Many shippers question whether or not they should leverage the resources of a freight broker. But the answer is never simple because it will depend on several different factors.
At the same time, what a freight broker does is straightforward. A licensed broker can be an individual, or company, who helps shippers find qualified carriers to haul their freight. They facilitate the movement of loads, handle communication between the carrier and shipper, and track shipments (among other responsibilities) to make the shipping process easier for both parties – the shipper and carrier.
While truckload brokers need to profit off of the negotiated buy-sell spread, or the difference between what the carrier charges versus what’s paid to the carrier, good brokers actually add value rather than detract from the transaction. The value, of course, needs to exceed the broker’s margin.
Despite this, brokers often get a bad rap. Here are four benefits shippers can expect from working with a truckload broker:
- Capacity Connections
Freight brokers can quickly find the best rates for shippers on a spot-basis because they have better access to capacity. An established pool of carrier partners will instantly give most shippers access to better rates and options. Shippers facing issues with capacity can turn to brokers who are in the market every day to find carriers. When your usual carriers fall through, brokers can step in as additional support to find the coverage you need and get your freight on the road.
- Market Knowledge
Just as with their access to capacity, brokers have access to better rate information. Working regularly on the spot-market, brokers understand what drives capacity and rates within the logistics marketplace. They can save shippers money by not only utilizing their carrier relationships, but also their inside expertise to match shippers with the most appropriate carrier at the best rate. Their business is knowing how to match specific carriers with shippers to get the best service and cost for each situation.
- Vetting Capabilities
It’s important for shippers to select carriers who have a good reputation because they operate safely and legally. Freight brokers can confirm a carrier’s safety rating and operating authority through their vetting process, which verifies a carrier’s history through established organizations like the Federal Motor Carrier Safety Administration (FMCSA). They can help you avoid making the wrong hiring decision that could potentially lead to dangerous or expensive outcomes without the proper background check.
- Safety Net
As a logistics professional, you know problems are inevitable. Over, Short, and Damaged (OS&D) issues come with the territory. If you need to file a claim or buy additional insurance due to lost or damaged freight, truckload brokers can provide valuable protection for shippers. Claims are messy and very time-consuming, and a licensed and credible broker will assist you with the process while preventing common mistakes.
Shipper’s priorities are always to maximize service for the lowest possible price. Freight brokers can play an integral part in achieving these objectives, and shouldn’t be viewed as just a way to find rock-bottom rates. Used correctly, brokers help shippers overcome capacity issues, leverage market knowledge, find better carriers, provide liability protection, and ultimately improve delivery service to their customers.