In many scenarios, bigger isn’t better. Sometimes large things like credit card payments and mouse infestations, for example, can come back to haunt you.
In other instances, however, bigger is better.
Is a big pay raise better than a small one? Usually. Is it better to have a large bank of vacation hours to lean on when needed? Almost definitely.
And, when it’s time for your freight to get moving isn’t it best to work with a big freight brokerage over a smaller one? This article will help you make this decision.
Here at ATS Logistics, we operate as a large-sized traditional freight brokerage. Although we’ve found success during our years operating under this model, we recognize that working with a larger brokerage comes with a pretty specific set of pros and cons.
We also recognize that this knowledge shouldn’t only be for our use. You deserve to understand what you’re getting when handing freight over to a large freight brokerage — including the good, the bad and the ugly.
This article will give you all of the information you need to make the right freight brokerage selection decision for your business, including:
- What is considered a large freight brokerage?
- What the advantages of working with a large freight brokerage are.
- What the disadvantages of working with a large freight brokerage are.
Let’s jump in.
What is Considered a Large Freight Brokerage?
The freight brokerage service industry is full of companies that go about offering these third-party transportation services in different ways. Like any other industry in our free-market economy, there are freight brokerage companies that — for one reason or another — soak up more market share than their competitors.
For this article — and to help you make the most educated decision possible — the term “large freight brokerage” will refer to companies that make more than 50 million dollars in gross revenue annually.
These larger firms are a great fit for many businesses, particularly those that have extensive volumes of outbound/inbound freight demands.
But let’s take a look at what advantages you’ll likely receive by routing freight with a large freight brokerage company.
What Are The Advantages of Working With a Large Freight Brokerage?
Getting the most from your transportation partnerships often comes down to how well you understand where their strengths lie. With this knowledge as your guide, setting expectations and planning out your shipments in accordance with each provider’s capabilities will be easier.
In turn, handling your broker-shipper relationship appropriately will help you keep things on track and reliably come through for customers.
The top four advantages of working with a large freight brokerage are:
- Large brokers have more resources
- Larger freight brokers are more likely to honor contracted freight
- Large brokerages can have expansive carrier networks
- Larger brokerages can offer a wide array of services
1. Large Brokers Have More Resources
In the business of moving freight, “resources” can be many things. For freight brokers, resources include but aren’t limited to:
- The number of employees on staff that can service customers.
- The financial resources at their disposal.
- The administrative technology, load-tracking and communication software.
- The access to other prominent organizations and industry-specific insights.
Large freight brokerages that boast extensive histories of excellence and track records that reflect competence have more of these resources than smaller ones.
Plain and simple.
This gives these companies the ability to meet customer demands, find out-of-the-box solutions to address problems and offer services in a wide variety of areas.
The visibility and technology utilization of large freight brokerages often translates to cost-savings for their customers as they’re offered an array of potential solutions and — with their broker’s guidance — select only the absolute best fit for their needs.
2. Large Brokers Are More Likely To Honor Contracted Freight
Whenever companies have a high volume of freight to move over an extended period — because of a peak season or otherwise — they may decide to enter into contracts with their transportation providers.
These contracts typically specify the number of truckloads each provider will cover and the price each shipper will pay for them to do so. Agreements on contracted lanes typically specify the duration of this commitment for both parties.
When the time comes for a freight brokerage to follow through on their contracted commitments, larger brokers can more consistently do so.
You see, the going rate for transportation services fluctuates constantly — especially in recent history. Sometimes — when it’s time for a broker to secure their customer’s truck — the previously agreed-to contracted freight rate ends up being less than the cost of doing business.
As a result, freight brokerages in this position are forced to do one of three things:
- Take a hit on this underpriced shipment and hope that their contracted price is enough to get the job done next time.
- Go back to the customer asking for more money.
- Fail on their customer’s load entirely, leaving them in the lurch.
These final two options are more commonly employed by smaller freight brokers that simply don’t have the financial security to stand by their commitments.
Larger brokers, however, recognizing their ability to take a hit and the value a long-term partnership with these shippers brings, are more likely to honor these commitments.
For this reason, if your company will need contracted agreements with your brokerage partner, consider adding a large-sized provider to your network.
3. Large Freight Brokers Can Have Expansive Carrier Networks
Large freight brokerage companies — especially the best ones — utilize their size and income to increase their value to customers. As third-party providers, brokers depend heavily on their carrier network to handle each load they book.
For this reason, large brokers are constantly working to expand their reach by adding great trucking companies to their fold. When managed properly, the broker-carrier relationship can be mutually beneficial, allowing each company to turn a profit by moving freight.
Some of the nation’s biggest brokers boast networks of hundreds of thousands of carriers. This helps these companies source a trucking solution for their customers no matter their origin, destination or what service they need.
