You’re Only Looking at Half the Rate
Content for this blog came from the TIA Livestream The Other Side of the Rate: Using Shipper Spot Rates to Win Bids
The big picture: Most freight brokers benchmark their performance against carrier costs. Adam Lawhorn, senior analytics consultant at DAT, thinks that’s an incomplete picture and has the data to back it up.
On a recent TIA live stream, Lawhorn made the case for sell-side benchmarking using shipper spot rates, and walked through what DAT’s data actually shows about the relationship between buying well and making money.
The assumption that doesn’t hold up: The conventional logic in brokerage is straightforward: buy below market, add margin, submit the bid, win. As long as you beat the buy side, you’re winning optimally. Lawhorn’s data challenges that directly.
When DAT analyzed account performance against national average spot rates, they found that 53% of accounts buying above market average still beat average margin. And more than one in four total accounts beat the national average margin despite paying above average carrier rates. Meanwhile, more than 12% of observed months showed accounts buying below market but still lagging on margin.
“The buy rate alone is far from deterministic,” Lawhorn said. The scatter in the data is vertical, not diagonal. If cheap buying reliably produced higher margins, the data would tilt from bottom left to top right. It doesn’t.
What shipper spot rates actually tell you: Without visibility into what shippers are paying on the sell side, brokers are missing three things: competitor pricing benchmarks, shipper willingness to pay, and how their margin compares to market margin.
Lawhorn illustrated the gap with a simple two-broker scenario. Both brokers have identical carrier costs. Broker B knows shipper spot rates. On a wide-margin lane, Broker B captures more. On a tight-margin lane, Broker B either wins strategically at compressed margin to build shipper favor or walks away entirely. Broker A, without that context, either leaves money on the table or spends time renegotiating without knowing where the ceiling actually is.
Three things you can do with the data: Lawhorn framed sell-side benchmarking around three strategic opportunities. The first is margin expansion: on lanes where you are buying in the bottom 25th percentile of market rates, shipper spot data tells you there is room to charge more. The second is risk mitigation: on lanes where you are buying above market, identifying that early lets you make a no-bid decision before locking into a money-losing load. The third is volume expansion: on lanes where your buying is roughly at market, pricing just below shipper benchmarks can win you incremental volume with a shipper when that relationship matters.
What the market cycle data shows: The presentation closed with a finding Lawhorn described as structural rather than coincidental. Compressed broker margins cluster almost exclusively at the peaks of spot rate cycles. When carriers have pricing power, they capture a larger share of the shipper rate and leave less for brokers. The starkest example in the data set is the period from 2021 to 2022, when margins stayed compressed for nearly 18 consecutive months while spot rates were at all-time highs.
The inverse is also true. Green margin periods tend to appear early in rate upcycles or during soft markets, when brokers have more leverage on the buy side. In compressed margin periods, spot rates run 30 to 40% higher on average than in healthy margin periods.
The practical implication: tracking margin percentage in real time is not a precise rate forecast, but it is a reliable signal of where you are in the freight cycle. Historically, rates have softened meaningfully in the two quarters following margin compression.
The bottom line: Knowing what shippers pay is not just a pricing tool. It tells you which lanes to fight for, which to walk away from, and where in the market cycle you currently sit. For brokers still benchmarking only against carrier costs, that is a significant blind spot.
