/tr/lp/blog/key-terms/2023/freight-broker
Understanding Shipping: What is a Freight Broker?
19/12/2023
A freight broker acts as an intermediary or contact point between a shipper and a carrier. With so many moving parts involved in the shipping and logistics process, in some instances, it can be helpful for carriers and shippers to work with a freight broker to facilitate a smooth handover of cargo and help minimise the potential for deadlines to be missed.
The Distinct Roles of Freight Broker and Dispatcher
Because they can often perform similar tasks, it can be easy to confuse the roles of a dispatcher and a freight broker. However, there are a few key differences between the two jobs and the role that they play in the transportation process.
While a freight broker is responsible for connecting the shippers with the carriers, a dispatcher works exclusively with the carrier to handle the receipt and transmission of the location of cargo during transportation.
Dispatchers are also not required to be licensed or insured; however, freight brokers are. All brokers will need to register and be licensed by a federal government body.
Another key difference is the way that invoicing and payment are issued for a freight broker and a dispatcher. As a dispatcher represents the carrier, they take a percentage of their payment as a result. Conversely, freight brokers operate independently, meaning they invoice the shipper and pay the carrier. Their profit comes from the difference between the freight rate and the price paid by the shipper.
Charting the Path to Success: The Duties of a Freight Broker
As the liaison between shippers and carriers, the main duties of a freight broker will vary depending on the client. However, their main day-to-day responsibilities include:
- Working with clients to establish their specific shipping needs.
- Collating shipping quotes from carriers and sharing these with clients.
- Booking freight services through carriers on behalf of clients.
- Coordinating the pickup and drop off of shipments.
- Work with shippers, carriers, and dispatchers to manage schedules.
- Ensure necessary freight paperwork is completed and approved ahead of transportation.
Vital Skills for a Freight Broker
A successful freight broker will need to be customer orientated and have a good understanding of the supply chains across different industries. Other skills needed by freight brokers include:
- Strong strategic and organisational skills.
- Knowledge of supply chain management.
- Familiarity with different types of software including logistics tools, and customer relations management spreadsheets.
- Good problem-solving abilities.
- An understanding and appreciation of the different shipping regulations worldwide.
- The ability to multitask.
- Good communication skills.
If you’re looking for cargo or logistics support, it’s vital to choose a shipping partner or freight broker who has a detailed understanding of different global and local markets.
Handling Logistics: The Unique Roles of a Freight Broker and a Freight Forwarder?
Similarly, there can often be confusion between a freight broker and a freight forwarder. Again, although both help manage the transportation of freight for a third party, there are clear distinctions in their roles and responsibilities.
A freight forwarder is responsible for organising the transportation of freight, while a freight broker is an intermediary between the shipper and carrier. Freight brokers are contracted to work with carriers to schedule how and when a client’s cargo will be transported or shipped.
Another contrast between the roles of a freight forwarder and a freight broker is the handling of cargo. Freight forwarders take responsibility and liability for cargo storage and preparation for shipping, while the role of a freight broker means they don’t.
Equally, freight forwarders are often involved in a variety of tasks to prepare cargo for transportation including preparing customs paperwork, warehousing and storing cargo, and preparing it for shipping.
Different clients and industries have different requirements for their cargo transportation. Because of this, there are different types of freight brokerages, all of which have various advantages and disadvantages depending on the needs of the customer.
Traditional freight brokerage
One of the most common types of freight brokerage is the traditional freight broker, which is made up of a sales team and carrier representatives.
The sales team is responsible for finding new customers and booking loads, while carrier representatives develop relationships with the different carrier companies. One of the main advantages of a traditional freight brokerage company is that they can leverage the skills of both their sales and carrier teams to deliver the best service for their customers.
However, as traditional brokerages don’t own vessels, it can mean that they are unable to guarantee capacity for their customer’s freight.
Agent model freight brokerage
A popular freight brokerage option is an agent model freight brokerage company. Rather than being split, employees or ‘freight agents’ manage every aspect of the process, from quoting the freight to sourcing the carrier and working with the shipper to establish timeframes.
Because of this, agent model freight brokerage companies can offer their customers a wider range of carrier partners that they have built personal relationships with. Again though, it can be difficult to guarantee shipping capacity for clients as companies don’t have any physical carrier assets.
Asset-based freight brokerage
Conversely, asset-based freight brokerage companies are generally trucking companies that have the authority and insurance to act as freight brokers.
This means that while asset-based freight brokers will often source separate carriers, they also have the option to utilise their own fleet where appropriate allowing them to make more guarantees for the customers. However, because of the increased cost of creating a fleet, there can be a risk that customers are not always receiving the best fit or price for their freight.
There are a variety of reasons why some businesses might decide to work with a freight broker. Brokers will monitor different industries for changes in regulations, fuel rates, or emerging trends and often communicate these with shippers and carriers, helping their clients to receive the best service.
If an error arises and cargo is damaged during shipping, freight brokers can also help businesses manage and make claims, reducing time, stress, and frustration for their customers.
Ask MSC
Here at MSC, we provide complete consultation and advice on all your shipping and logistics requirements. Our dedicated teams of experts have decades of experience across different industries, as well as a global spread of contacts with detailed knowledge of local markets. We work diligently to provide specialised solutions for our customers.
Contact us today to explore how MSC’s full range of shipping and transportation solutions could be beneficial for your business.
