Blog · Board and management reporting · Freight brokers and 3PLs
How a freight broker measures gross margin per load from the load ledger's customer rate and carrier cost, rolls it up by shipper and by lane, finds the shipper-lane pairs at or below zero margin that volume was hiding, separates contracted lanes priced wrong from spot lanes bought badly, and ranks the pairs by the margin that a repricing or a carrier change would recover.
A broker's shipper is profitable at 14 percent margin. Inside it, one lane has been moving at a loss for two quarters, because the customer rate was set at a bid when carrier costs were lower and never revisited. The load ledger shows every pair. This guide sets out margin per load by shipper and lane, the pairs the averages hide, the contract-versus-spot split, and the recovery.
Per load:
Margin = customer rate − carrier cost, including accessorials on both sides Margin share = margin ÷ customer rate
Per shipper, per lane, per shipper-lane pair:
Loads, revenue, margin, margin share Lane norm = median margin per load on the lane, all shippers, trailing quarter Recovery = (lane norm − pair margin per load) × loads, floored at zero
Shipper and carrier identifiers only.
Σ loads' margin = gross margin in the ledger, per period Σ shippers' margin = Σ lanes' margin = Σ pairs'
A load with no carrier cost, which is a load not yet settled, fails it and is excluded with a count.
| Shipper 2207 | Loads | Revenue | Margin | Share |
|---|---|---|---|---|
| All lanes | 840 | $1.9m | $266,000 | 14% |
| CHI to DAL | 210 | $480,000 | −$21,000 | −4% |
| ATL to MIA | 310 | $690,000 | $131,000 | 19% |
| Others | 320 | $730,000 | $156,000 | 21% |
| Pair | Customer rate type | Carrier rate type | Lane norm margin/load | Pair margin/load | Recovery |
|---|---|---|---|---|---|
| 2207, CHI to DAL | Contract, set 14 months ago | Spot | $190 | −$100 | $61,000/yr |
| 4471, LAX to PHX | Spot | Contract | $140 | $20 | $14,000/yr |
Shipper 2207's Chicago to Dallas lane loses a hundred dollars a load, two hundred and ten times a quarter, inside a shipper at 14 percent. The customer rate was contracted before the carrier market moved, and the fix is the next bid, with sixty-one thousand dollars a year on the line.
| Customer rate | Carrier rate | Below-norm margin means |
|---|---|---|
| Contract | Spot | Customer price stale; reprice at bid |
| Spot | Contract | Selling below the contracted cost; quoting problem |
| Contract | Contract | Both fixed; renegotiate one |
| Spot | Spot | Bought badly on the day; carrier procurement |
Shipper level only. The losing lane inside the profitable shipper.
Lane level only. The losing shipper inside the profitable lane.
Accessorials excluded. Loads that are fine look negative.
Refusal as the fix. Reprice first; the contract may be worth the lane.
Mapped once, the load ledger produces margin per load, the roll-ups, the pairs below norm, the quadrant and the recovery every month. Covirage builds this from the export as it is. The freight page describes the setup, and the carrier concentration guide covers the carrier side of the same lanes.
The median margin per load on that lane across all shippers over the trailing quarter, from the broker's own ledger. A shipper-lane pair well below it is the finding; the norm is what the broker earns on that lane when the pricing is right.
Sometimes they are the price of a contract that is profitable on other lanes, and the report shows the shipper's total beside the pair. The decision is per pair with the shipper's whole book in view, and it is usually a repricing at the next bid or a carrier change, not a refusal.
Included in the customer rate where it is billed, and accessorial cost in the carrier cost. A load that looks negative on linehaul and positive with accessorials is positive. The split is shown where the ledger carries it.