The reliable transportation of your precious cargo, the freight essential to your business’ survival, is important. But with so many options available for moving a shipment from A to B, finding the best solution for your business can be difficult.
Should you use an asset-based provider that owns the trucks and trailers used to move freight? There are certainly advantages to this (you have direct access to the driver and know exactly who will be picking up your load). That said, there are also several downsides to working with asset carriers exclusively.
As such, you might also want to consider using a freight brokerage for your next shipment.
But what is your company really getting by brokering its freight?
Here at Anderson Trucking Service (ATS), our freight brokerage company, ATS Logistics, knows that in situations like this, when it’s time for the rubber to meet the road, deciding how to move your freight can be intimidating. We've been working as a freight brokerage since 1989. During this time, we’ve been helping people like you find the best shipping solutions for their needs (even if we're not it)
In this article, we’ll explain four key elements of freight brokerage so you can decide where a great one fits your supply chain.
Here's what you can expect to learn:
- What a freight brokerage is
- What a freight brokerage does
- What it's like to work with a great brokerage
- Whether a freight brokerage is right for your company
- How to choose a brokerage (5 considerations)
⏬ Listen to the Podcast on Freight Brokerage ⏬
What Is a Freight Brokerage?
A freight brokerage serves as the intermediary between the shipper, who needs to move their cargo, and the carrier (trucking company) that has the means to do so. Using a network of these regional, national and international trucking companies, a freight broker is capable of providing the truck and trailer capacity each shipper needs to get their freight out the door and to its destination.
The business of brokering freight is all about relationships. Because of this, the shipper relies on the brokerage’s network of carriers to move their shipment. This process provides convenience for each shipper, saving them the time they’d spend coordinating with and selecting a carrier directly. Instead, any shipment that is routed through a freight brokerage is overseen by that broker from start to finish.
What Does a Freight Brokerage Do?
Although there are an array of things freight brokerage employees must accomplish each day, the core duties of this transportation service provider are relatively consistent.
The two main duties freight brokerage companies must perform in order to offer this service at the highest level possible are:
- Vet and select reliable carrier partners
- Managing the logistics of each shipment
1. Vetting and Selecting Reliable Carriers
Your freight broker's job starts long before your freight ever leaves your loading dock. This begins with the thorough vetting of their carrier base. “Do they have the appropriate authority and insurance requirements?”, “What are their areas of expertise?” and “Does their track record indicate reliability?” are all questions that should be answered before your broker assigns a carrier to your freight.
A good freight brokerage understands the value of partnering with high-quality carriers.
Integrity and reliability are on the top of their priority list.
It should be noted that not all freight brokerages, or carriers for that matter, are consistently high quality and dependable. The careful vetting of carriers is an important piece in the creation of a quality supply chain. That said, some brokers don't make this a priority and fall through on their commitments as a result.
2. Managing The Logistics Of Each Shipment
Once a broker is comfortable with the quality and reliability of the carriers in its network, the work of moving your freight can begin. Planning your shipment's journey from start to finish, no matter the resources needed, is the key function of a brokerage.
This includes everything from arranging pickup appointments, relaying in-transit updates, arranging recovery options when something goes wrong and working alongside consignees to arrange deliveries to helping their customers manage their costs and optimize their supply chain procedures.
Whether you need to get your freight overseas, across the nation or simply to a nearby town, a freight broker's job is to find and oversee the best possible solution to reach your destination.
What Is It Like to Work With a Great Brokerage?
The process of partnering with a freight brokerage is an exercise in trust and the good ones know this. As soon as you decide to hand your load off to a freight brokerage, its job begins as it works to find the best fit for your specific freight.
Although, as the shipper, you'll often communicate with a single member of a freight brokerage, there are plenty of people working behind the scenes to ensure your freight is delivered successfully.
Through transparent communication and a clear understanding of expectations from the beginning, a freight brokerage’s main job is to ensure you feel comfortable every step of the way. A good freight brokerage will work to achieve your deadlines and will be very transparent in answering all of your questions.
Additionally, after a time, your freight brokerage contact will learn your business intimately. This will allow them to optimize their services to your liking, undertand your procedures and help you secure capacity to meet your supply chain's cycles.
Is a Freight Brokerage Right for Your Company?
The essential function of any freight brokerage is to make the lives of its customers easier. If you are looking for a partner to help with your shipping needs, a good freight broker may be exactly what you need. The expertise, insights and capacity reach it can provide you is invaluable (provided you're working with a good company, of course).
