Freight brokers play a vital role in the transportation industry by connecting shippers who need freight moved with carriers who have available capacity. But one of the most common questions shippers and drivers ask is: how do freight brokers make money?
A freight brokerage earns revenue by coordinating freight shipments at a rate that covers carrier costs while leaving a small margin for the broker’s services.
That margin is what the brokerage earns, and it's not a standardized percentage. One broker's margin may be wildly different from another's.
Anderson Trucking Service (ATS) has firsthand insights into how these margins are drawn. Our sister company ATS Logistics is a freight brokerage that has helped shippers move freight efficiently and cost-effectively for over 30 years.
In this blog, we'll use our decades of expertise in the freight brokerage business to help you understand how this model works and how it affects your shipping experience, including rates and service quality.
At its core, the answer lies in managing relationships, information, and pricing efficiently. Let's get into it.
Key Takeaways for Shippers
- Freight brokers earn money through the difference between what shippers pay and what carriers are paid.
- Typical freight broker profit margins range from 10-20%, depending on market conditions.
- A freight broker's margins don't directly impact shipping rates, but it may reflect how efficiently the brokerage operates.
- A successful freight brokerage business model focuses on value (not just price) by improving efficiency, visibility, and service reliability.
- Good brokers build long-term partnerships with both shippers and carriers through transparent pricing and consistent communication.
Understanding the Freight Brokerage Business Model
The freight brokerage business model centers around matching shipments with available carrier capacity. Shippers contact a broker to move their freight; the broker then sources a carrier able to haul the load at a competitive rate. The broker negotiates and communicates with both parties, manages paperwork, tracks the shipment, and ensures on-time delivery.
Freight brokerage revenue is generated through what’s known as a margin spread — the difference between what the shipper pays the broker and what the broker pays the carrier.
For example, if a shipper pays $2,000 for a load and the carrier is paid $1,700, the broker earns $300 in gross margin.
Gross margin is often displayed as a percentage of net sales. Typical freight broker profit margins range from 10-20%, but can be higher depending on the broker and market conditions.
So if your broker's margin is 15%, that means they take away $.15 in gross margin for for every $1 you pay to move your shipment.
What Influences Freight Broker Profit Margins
For the freight brokerage business model, profitability depends on several factors:
- Market conditions: When truck capacity is tight, margins may shrink as carrier rates rise.
- Lane familiarity: Brokers who specialize in certain routes understand pricing better and can maintain healthier spreads.
- Operational efficiency: Technology, automations, and strong carrier relationships can reduce overhead, boosting brokerage profit.
- Service quality: Reliable brokers retain customers longer, which increases long-term margin stability.
The best brokers don't chase one-time profits. Quality freight brokers focus on sustainable relationships that bring consistent freight volume and predictable revenue.
Freight Broker vs. Carrier Pricing: What Shippers Should Know
While both asset-based carriers and freight brokers are transportation service providers, their business models differ, as do their pricing models:
- Carriers own and operate equipment and hire drivers, so they set rates based on those operating costs, e.g. equipment, fuel, drivers, and insurance.
- Freight brokers do not own or operate equipment or hire drivers, so pricing reflects the total delivered cost to move the shipment. Total delivered cost covers the carrier's rate with the broker's margin already factored in.
But wait — if the rate a broker quotes you technically includes their margin, is shipping with a broker more expensive than booking directly with a carrier?
Not necessarily. In fact, the all-in broker rate often ends up being equal to or less than what a shipper would pay working directly with a carrier. Here's how:
- Brokers often have large carrier networks, which lets them find lower rates or better lane matches than a shipper could secure alone.
- Brokers boost efficiency by leveraging technology that helps to manage logistics details and increase visibility, which saves time and administrative costs.
- Brokers assume responsibilities like carrier vetting, insurance verification, and claims support, which protect shippers from costly disruptions.
Each of these factors help to balance your all-in rate with a broker.
