Load brokers pinch transporters’ margins

South Africa’s rapid growth of unregulated digital and traditional load broking platforms is driving price undercutting and escalating financial and operational risks for local transport operators. Industry experts warned at the Road Freight Association (RFA) Convention in Ballito that the phenomenon was severely compressing already thin margins and undercutting legitimate operations. The commercial realities and mounting operational risks of this phenomenon were a focal point of a panel discussion moderated by Professor Hugo Pienaar. The discussion, titled Shifting gears or stripping gears – is load broking breaking the freight engine? brought together key industry voices to debate whether these platforms are an essential modern logistical tool or a destructive force eroding sustainability. Delegates noted that load broking operated similarly to the services provided to clients by bond originators, acting as middlemen to source and aggregate load price options. However, while banking and bond origination sectors are highly regulated, the load broking industry remains completely unregulated. “Unlike the bond originators, there isn’t a formalised structure for these types of businesses that operate within the industry,” said RFA CEO Gavin Kelly. For example, the National Bargaining Council for the Road Freight and Logistics Industry does not inspect load brokers, because they are not required to be registered with council. For small and medium enterprises (SMEs), entering these platforms can trigger a desperate spiral. Entrepreneur Prayleen Bailey, founder of courier firm Krosworx Trading, highlighted that while brokers acted as industry aggregators to quickly pull fleet capacity for demanding customers, the unintended consequences for small truckers were severe. “We start looking at dropping prices because you want that vehicle to move, so that is one of the unintended consequences, and it just doesn’t become sustainable in the long run,” Bailey said. “The broker takes a margin on the top, and in some instances, when it comes to payment, they sort of disappear,” she said. Exporters and end users are also being exposed to severe cost inflation and risk through multi-layered intermediaries. Removal firm Britannia MD, Ryan Kruger, focused on the exporter’s perspective, noting that unaccredited brokers frequently approached transporters for pricing simply to flip the move on to someone else at a massive profit margin. “What we’re finding is the trend is getting more and more that there are people that are unaccredited or … don’t have any affiliation to anybody that are getting companies to do their moves, but adding maybe 20-30% to the prices,” Kruger said. “If something goes wrong, that person’s gone and run with the money; you may end up carrying the weight and consequences.” Kelly questioned the hidden compromises behind the slashed rates load brokers are squeezing from transporters “What’s not being paid for? Is it labour? Is it simple stuff? Is it tyres? Is it brake linings? Is it maintenance? Is it adulterated fuel? What is it that is being cut out of the cost structure?” He said as a result road safety was probably also being compromised. Kelly added that the RFA was escalating the issue to national authorities to protect vulnerable operators and drivers. The association had engaged with the Department of Transport and the Department of Trade, Industry and Competition to discuss the potential oversight and regulation of load brokers, he said. LC