What is a

Freight Broker?

A Shipper's Ultimate Guide
to Freight Brokerage

Welcome to your crash course for working with a freight brokerage!

Freight brokerage companies are a staple piece of the transportation industry. With their assistance, companies with cargos to collect and freight to distribute can do so in a swift, and often cost-effective, manner.

But what is a freight brokerage really? And, what should you expect when working with one?

This is your ultimate guide to gaining a clear and comprehensive understanding of what freight brokers do so you can decide whether adding a great one to your transportation network will be worth it.

Below, you’ll find answers to the most common questions people have about freight brokerages. This includes information on how brokers find and vet the carriers they utilize, what different kinds of brokers are out there, how brokerages make money and so much more.

Are you ready to take your transportation supply chain and logistics knowledge to the next level?

Let's get started.

 

Crystal Lahr
By Crystal Lahr
Crystal is a sales director in ATS Logistics, where she develops business plans and strategies, among other things, to promote the continued success and growth of ATS customers and her team at ATS Logistics. Since coming to ATS in 2012, Crystal has served in several positions, including regional carrier representative and national sales representative, before earning her way to a director.

 

For many shippers, managing a transportation supply chain isn't simple these days.

Ok, it’s out there. Somebody had to say it.

I mean, it’s as plain as the freckles dancing across Eddie Redmayne’s chiseled chin. . you know. . . the “Fantastic Beasts and Where to Find Them” guy? Eh, forget it.

Is “managing a transportation supply chain isn’t simple” the understatement of the century? Perhaps.

If it is, I’ll wear that mantra with pride. It’s better to spearhead the vocalization of a popular opinion than the opposite, I suppose.

When you think about it, the sheer amount of transportation providers vying for the attention of this nation’s shippers…

MORE THAN
17k Brokers 700k Trucking CompaniesUnitedStatesBrokers

 

…is truly BONKERS.

Sure, the trucking industry handles more than 70 percent of this nation’s total freight movement, but still. . . that’s a lot of options to choose from.

Even binary decisions can be difficult for us humans to make, like:

Soup-SaladV2
"would you like soup or a salad with dinner tonight?
Sweatshirt-or-TShirtV2
"is it sweater weather or a short-sleeve t-shirt kind of evening?"
Handwash-or-DishwasherV2
"should I wash this by hand or just toss it in the dishwasher and forget about it?"

Scratch that last one though, the dishwasher rules.

In any other scenario, forcing a person to choose between nearly one million different options would seem really weird. But, in the transportation world, we don’t bat an eye at our reality.

Can you imagine the psychological toll of having to choose between even 400,000 ophthalmologists would take on a person? Especially since no one, myself included, knows anything about ophthalmology or what to consider when selecting one?

It would be madness.

 

Luckily, our ophthalmologist is selected based on whichever clinic we frequent and the recommendations of our friends and family members.

Yet finding a transportation provider is different. And finding a good one is far harder than locating a highly skilled eye doctor. I’m kind of reaching, but you get my point.

What about selecting a pair of shoes? Have you ever walked into a Foot Locker and tried on 17,000 different pairs? Of course not. First, you figure out what type of shoe you’re looking for and go from there.

Finding a competent transportation company should be done the same way. And, when it comes to selecting a provider, you’re really only given a few types of companies to choose from. Either an asset carrier, a freight brokerage or a third-party logistics (3PL) provider. You just aren’t sure what you like yet.

Phrases such as:

"Just choose one and move on"

"Live and learn, I guess"

"Better luck next time"

…shouldn’t frame your mindset when choosing a transportation partner.
But, too often, they do.

You see, this industry’s providers have done shippers like you a disservice. A disservice that began at the onset of the internet age.

At the touch of a button, you can check football scores (no need if it’s the Lions though, they’re losing), touch base with friends and discover the true nature of the Big Mac’s “secret sauce”
🎶 ba-da-ba-ba-ba 🎶

iPhone screenshot showing Google's home pageAll of this information, and so much more, can be found by simply “raising-to-wake” the six-inch piece of technology that occupies your pocket each day.

But you know what you can’t do? Get real-time, real effective information about what each type of transportation provider will do for you and what steps you can take today to make the most of your shipper-provider relationship tomorrow.

Information like this has made an impact on shippers in the past and will make an impression on your supply chain in the future.

Here at ATS Logistics, we’re only one of this nation’s 17,000-strong (and quickly rising) collection of freight brokerages. A needle of truth in a haystack of many less-than-transparent transportation providers.

With over 5,000 active customers and more than 23,000 loads successfully delivered each month, we’re proud to be a staple piece of the freight brokerage service industry.

Today, the time has come for the expertise we’ve developed over the last three-plus decades to become yours.

In this guide, you’ll be given all of the freight brokerage information you’ve been craving. All the information needed to understand and select a freight brokerage as well as the skills necessary to partner with, and flourish alongside, a best-fit brokerage of your very own.

Intriguing right?


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Chapter 1

What Does a Freight Brokerage Do?

At the most basic level, a freight brokerage is an intermediary. A helping hand, bridging the gap between a shipper, who has goods to move and a trucking company with the means to do so.

Balancing customer supply chain vs. carrier relationships

 

In a world where relationships matter, a freight brokerage is charged with holding them on all sides. Keeping their customers’ supply chains on track and maintaining relationships with competent carrier partners are both top priorities to this nation’s freight brokers.

How can you have 2 top priorities?


It's easy really; simply prioritize one thing and then. . . double down. This may be difficult for some businesses but for a freight brokerage, doing so is a necessity.

Honestly, if I had to explain what a freight brokerage does without going into details like “brokers work to match freight shipments — brought to them by their customers — with the absolute best transportation solution for their needs,” I’d simply say:

"freight brokerages

maintain relationships."

