Business Management

How to Choose the Right Freight Broker for Your Business?

How to Choose the Right Freight Broker for Your Business?

Freight brokers possess the required market knowledge, organizational skills, and TMS and methodologies to streamline business operations and reduce overhead costs by 40%. These professionals work as an intermediary between shippers and carriers to ensure smooth shipment from one point to another. They also help shippers and carriers optimize their businesses in many ways.

If you are new to the industry, you may be overwhelmed by the sheer number of freight brokers operating in the market. While most of them are reliable, licensed, and effective, choosing the right freight broker for your requirements can be challenging.

This blog will cover the factors to remember before selecting the right agency.

Why Partner with a Freight Broker and Not Do Things by Yourself?

You may be an expert in your core business, but you may not know the best way to manage your logistics and streamline your supply chain. A freight broker essentially helps you navigate the complicated system of global logistics, particularly when the number of shipping orders is big.

Things Freight Brokers Do:

  • A freight broker can be a company or an independent professional.
  • They have an expansive knowledge of the logistics and trucking industry and have a first-hand understanding of laws and regulations worldwide.
  • They help shippers find the right carriers, facilitate cargo pick-up and delivery, arrange for shipment based on customer needs, negotiate terms between both parties, and track and manage shipment and update status.
  • If required, they also handle cargo insurance and claims, and other paper works for the shippers.
  • There are three types of freight brokers – licensed companies, independent 1099 brokers, and W-2 brokers.
  • Freight brokers charge based on their services (a small fee or a certain percentage as commission).
  • Many also help shippers collect invoices, proof of delivery, and bills of lading from the carriers for billing processes and solicit the services of factoring companies to ensure continuous cash flow for the shipper.
  • They can also connect shippers with third-party warehousing companies (3PLs) to store stocks.

When do You Need a Freight Broker?

Freight brokers help both shippers and carriers in different ways. For instance, for a carrier, a freight broker can prevent deadhead miles, reduce cost by ensuring route efficiency and supply enough cargo for loads to keep income flowing. On the other hand, freight brokers can help shippers meet deadlines, increase cargo safety, and boost end-customer satisfaction.

Here are some of the important situations for reasons to hire freight broker:

  • When your orders are inflowing, and all your employees are occupied in creating and sending out shipments and tracking them. If this is negatively impacting other parts of your business, such as marketing, production, and customer service.
  • When the cost of recruiting and training in-house staff is time-consuming and expensive than hiring the services of freight brokers.
  • If you experience high demands of products during a particular season and want a broker to scale your shipments and orders with better rates to minimize costs.
  •  If your business is growing and your current storage capacity is not enough, a freight broker can find warehouse space nearby.

Tips to Choose the Best Freight Broker Company for Your Business

As you interview several candidates before hiring an employee, you mustn’t choose the first company you come across for freight brokerage. A freight broker will stay with your company for the long term, help your business grow, and manage your expensive inventory. So, you must consider a lot of factors before choosing the right professional.

While Google can help you locate the top agencies, only you can determine the best. Ask the following questions when evaluating a freight broker’s profile:

1. Is your broker licensed?

Find out if the broker is licensed by the Federal Motor Carrier Safety Administration (FMCSA). A licensed broker will be credibly insured and bonded and adhere to business and safety operational standards set by the law. Verify their license and related documents up front before signing a contract. If your broker is a member or certified in any of the top programs, such as NASTC and TIA, it is an indication that the broker follows business ethics.

2. What is their mode of transportation?

Do check if the company provides different transportation modes besides truckload motor carriers (TL), which is commonly preferred in the USA. Other modes of transport include air freight, intermodal transportation, international ocean freight, and less than truckload transportation (LTL).

You may also want to check whether they have several freight carriers of the same mode. Additionally, if your shipment needs a particular carrier type, such as AC, Non A/C, Cold Storage, etc., will the broker accommodate the requirement?

3. What is the experience of the broker?

Check the number of years of experience the broker has in the logistics and shipping industry. You would also want to make sure that the broker possesses expansive knowledge of the industry you serve, be it manufacturing, oil, or gas. Their years of market knowledge and job experience will help you overcome common freight shipping challenges.

However, for new companies, find out if the broker is licensed, how many employees they staff, how they train their staff, what process they follow, and if the owner has previously worked with any freight broker.

4. What is their insurance and claim support policy?

It is important to find out how the contending broker company manages insurance and processes the claims. A broker should have a thorough understanding of the entire system and must be able to set up insurance specific to each shipping type. Basically, they should be able to offer different insurance options. Besides, a good freight broker will also help you file paper works and communicate with the insurance provider in case of a claim.

5. What methods and tools they use?

Modern businesses require modern solutions. Therefore, it is equally important to finding out what advanced technology tools, CMS, and methodologies the freight broker apply for proactive management. Reputed freight brokers use oracle powered, cloud-based broker load boards or Transport Management Systems to schedule logistics, track loads, and send and receive real-time updates on carriers and drivers through texts, emails, and push notifications.

The bottom line is that your freight broker will be a significant part of your business and might stay for the longest term. An established and reliable freight broker will understand this, provide complete visibility and access to their services, get you the right carrier, and devote their time to scaling your business.

Make sure you ask as many questions as you like and be 100% satisfied before choosing one.

Getting started?? We can help you with your freight inquiries. Get an instant complimentary consultation by giving us a call at 626-296-6892 or 800-929-5589.