On the other hand, a freight brokerage is not the right solution for every business. If you're looking for a more robust supply chain managment solution, consider using a 3PL which can handle more of your logisitcs.
Brokers also aren't asset companys. This means they don't employ any drivers or own the trucks that show up to haul your cargo. If this makes you nervous because you'd prefer an asset carrier's control, a freight brokerage might not be for you.
Should your needs align with its capabilities, however, the right brokerage can make a worthy addition to your transportation network.
How to Choose a Freight Brokerage (5 Considerations)
Choosing to work with a freight brokerage is a big decision. To ensure the best possible experience and fit, here are five things to keep in mind:
- The freight broker's size
- The freight broker's communication practices
- The freight broker's access to capacity
- The freight broker's reliability
- The freight broker's ability to responsibly follow through
1. The Freight Broker's Size
Freight brokerages vary in size. Some of the nation’s largest freight brokerages leverage massive networks of carriers, giving them a large variety of options for each situation. With size comes varying levels of capacity and capability. When it comes to picking which brokerage to partner with, you should always take stock of your own needs and search accordingly.
Larger freight brokerages are useful in times of uncertainty where special actions, such as re-routing a shipment or re-powering a load, are necessary. While it isn’t always the case, you may sacrifice service at larger brokerages.
Smaller freight brokerages are also an option. Although many times smaller brokers provide excellent customer service and attentive salespeople, they are not without their faults. As the size of a broker's network decreases, so does their ability to efficiently respond to a quick change of plans. This is due mostly to the fact that they simply don’t have the resources of a larger firm.
Note: Some smaller brokers have been known to leave the freight brokerage industry with a bad reputation.
Given the name “basement brokerages,” the small brokerages ran out of people’s homes tend to come with limited resources. As challenges come up surrounding a customer's shipment, it’s often these smaller operations that are unable to deal with them cost-effectively as they try to maintain their bottom line.
Larger freight brokers tend to avoid these issues because of their ability to absorb a loss now and then, leaving them with the ability to stick to their originally quoted price more easily.
2. The Freight Broker's Communication Practices
Communication is key in all relationships. Your relationship with your freight brokerage is no exception. From the beginning, it’s important that you feel that your concerns are heard and your goals shared.
A good way to measure this is to ask your potential freight partner for references. By reaching out to some of their current customers, you will be able to further determine whether they are your right fit.
3. The Broker's Access To Capacity
With over 700,000 trucking companies to select from, the brokerage of your choosing must have the resources you need.
97 percent of trucking companies currently operating in the U.S. have less than 20 trucks in their fleet. If your shipping needs are not met because of the size and capabilities of a certain brokerage, this can send ripples of disruption along your supply chain.
As such, ensuring the brokerage you choose has the capabilities you need is an essential factor in making the right decision.
4. The Freight Broker's Reliability
When it comes to the shipment of your goods, reliability goes well beyond receiving an on-time delivery. Although your brokerage must be able to meet deadlines, there is more to consider when it comes to selecting a reliable brokerage.
When a freight brokerage says that it can ship your load for a certain price it should always do so. A quality brokerage will not come back to you following your initial transaction asking for more money. It is practices like this that give freight brokers a bad name.
Pick a freight brokerage that will quote you a price and stick to it. If this means that they have to take a loss because of an unforeseen circumstance, so be it. This is a business of relationships and, as their customer, you come first.
5. The Freight Broker's Ability to Responsibly Follow Through
Life is strange. The world we live in is oftentimes crazy and unpredictable. Great freight brokerages understand this. For this reason, these types of brokerages are always there to deal with any problems that occur while your shipment is under their care.
This type of responsibility is perhaps the most important of all. Knowing that if something unplanned pops up during transit, your freight brokerage will pick up the phone and get it straightened out provides great peace of mind. When selecting a freight brokerage, make sure that they’re ready and willing to pick up the phone.
The Next Step in Your Shipping Journey
Moving your freight doesn’t have to be intimidating. Consider what’s important to you, ask your transportation provider the right questions and find someone that fits your needs, not the other way around.
Now that you know what a freight brokerage is, what their primary duties are and what to look for when choosing one, you’re ready to continue your search.
Download The Freight Brokerage Selection Checklist, a comprehensive guide for vetting your current and future freight brokers, today. Doing so will ensure that, when the time comes, you've done everything in your power to select the right partner for your needs.
If you’d like to do some more research check out the rest of our articles. At the end of the day, we just want you to be happy with whatever decision you make. That said, if you have any further questions please don’t hesitate to reach out and ask.