You are a carrier and all of your trucks are out on the road, but another customer has a last minute full truckload (FTL). You don’t want to lose out on the business. What do you do?
You are a shipper and the carrier you have been using for 10 years doesn’t have the equipment to accommodate a new product that needs to be transported. What do you do?
An answer to both questions is to outsource the search for trucking companies by using a freight broker to fulfill the loads.
1. What is a Freight Broker?
Where an asset-based company, or carrier, owns trucks that are used to transport goods, a freight broker does not own any trucks or assets. Brokers build relationships with carriers and will reach out to them to complete loads that need to be filled by their shipping clients. Broker companies are a resource that shippers and carriers can use to send freight to receivers, as they serve as a middleman by connecting shippers and carriers.
2. What's the Difference Between a Freight Broker and Dispatcher?
Although the tasks of a broker and dispatcher seem similar, the biggest difference between the two jobs is who they work for.
A freight broker can work for both the shipper and carrier and, based on the network of relationships they have built, can connect carrier companies with shippers to get their freight moving.
A dispatcher works for the carrier and organizes loads using the drivers that work for the company who employs them. Although dispatchers and freight brokers can work together, they work for different entities, but have the same goal: get trucks and cargo moving as efficiently and effectively as possible.
3. Why Use a Freight Broker?
For the Shipper
Shippers don’t have to be limited in how products are delivered to customers. Here are a few reasons why using a freight broker could be beneficial to your business:
Time Saver
- Shippers don’t need to worry about finding carriers to fill large loads when they can easily outsource it to freight brokers, who will take the lead on finding a carrier to fulfill the load.
Emergency Shipping
- Using the services of a freight broker can fill the gap if a shipper’s in-house fleet or go-to carriers aren’t available and they don’t want to lose out on business.
New or Seasonal Products
- A new or seasonal product needs special equipment and go-to carriers do not have the equipment to accommodate this load. Brokers will know who to contact for specialized equipment due to their network.
For the Carrier
A carrier can still use their trucks to move freight for some customers, and utilize brokers for other customers. Here are other ways a freight broker can support trucking companies:
Fill Gaps
- Using the services of a freight broker can fill the gap if a carrier’s fleet can’t accommodate a load requested by a customer and doesn’t want to lose out on business. The carrier can use a freight broker to contract out the work that they can’t otherwise fulfill due to lack of drivers or equipment or because all of their drivers and trucks are already out on the road.
Fill Potential Deadhead Loads
- If a carrier is running a load for a customer and doesn’t want to deadhead, or drive an empty trailer, on the way back to the yard, using the services of a broker is one way to ensure that every mile the driver is on the road is being maximized.
4. Things to Consider Before Contacting a Freight Broker
Still deciding on whether you should contact a broker? Be sure to consider these factors:
Fees
- Using a broker will result in extra fees. In addition to the cost of moving the freight, the broker will charge a fee for their services. Fees range from a flat fee to a percentage of the load.
Communication Gap
- In the unfortunate event that something goes wrong, there can be a gap in communication because your dispatch won’t be able to contact the broker’s carrier as easily as they can communicate with their own drivers. The delay in communication can cause loads to be delivered at the wrong time or place, cause stress, and take up valuable time and effort from your team.
Check Your Agreement
- One thing to consider is that some shippers do not allow carriers to utilize brokers to fill loads. Be sure to consult your transportation agreement or contact the logistics manager before contracting work out.
5. What to Look For When Selecting A Broker
After confirming a company has an active broker authority and running a credit check, a few additional things to consider include:
Reputation
- Look up reviews, ask others in your network which brokers they recommend, who they don’t recommend, and why. Just because a broker didn’t work for a colleague, doesn’t mean they aren’t a good fit for your company’s needs.
Tracking Technology
- If being able to track loads is vital to your supply chain, be sure to let brokers know that this important and ask about their real-time tracking options.
Communication
- What is the communication style of the broker company? Will they keep you updated every step of the way or just let you know when the task is complete, and which option is best for your company? Be sure to ask how they will keep you up to date during the process.
Geography
- Some brokers only coordinate local shipments, while others have extended networks and specialize in interstate or international freight transportation. Consider your company goals and the capabilities of the broker company before moving forward with an agreement.
Whether you are a shipper or carrier, hiring a broker company is a big decision. The role of a broker company is to assist shippers in moving their product through their network of relationships with trucking companies either locally, or sometimes even across the globe. At the end of the day, everyone’s goal is the same: move freight and keep the supply chains moving as timely and cost effectively as possible.
