What is Freight Brokerage? Here's What You Need to Know

Freight Broker

Freight brokerage is a distinct line of business that organizes freight orders and forwards them to freight carriers. Don't get confused with the freight forwarding industry, as it does not own vehicles or storage facilities. 

Thus, freight brokerage is best compared to a freight exchange that forwards freight orders to permanent or occasional carriers. As a result, the freight broker is also the principal and, as such, the carrier's invoice recipient. Okay, don't get puzzled up; let's break everything into parts and understand it in-depth.

What is Freight Brokerage?

A freight brokerage acts as a common ground for the shipper, who needs to move their cargo, and the carrier. A freight broker can equip a shipper with the truck and trailer capacity to get their stock out the door and to its destination using a network of trucking companies.

Long story short, the freight brokerage business is all about relationships. So, the shipper relies on the brokerage's network of carriers to transport their shipment. This process saves each shipper time that would otherwise be spent coordinating with and selecting a carrier directly. Instead, any shipment that is dispatched through a freight brokerage is overseen from start to finish by that broker.

How Do You Differentiate Between a Freight Brokerage and Carrier?

A freight brokerage acts as a middleman like any other commodity broker in the most basic terms. However, in this case, the negotiated product is transportation services rather than insurance or securities. Who owns and manages the equipment distinguishes a freight broker from a carrier. Freight brokers do not own trucks or employ drivers; only carriers do.

A freight broker is a person or business planning the delivery and transportation of goods without acquiring the cargo. To accomplish this, a shipment is contracted to be picked up and delivered by a third-party carrier.

How can a Freight Broker Help You?

A person with a freight broker license can help you in a lot many ways, like

Cutting Costs

Cost-related concerns? It's not just you. Profit margins are everything to shippers, and one of the most common reasons they hire freight brokers is to cut costs. 

Freight brokers have the knowledge and resources to streamline your supply chain, identify quick wins that lower your expenses, and pass the savings along to you. Furthermore, since freight brokers already have connections with other businesses and handle loads much larger than your company's cargo, they can take advantage of bulk discounts that will also help your company.

Relationship building

The freight broker you work with will forge a reliable business connection with you and will also have connections with transportation providers. These connections foster a network of productivity and help keep the level of service that ensures each participant in the process is valued.

Extensive carrier network

Brokers with more than two years' history typically have carrier networks with more than 10,000 authorized carriers. They can connect with shippers using LTL (less than truckload), intermodal (rail), air, teams, and specialized machinery. An average carrier has a hub in one or more locations and a limited number of trucks and drivers, but brokers are not subject to the same restriction.

To Sum Up

So, if you are a freight broker with a freight brokerage license longing to be hired, get an edge with the latest technology like TruckSmartz's fleet management system. If you'd be using super efficient trucking software, your chances of landing a good business would definitely increase. 

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