What is a freight broker?
A freight broker can help you streamline your processes and help with your workload by arranging transportation for your goods or freight for your vehicles. However, using a freight broker won’t suit every business. A freight exchange enables you to find capacity or freight yourself while building your network and growing your business.
What is a freight broker and what does a freight broker do?
The purpose of a freight broker is to liaise between shippers and carriers to arrange the movement of freight. They can also be called a load broker, cargo broker, truckload broker, or logistics broker. Whatever their title, they act like a project manager to be a single point of contact for both parties and ensure all the moving parts of transportation come together.
They deal with negotiating, finding capacity, and planning routes to streamline processes for shippers and carriers. The freight broker finds loads through their connections over years of working in the industry.
The freight transportation broker can negotiate lower rates because of the volume of shippers and carriers they have access to.
Carrier vs broker
While a freight broker agent or freight broker companies are the middlemen for organising the movement of freight, a carrier is the person who collects and delivers the freight. A freight broker will liaise with carriers to find freight for their vehicles to avoid empty or partial loads to reduce a loss of profits.
Freight dispatcher vs broker
A dispatcher works with a carrier and handles the receipt and transmission of the cargo. Dispatchers do not have to be licensed or insured, unlike a freight brokerage.
Freight broker vs freight forwarder
A freight forwarder does the same job as a freight broker but with more responsibilities. A freight forwarder is a company that arranges the shipment of freight but unlike a broker, they take responsibility for the process. They don’t simply arrange the transportation but can also store goods in their warehouses, transport them, and have responsibility if the freight is damaged or lost.
Freight exchange vs broker
A freight exchange is a marketplace where you can find capacity or freight yourself.
The partners are already vetted, and you begin making your own contacts to ensure you can get capacity or freight when you need it.
TIMOCOM’s Security Net gives you peace of mind that you are connecting with reliable companies. They verify new and existing customers by ensuring specific requirements are met before joining, verifying business documents, and permanent customer monitoring.
Using a freight exchange means finding and negotiating rates yourself but it builds up your connections and gives protection against non-payments and unreliable partners without the fees of a freight broker who cannot guarantee capacity.
The benefits of using a freight broker
Why use a freight broker? There are so many different tasks to ensure freight gets to its location on time, on budget, and meets client demand.
If you are struggling to carry out all the moving parts yourself, then a freight broker could be helpful to take away some of your workload. It may also alleviate some of the stress of trying to find capacity, especially when margins are so tight. A transportation broker also has a wealth of connections that you may not have access to yet. This makes it quicker and easier for them to find capacity or freight whereas it might take you a lot longer and you may not know who to trust.
You may need a freight broker if you are a start-up. A freight broker has experience and expertise that you may not have yet and can help you grow your business.
The disadvantages of a freight broker
While there are advantages to using a freight broker, it is not for all businesses the main solution to find freights or transport carriers. Here are some factors to consider:
Freight brokerage rates
Hiring a freight broker will mean additional expenses for your business. The freight broker arranges for a carrier to transport freight and negotiates a rate which the broker takes a profit from.
No guarantee of capacity
It is the freight brokers' job to find capacity, but they cannot guarantee it. They don’t have any transport themselves; they only arrange this with those who do, so they may not be able to find capacity for your freight. This means you could take a risk on a shipping broker finding capacity but if they don’t it could lead to missed deadlines or a loss of profits.
You can find capacity yourself on a freight exchange without having to pay a freight broker. TIMOCOM offers a trial period, in this way, you can check the loads and carriers before signing a contract.
Small scale
If you are moving freight internationally then a freight broker isn’t the best choice. Freight brokers are usually for smaller scale negotiations and mainly only deal in transport in one country.
Freight exchanges are better for transporting goods internationally as they are on a bigger scale with partners across multiple countries.
Limited logistics network
When you rely on a freight broker, it means you are not making connections yourself. Building relationships with reliable partners is a vital part of business, whatever industry you are in. If you are not spending time creating connections, then you will not be able to grow your business.
It also means you could be dependent on a freight broker and miss out on networking and opportunities that using a freight exchange will provide.
Insurance
While freight brokers have to be insured, freight broker insurance will not include being responsible for anything happening to your freight, unless there has been negligence on their part.
The responsibility of ensuring the safe and timely transportation of freight is with the carrier.
Therefore, you have to trust your freight broker to use trusted carriers to ensure your freight isn’t lost or damaged. Or if you are a carrier, you will bear the responsibility of the freight, should anything go wrong.
Choosing a freight exchange or a freight broker
A freight broker can be a good choice if you are operating on a small scale such as inside one country or if you are struggling to manage all the moving parts yourself such as negotiating rates, finding capacity or freight, route planning, and various other tasks.
However, you do not need a freight broker to find capacity or freight for you when you can join a freight exchange and do it yourself. A freight broker will use a load board or freight exchange too. While it will take time for you to do this, it saves on paying a freight broker to do the same thing and it helps grow your connections. Working directly with a freight exchange allows you to operate independently and reduce your logistics costs. A marketplace such as TIMOCOM has the benefits of a freight broker but there is the opportunity to grow your business by making connections.
It also means partners are vetted and you can integrate insurance into the freight exchange to protect your business.
Why use TIMOCOM’s freight exchange?
TIMOCOM’s freight exchange has up to 1 million freight and cargo spaces available daily in more than 45 countries.
You can find or publish offers quickly to find shippers and carriers. As a shipper, you will extend your network and find reliable business partners across countries. As a carrier, you will immediately reduce empty runs and you can be sure of payment because TIMOCOM has a debt collection department that supports you with this.
Working directly with TIMOCOM’s marketplace helps to reduce costs because you control who you work with and these connections are vetted, which means you don’t have to rely on a broker to grow your business.
If you’re ready to grow your business, then test our freight exchange today.
Tram Trinh Thanh
Marketing Manager Northern Europe