You won’t find this kind of access at a smaller brokerage. As such, if you’re looking for a provider that has a wide network of carriers and the ability to hand-select only the best-fit truck for your freight, check out a large freight brokerage.
4. Large Freight Brokers Can Offer a Wide Array of Services
With their expansive carrier network and in-house expertise, large-sized freight brokerages can offer a vast catalog of transportation services which may include any of the following:
- Open-deck transport
- Dry van transport
- Temperature-controlled services
- Warehousing solutions
- Heavy haul trucking
- Cross-border transportation
- Project management
With more substantial providers, shippers can expect to receive all of these services and more. This isn't true for smaller brokerages — that don’t have the manpower nor financial resources to do all of these things well.
What Are The Disadvantages of Working With a Large Freight Brokerage?
Although some of our world’s biggest brokers draw the attention and retain the business of shippers far and wide, they’re not without their weaknesses. In the interest of transparency, here are the three largest disadvantages of choosing to route freight with a large freight brokerage company:
- Large brokers can be unorganized and overcomplicate things
- Communication at large brokerages can fall off
- Some large brokerages prioritize high-volume shippers
Each of these drawbacks can be detrimental to your business. You won’t want to give your business to a brokerage that will do any of these things. Let’s talk about them.
1. Large Brokers Can Be Unorganized and Overcomplicate Things
Like any major business, the biggest freight brokerages employ hundreds of employees that work with just as many shippers every day. With so many moving pieces, it’s not uncommon for things to get lost in the mix at an unorganized, overcommitted, brokerage.
Additionally, large freight brokers — especially when mismanaged — see mishaps occur when wires of multiple communication lines get crossed.
Maybe one member of a team was supposed to find a power-only solution for a certain shipment but forgot. Or, perhaps the details of a load were miscommunicated by a confused employee.
Whatever it may be, large freight brokerages can overcomplicate things by doling out responsibilities to multiple people that cross paths infrequently.
2. Communication at Large Brokerages Can Fall Off
Small brokerages make their hay by offering their customers a single point of contact to develop a relationship with. This individual becomes intimately familiar with the goals, procedures and preferences of the shippers they work with.
In turn, the understanding developed and the consistent communication maintained, between each broker and their customer help to keep things moving even in the toughest times.
Although communication issues don’t plague every large freight brokerage, they pop up enough to make this list. You see, multi-million dollar-per-day brokers may have hundreds of irons in the fire at any given moment.
With so much stimulation and work to do, sometimes things slip through the cracks.
And, instead of picking up the phone and letting customers know that their shipment has been delayed — or finding them a solution when it falls through — unreliable brokers might leave them hanging.
Additionally, when companies moving freight with these brokers aren’t given a single point of contact to work with, issues can occur.
Without knowing who to reach out to for assistance or guidance when questions come up, shippers can often feel isolated — cut off from their freight and unable to control its movement.
3. Some Large Brokerages Prioritize High Volume Shippers
Perception is relative. One man’s trash is another man’s treasure. What’s a lot of money for some people might seem like pocket change to others.
The business of freight brokerage is no different. As companies in this industry increase their net margin year after year and cement their place within the transportation networks of fortune 500 shippers, their priorities often change.
Instead of servicing shippers with lower volumes of outbound freight — business that smaller brokerages would jump at — the largest companies have been known to put these loads on the backburner, in favor of more lucrative enterprises.
For this reason, don’t make the mistake of choosing a freight brokerage based on its size alone. If you do, you could find yourself feeling like just a number; like a debit on the balance sheet of a company that can’t give you the time of day.
Note, large brokerages that are good at what they do hold themselves to a higher standard. These companies aren’t solely motivated by turning a profit alone. That said, this flaw is certainly worth watching out for.
Choose The Best Brokerage For Your Business
Now that you understand the advantages and disadvantages of working with a large brokerage — a brokerage that does more than 50 million dollars in gross revenue annually, — you have a major portion of the information needed to make this crucial decision.
Freight brokers of this size aren’t your only option. If after reading this you’re unsure of whether a big brokerage is your best path forward, you’re not alone.
There is still plenty of research to do.
Let’s dive a bit deeper. Check out our article on The Pros and Cons of Working With a Small Freight Brokerage. Shippers all around the world prefer to work with providers on the lower end of the size spectrum, maybe they’ll fit your needs too.
At the end of the day, we want to make sure that your freight brokerage's selection decision is the absolute best one you could’ve made.
Download our free Freight Brokerage Selection Common Mistakes Guide and ensure that you don’t accidentally stumble into one of the 5 most common pitfalls shippers make during this process.
Finally, if you have any questions about how ATS Logistics can help you become the supplier that always delivers, contact us today! We’re always happy to lend our expertise in any way you need.