Is Freight Brokerage Broken?

As Transportation Secretary Sean Duffy takes on a number of scandals plaguing the trucking industry, Danielle Chaffin explains one part of the system driving (so to speak) a flood of cheap labor.

This is a guest post by Danielle Chaffin, the Founder of Highway Veritas. Danielle also works in trucking fraud & risk analysis. Her Substack is MaybeDanielleee https://substack.com/@maybedanielleee

America’s trucking industry is in crisis. Fatal crashes involving unqualified, illegal drivers dominate headlines. A four-year freight recession has bankrupted hundreds of trucking companies and forced freight rates to historic lows.

When a crash happens, the truck driver takes the spotlight. Yet long before the collision, a series of less conspicuous decisions determines which trucking company is awarded freight, at what rate, and under what standards.

Freight doesn’t always move directly from a shipper (seller, manufacturer, or supplier) to a trucking company. Licensed intermediaries, known as freight brokers, sit in the middle. They do not own trucks or employ drivers. They match freight with capacity inside a system that rewards speed and price, with limited accountability.

There are good brokers and bad brokers, just like there are good and bad trucking companies.

Deregulation & Proliferation of Brokerage

The Motor Carrier Act of 1980 fundamentally reshaped trucking, as Jimmy Carter prioritized deregulating transportation.

Pre-1980, rates and routes were heavily controlled by the federal government. Entry was limited, and collective rate-making operated under antitrust protections, allowing carriers to coordinate pricing within a stable framework. Competition existed, but inside guardrails designed to maintain market stability.

The 1980 Act dismantled much of this framework. Barriers to entry plummeted, the independent freight brokerage was formalized, and competition intensified. The increase in trucking companies underscores the scale of the transformation. In 1975, ~18,000 trucking companies operated in the United States. By 2018, that number had reached roughly 758,000 registered motor carriers. Today, it exceeds one million.

The intent of deregulation was to increase competition and reduce costs. In many respects, it succeeded, but open markets struggle to self-regulate when confronted with massive public safety risks, rampant opportunities for fraud, and reckless operators who undercut responsible ones.

How Brokers Operate

To operate, a freight broker obtains authority from the Federal Motor Carrier Safety Administration and must maintain a $75,000 surety bond. Beyond that, regulatory obligations are minimal compared to those imposed on motor carriers.

At its core, a freight brokerage is a high-speed, volume-focused sales organization. On the customer side, brokers secure freight from shippers through established relationships, negotiated contracts, or competitive spot market bids. On the carrier side, brokers source capacity (trucks) through similar channels: relationships, contracts, or load board postings and competitive spot rate negotiations.

Technology supercharges this process. Digital load boards, API-driven carrier onboarding, and vetting platforms verify authority status, insurance filings, and safety data in seconds. If the system confirms active authority and valid coverage, the load is booked automatically.

This technology means conversation with a dispatcher, let alone the truck driver, is often unnecessary. The crucial human layer that once introduced friction, intuition, and screening has largely been replaced.

Theoretically, this streamlined, frictionless process increases efficiency, lowers costs, and speeds up the supply chain. This model functions well when carriers use professional, safety-conscious drivers and keep up high standards, and when brokers diligently select fleets to move the freight. Regrettably, this ideal scenario is frequently absent.

How Brokers Make Money & The Race to the Bottom

Brokers hold the money. A food distribution company needs a truckload of goods moved from Baltimore, Maryland, to Chicago, Illinois. They agree to pay the freight broker $1,900. The broker finds a carrier that can handle the load and agrees to pay them $1,500.

The broker tracks the truck from pickup to delivery, invoices the shipper, and later pays the carrier. The shipper pays the broker $1,900, then the broker pays the carrier $1,500.

The $400 difference is the broker’s “margin” and is the economic incentive structure of the transaction.

In competitive markets, that margin is constantly under pressure. Shippers push for lower transportation costs. Brokers compete aggressively for volume. As cheap, excess capacity floods the market, as it has in recent years, shipper rate expectations reset downward.

That cheap capacity often comes from trucking companies that exploit drivers with substandard pay, deferred maintenance, recycled operating authorities to dodge scrutiny, and operate with minimal training or regulatory compliance.

Since 2019, the market flooded with non-domiciled CDL holders, significantly increasing capacity. This influx gave brokers a wealth of low-cost options, helping to sustain margins even amid falling costs. These operators dramatically undercut rates, effectively establishing a new, lower pricing floor for the industry.

Corner-cutting competitors offer rock-bottom rates that consistently price out carriers who invest in safety, training, and compliance. The responsible carriers simply cannot compete without eroding their own viability.

Brokers, squeezed by thin margins, gravitate toward the lowest-cost option, despite the safety risks. After all, the lower the cost of the truck, the better the margin.

The Accountability Gap

Brokers don’t drive the truck, but they do choose which carrier hauls the freight. Unsafe carriers stay in business because someone continues to give them freight.

The U.S. Supreme Court is evaluating whether the Federal Aviation Administration Authorization Act (FAAAA) preempts state negligence claims against brokers for selecting unsafe carriers in Montgomery v. Caribe Transport II, LLC. A ruling either way will resolve jurisdictional chaos and potentially reshape broker risk exposure when giving freight to questionable carriers.

Meanwhile, the chameleon carrier epidemic is real and rampant. Fraudulent operations shut down one company only to reincarnate with a new name, and the system allows it. The Federal Motor Carrier Safety Administration (FMCSA) must step up aggressively to purge bad actors from the system and block re-entry.

Recent FMCSA actions show promise, but fall short of the decisive hammer needed. Under Transportation Secretary Sean P. Duffy and Administrator Derek Barrs, the agency has ramped up enforcement.

• English-language enforcement was tightened in May 2025.

• In February 2026, the agency finalized stricter limits on non-domiciled CDL issuance and renewal.

• Hundreds of non-compliant “CDL Mills” have been removed from the federal Training Provider Registry.

• Proposed rulemakings target chameleon carriers through identity verification, automated fraud detection, and registration reform.

Securing the Freight Chain

Although many brokers operate with discipline, verify beyond the minimum, and refuse questionable capacity, the system incentivizes speed and price over safety.

Every truck on the road represents a chain of decisions made long before it’s driving on the highway. Shippers are responsible for the partners they use, whether broker or carrier. Brokers are responsible for the carriers to whom they assign freight. Carriers are responsible for the drivers they put behind the wheel and the safety of their equipment. States are responsible for the drivers they certify with a CDL. The FMCSA is responsible for authorizing which carriers get to operate.

Achieving safer highways across our country depends upon shared commitment and accountability from all parties involved: shippers, brokers, carriers, State agencies, and the FMCSA.