If you want to know more about how your specific rates are calculated, ask your broker. Transparent brokerages will clearly explain how each rate is built, ensuring shippers understand the carrier cost, the service value, and the reliability they’re receiving for every dollar spent.
How a Freight Broker's Margin Impacts Your Rate & Service
In most cases, a broker's profit margin doesn't significantly change the total freight rate you pay.
There's a common misconception that a freight brokerage's margin directly affects rates. In reality, a freight broker's margin has less to do with inflating your price and more to do with how efficiently the broker manages the shipping process.
Every broker builds a small margin into their pricing to cover operational costs. This margin generally represents the value of the services provided, not an unnecessary markup.
Market forces — like truck availability, fuel costs, lane balance, and seasonality — have a far greater impact on freight rates than the margin your broker takes.
Transparent brokers work to minimize these market fluctuations by maintaining strong carrier networks, leveraging data-driven rate benchmarks, and investing in technology that makes the process of matching a load to a truck faster and simpler.
In short: the more streamlined and optimized a broker's operations are, the less volatile your rate is likely to be. Those efficiencies help control overall shipping costs while ensuring consistent service quality.
And speaking of service quality: be wary of brokerages offering extremely low rates.
Often, the rate you pay directly correlates with a carrier's ability to execute your shipment successfully. Very low rates can lead to a higher risk of service failure — and in recovering the load and getting it moving with another carrier, you'll end up paying more anyway.
Ultimately, while a freight broker's margin doesn't directly impact your rate, a fair margin does support better visibility, proactive communication, and reliable capacity — which will save you time and money in the long run.
Take a Quality-First Approach to Your Brokerage Network
At the end of the day, freight brokers make money by adding efficiency and expertise to the shipping process. Their revenue comes from the small margin built between what a shipper pays and what a carrier earns — but that margin represents far more than a transaction fee. It’s the cost of coordination, technology, communication, and peace of mind.
A transparent freight brokerage business model ensures both shippers and carriers benefit:
- Shippers gain access to reliable capacity, market-rate visibility, and fewer logistics headaches.
- Carriers receive steady freight opportunities and prompt payment from trusted partners.
When that balance is maintained, everyone in the supply chain wins.
The most successful brokerages don’t focus on maximizing profit from a single load — they focus on building long-term partnerships grounded in trust, performance, and shared success.
That’s exactly how ATS Logistics approaches brokerage. Our goal is to simplify transportation, provide honest pricing, and deliver dependable service that keeps your business moving forward.
If you’re ready to work with a broker that prioritizes transparency and results, reach out to ATS Logistics today to start the conversation.
FAQs About Freight Brokerages & Profit Margins
How do freight brokerages make money?
A freight brokerage makes money by coordinating freight shipments at a rate that covers carrier costs while leaving a small margin for the value of the broker’s services.
What is a normal profit margin for a freight broker?
A typical freight broker profit margin falls between 10-20%. Margins can be higher for specialized freight or complex lanes where capacity is limited; competitive markets may push margins closer to 8-12%.
Do freight broker profit margins impact freight rates?
A higher freight broker profit margin does not necessarily mean you'll pay a higher freight rate. Your all-in freight rate has the margin already factored in, and is driven more by market factors and the operational efficiencies your broker can achieve.
How do freight brokers make money compared to asset carriers?
Asset carriers own and operate their own equipment and hire their own drivers, so they make money by charging shippers rates that reflect those operating costs as they relate to each shipment. Brokers don't have the same operating costs, so they make money by negotiating rates that cover the carriers' costs while leaving room for their own profit margin.
Is shipping with a freight broker more expensive than shipping with a carrier directly?
Not necessarily. All-in broker rates are often equal to or less than the rate a shipper would get from an asset carrier. Brokers achieve this by working large networks of trusted carrier relationships, leveraging real-time market data and operational technology, and managing risk for shippers, all of which can result in lower all-in rates.
Do freight brokers make money on every load?
Not always. While freight brokers certainly aim to make money on every load, they may occasionally accept low-margin or break-even loads to maintain customer relationships or position equipment for higher-value opportunities.
