brokerage
🠋
Freight Agency of the Brokerage
🠋
Independent Freight Agent
In essence, Freight brokerages have distanced themselves from their freight by 2 layers in this model.
Everyone? Lol
So when this 1-person brokerage adds 9 agent brokers under their authority they can say, hey look my company is growing!
But wait, The Freight Brokerages are not the only ones running this model.
The Carriers decided at this same time, the best way to grow and scale, is the same way the brokers did, don’t buy more trucks, add w2 drivers, terminals etc. why would we do that when we can “agent” out our work to grow the company.
How many trucking companies are actually 1 owned truck with 1 driver but actually run a 10 truck operation through agency and lease ons?
So this one person Carrier adds 9 agent lease on carriers under their authority and they can say, hey look my company is growing!
You find the carriers have the same convoluted model as the brokerages. In fact this one person carrier now is just acting as a broker to move loads on his lease on trucks so now he needs a dispatch service because he is driving.
How many Carriers, who operate as 1 person Owner Operators think I’ll expand my business by adding another Lease on Truck as an agent?
Everyone? Lol
Here is what this model looks like (look familiar?)
Carrier
🠋
Carrier
Dispatch
🠋
“Lease On” Agent Carrier
The most interesting thing that this carrier model caused was the growth of outsourced dispatch services. I could write a whole separate long article about the fraud and issues with these services at another time, because there is a lot involved, but I want to stick to just the issue of each party, the Brokers and the Carriers convoluting their services through “Agency” models.
I started my brokerage in 2012 and have resisted growing my brokerage through an agency model. It’s funny because I am not an agent, or an agency of a brokerage and don’t believe in the agent model so have no agents myself, but when people ask me today asked should they start their own freight brokerage I would say start out as an agent! lol
But back to how this got broken.
So if I am a shipper and I need to move goods today and I book my load with my local Freight agent, this load might run through a 6 layer distribution model like this!
🠋Independent Local Freight Agent (Book Freight)
🠋Freight Agency of the Brokerage
🠋Freight Brokerage
🠋Carrier
🠋Carrier Dispatch
“Lease On” Agent Carrier (Actually Moves the Freight)
By adding so many layers into this process, the industry opened itself up to become an easy target for fraud.
I travel around the country a lot. I meet with many Brokers and Carriers (Owner Operators).
I have met Truck Drivers who are “leased on” to a small trucking company but have never met the person who hired them or the person who owns the trucking company.
That tells me the person who leased him on might have only done all his vetting from paperwork.
That means the owner of this trucking company has never seen this truck, the company mechanic has never looked at its road worthiness, he has never met the driver or observed if he was a good driver or not. Yet he has let this carrier lease on under his MC.
I know independent Freight Broker “agents” who have been hired on by Broker agencies and they have never met the person, and in many cases doesn’t even know who owns the actual brokerage.
That tells me the person who hired this agent may have only done his vetting from paperwork.
That means the owner of the Brokerage has never met this agent who represents them, doesn’t know their personality or if they care to follow an SOP of the company. Yet he has let the agent work under his MC!
“Work under my MC” is the driving force of what’s gotten broke in freight management. In the broker and carrier world I see this used all the time. I see posts on social media every day that literally says
You don’t need an MC or DOT number for this load…run under ours!
This story has played out on both sides and has resulted in a convoluted chain of custody (not the legal type) of shippers freight. This allows bad actors to enter into the transaction at 6 different control points on every shipment!
Recently most news about the freight industry has been about Brokers and Carriers shutting down. Ive seen Carriers talk about how "insurance has gotten insane, I can't afford to stay in business" and closing their doors and we all point our fingers at the insurance agencies (another agent of an agent model. lol).
Do you think maybe the insurance went up because you had so many citations on trucks running under your MC that you have never seen, or being driven by drivers with little to no experience operating under your MC?
This subject is so pervasive, but I wanted to just simplify it down to show even the people who create businesses with the best intention to manage freight on behalf of their shipper clients, Brokers and Carriers, have allowed the process to slip away from their control.
There is this pressure on both small to mid sized and even larger brokers and carriers to scale and grow. But the last decade has been about growth through using others not through ownership.
For brokerages the growth is not from adding w2 employees, computers or offices.
For carriers the growth is not from buying trucks, hiring w2 drivers or buying terminals.
The growth has been from adding agents and then those agents, adding agents and those agents, adding agents. Adding people who are part of the process but don’t ‘own’ the process results in a broke system.
And on a basic level that’s how freight transportation in this country became broken.
#PapaFreight
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