Ikea v. Convoy: Lawsuit reveals glimpse at contract rates, broker margins

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Ikea's bombshell lawsuit against Convoy, the dead and now back again digital freight brokerage, revealed not only that many carriers remain unpaid by Convoy, but also how much Convoy charged Ikea to run certain lanes.

A Transport Agreement between Ikea and Convoy, submitted as Exhibit B in Ikea's interpleader lawsuit against Convoy, breaks down the lanes, rates, fuel surcharges, and more that the big broker agreed to with the mega shipper. 

Given how hard some owner-operators have had to fight for a shred of broker transparency, with one owner spending months petitioning the FMCSA to compel TQL to share its transaction data, we thought to shine light on this trove of unfiltered, not-for-your-eyes-as-a-spot-carrier rates data. 

[Related: FMCSA investigates TQL as fight over broker transparency rages]

If Overdrive's analysis of the document is correct, and we did have to make a few assumptions, then it shows the dream of the $4/mile load is still alive. At the very least, a big shipper was willing to pay that in October of 2023 when the contract was in force. 

Download the Ikea-Convoy Transport Agreement document at this link and look for yourself. (FYI distances/volumes there are expressed in kilometers/liters.)

Most of the lanes Ikea contracted to Convoy ran from the retailer's Lebec, California, location to other spots in the Golden State, as well as some up to Portland, Oregon, and Draper, Utah. Another big chunk ran out of Bolingbrook, Illinois, all across the Midwest and back West. 

A scattered few short hauls across the Los Angeles area paid Convoy up to $20/mile for 20-mile runs in the city.

Overall, Convoy's contract with Ikea beat the spot rate averages near every time, but that's to be expected. In a down market, it's typical for contract freight to fetch a higher rate than spot freight. 

Also, on average, a spot market load from a broker has a 15 or so percent bite mark out of it from the broker

Below, find a table that shows a snapshot of a few lanes in October 2023, comparing the DAT spot-rate average for that lane to what Ikea agreed to pay broker Convoy under contract on the same lane.  

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DAT Chief of Analytics Ken Adamo, who is on something of a crusade to improve rate average data for small carriersprovided the spot rate data in the chart above. 

[Related: Broker margins, rates data, transparency: What owner-operators really think]

The numbers reveal that broker Convoy might have gotten nearly 80% more than the carrier lane average on some loads. And that run from Lebec to West Sacramento, California, the one Convoy appears to have contracted 24% below the spot market average for the time, looks like a pretty straight shot up and down I-5. But at just $2.59/mile between Ikea and Convoy, one wonders what might have been left for the carrier. 

This broadly tracks with the analysis of broker margins Adamo performed in January -- sometimes even brokers lose money. What was Convoy's margin on these loads and lanes? Only Convoy, or any carrier that hauled one of these lanes at the time, would know. These numbers don't definitively tell the story of Convoy's actual margins, only what Ikea and Convoy agreed to.

Yet perhaps it serves as another reminder as an owner-operator or small fleet to pursue direct customers yourself -- the rates do seem a lot better. 

[Related: Direct freight: Delivering a modicum of consistency in a turbulent market] 

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