If you are starting with your logistics business, you may not be familiar with the roles and responsibilities freight brokers assume in the trucking and freight industry. Freight brokers run multiple tasks – they lift the burden of load scheduling and tracking off your shoulders. But most importantly, they act as the key link between shippers and carriers. They allow you to focus on your key business goals while they take care of the rest.
In this article, we would like to cover what does freight brokers do, the different types of freight brokers, how much do they charge, and the reasons why partnering with one will help you streamline your management and run your business optimally.
A freight broker connects shippers with reliable and relevant carriers to haul a load from one destination to another. He assists shippers to schedule freights, including products, materials, goods, and heavy equipment. He acts as an intermediator between the shipper company and the carrier company without actually handling the cargo.
Freight brokers are responsible for creating profitable deals with shippers, planning out logistics, assigning the right carrier company, and implementing the entire load pick-up, transit, and delivery process from point A to point B.
Freight brokers perform multiple tasks – track the shipment, get updates from the carriers regularly, inform the shipping companies of the status, and ensure that the loads reach the destination safely and in time.
Shippers prefer working with freight brokers because they are agile, they act as a single point of contact, they connect with best carriers, they have market know-how, and save shippers time and effort from having to plan, schedule and track truck boards and logistic routes, manage their own work, and communicate with drivers.
Carriers prefer working with freight brokers because they prevent carriers from having deadhead miles by supplying enough loads and optimize their routes.
For a good example, consider freight brokers as real-estate brokers – they act as the middle man between the property owner/ seller and buyer. Besides, they complete all the regulatory and mandatory tasks that require in buying and selling properties on behalf of the buyer, and the owner, including negotiating budget and terms, finding and showing the right property and the right buyer, collecting required documents for processing loan, assisting the buyer is registering the house and completing the sales.
They provide their services by collecting a small commission.
The rates of freight brokers vary based on their experience and their clients. For instance, the freight brokers that support the industry powerhouses charge more. However, you can determine their mean salary based on the below-mentioned types:
– Licensed Brokers: Brokers that own a load broker license, own a registered company, and have trucking and brokering authority fall under this category. They recruit other freight brokers for their businesses as salaried employees. While their income is high and start-up cost is very low, they take great risks in their business.
– Independent Brokers: Also known as 1099 freight brokers, these professionals also broker freight for licensed brokers as independent service providers and not employees. They work on fees and commissions, pay their taxes, and work with multiple licensed brokers at the same time. They increase and decrease their rates based on their services.
– W-2 Brokers: Licensed broker companies, trucking and logistic companies, and other big companies employ W-2 brokers as full-time employees. Their salaries are based on industry norms, and these brokers are eligible for additional benefits, such as incentives, employee insurance, gratuity, PF, and pension plans.
In many ways, they are. Their line of work is almost the same, except they work for different people.
A freight dispatcher works for the carrier company, while a freight broker works for both the carrier and the shipper.
Before choosing a freight broker, it is important to learn the difference between the two and ensure their services align with your business requirements.
A freight broker does much more than finding quality carriers for the shippers and vice-versa. They possess impeccable market knowledge to match the right shippers with the relevant carriers, good organizational skills to ensure shipments are met before the deadline, and great marketing skills to make sure the carriers have enough supply of load to keep them from deadheading.
A good freight broker projects the following attributes:
If you want to reduce cost, save time, streamline operations, focus on core business, or improve your bottom line, you may want to hire a freight broker company.
Most powerhouse industries, such as oil, gas, manufacturing, construction, and mining, do not have the time or expertise to recruit a qualified carrier to carry out their specific cargo-related tasks. For instance, you may not be sure if you can entrust your million dollars’ worth of equipment and machinery to the hands of a new company.
Here’s where freight brokers come into the picture with their expertise. They are tied up with reliable carriers, find the best ones for a given job, negotiate the terms and deadline, and track the shipments until they reach the consignee’s hands.
Carriers earn more by finding more work through freight brokers. Freight brokers supply an endless number of readily available loads to haul. This way, reliable and professional carrier companies can run their small businesses smoothly without seeking work.
Instead of hiring an in-house shipping and logistics team, you can take advantage of freight broker services delivered by exclusive broker companies and save overhead costs and time and money in hiring staff, installing equipment, systems, infrastructure, training staff, etc., running the process.
Your human resources can concentrate on key business values. Besides, you can also reduce the cost of shipping itself by partnering with a freight broker company. The years of market knowledge and the relationship freight brokers have built over the years allow them to close a deal at lower rates than you would receive otherwise.
Depending upon the demand season or specific business need, a freight broker can offer you customized services in different quarters of business. That means you pay for the services you receive and not a dime extra, unlike working with an in-house team. You will be paying a salary every month to employees no matter how the business is at the moment.
A freight broker will give you access to trade secrets, researched insights, and industry best practices in trucking and logistics because that’s what they major in. They will be the first to know about new technology and the latest methods to improve business efficiency. You will also get real-time updates about new leaders and new entrants.
Their expansive carrier network gains a brownie point – you will get different options to choose from in terms of discounts, availability, vehicle choice, and carrier services, which an internal shipping department may not be able to procure.
Freight brokers work in partnership with you – they get paid only when they provide excellent services and vice-versa. Their success will depend upon your business success. Therefore, a freight broker will always put your interest and needs first, streamline your operations, and do everything in their capability to help your company perform better and earn profits.
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