Bringing value to the relationships they hold is the single most important segment of a freight brokerage’s duties. Not all of them are able to do this well but those that can find great success.

Similar to how Subway continuously adds delicious toppings to their menu to expand their business beyond their current customer base, a freight broker’s service offerings are directly tied to their network of relationships.

And over time, as competencies are gained and a good reputation is earned, freight brokers are able to widen their reach, expand their network of trucking companies and the customers they help.

Although a freight brokerage’s day-to-day consists of various tasks, there is one fundamental duty that must be accomplished before everything else: Finding and vetting reliable carrier partners.

In fact, this process couldn’t be more central to a freight broker’s success.

Just like you can’t make lemonade without a lemon, a freight brokerage can’t do its job without the right ingredients. And without the proper network of carriers, freight brokerages don’t stay in business for very long.

We don’t need to dig into the nitty-gritty of how many breaks a freight brokerage’s sales representatives take or what paperwork is filed and when.

No, to give you the highest possible value in this guide, let’s jump into what you absolutely need to know. Anything more would be a waste of your time, anything less, a disservice.

Orange crossed out above a cup of lemonade
Graphic of two pieces of paper
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What Does a Freight Brokerage Do?


Chapter 2

How Do Brokerages Find Carriers for Their Network?

Section one in the “How To Be A Good Freight Brokerage” handbook — written and illustrated by “The Society of Good Brokers” — outlines tips and tricks for how a brokerage can find good carrier partners. Just kidding, that doesn’t exist.

Didn’t fool you, did I?

No, there isn’t a handbook explaining how a freight brokerage should find and vet reliable carrier partners. No comprehensive guide for new freight brokers to reach for when the time comes to expand their network.

Come to think of it, something like that would be a really helpful tool. Maybe I’ll write that next. . .

As of today though, all freight brokers have is general knowledge, their experiences with trial and error and transportation industry best practices to turn to in this process.

That said, the best freight brokers have an iron-clad methodology for finding and vetting the carriers they work with.

So how do they do it?

 

When working with a freight broker, the carrier on your load was most likely originally introduced to your broker in one of three ways:

Carrier Collection Highway graphicTogether, these three avenues are capable of providing a steady stream of trucking companies for a freight brokerage to pull from. Should we call them the “carrier collection highway?” I think we shall.

After this initial connection, each carrier can be properly vetted. The fact remains though — you need to find them first.

How Do Brokers Find Carriers
on Load Matching Websites?

Load-matching websites are internet-based databases designed to connect trucking companies with the freight they’re looking to haul. Kind of like online dating, but less high stakes.

Although many brokerages have pre-existing, well-used, connections in all regions of their home nation, the best of them are consistently working to add great partners to their network.

To add to their network, freight brokerages will traverse these websites in the hopes of making a special connection with a trucking company in one area or another.

Perhaps a carrier is based in a region where a new customer is located or maybe they’re trying to cover an area of weakness a bit further by expanding their reach. Either way, load matching websites like truckstop.com and DAT provide an excellent route through which brokers find many carriers.

Within their confines, these websites offer brokers the option to narrow down their search for competent partnerships based on a number of criteria including region, level of active authority, past history and safety scores.

When used correctly, freight brokers can use these websites to spark the flame. 🔥 The flame they hope will one day turn into a raging fire of broker-carrier relationship success.


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How Do Brokers Find Carriers on
"Become a Carrier" Webpages?

The second method that brokers use to widen their capacity reach — and ability to serve their customers — is by employing “become a carrier” webpages. Think of these as job applications, free to access and open to the public.

Even though not all brokerages use them, “Become a Carrier” online forms are a great place for freight brokers to bring additional companies into the fold.

These pages — situated on their website — work best for larger brokerages with a reputation of quality partnership and a demonstrated history of success. Solid companies are few and far between in such a competitive industry. As such, good freight brokers consistently add trucking companies to their network simply by offering the option to become a carrier on their website.

Following a successful submission, a representative from the solicited brokerage will reach out to each prospective carrier with questions ranging from

"What are you looking for in

this partnership?"

to

"What are your areas of expertise?"

The way each trucking company answers these questions, coupled with their safety scores and track record, gives brokers a solid grasp on whether they’d make a healthy addition to their network.

If you don’t want to eat those Milano cookies, don’t buy them at the store. If you don’t want to add an unreliable carrier to your network, make sure not to let them in.

How Do Freight Brokers Find
Carriers By Referral?

Have I mentioned that the freight brokerage business is all about relationships? From one company to the next, everyone likes to work with businesses that are great at what they do — a slice of the pie, a bit of the bacon, out of the dugout and into the action.

As such, many freight brokers are introduced to their carrier partners by leveraging a prior relationship. Maybe one of their current carriers can’t cover a certain load but they know of a company in the area that can.

Or, perhaps one of their carrier representatives (a staple role in traditional brokerages) heard of a great company — through word of mouth — that they just had to reach out to.

No matter how it comes about, you’d be surprised by how many great carriers are found unexpectedly, through inter-company referrals.

Although all of these carriers need vetting, many of the trucking companies identified in this way end up panning out quite well.

I met one of my best friends through a mutual connection. Why wouldn’t this pattern hold true in the business world as well?

Graphic of two pieces of paper
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How Do Brokers Grow and Maintain a Reliable Carrier Network?


Chapter 3

How Do Freight Brokers Vet Their Carriers?

After a trucking company has drawn the attention of a freight brokerage, their real test begins. To ensure they welcome only the most qualified companies into their network, good freight brokerages dedicate time and resources to vetting each on a number of criteria.

More than anything else, safety is crucial in the transportation world. Driving a fully-loaded 80,000-pound truck and trailer combo is nothing like Mario Kart. There isn’t a friendly cloud standing by to fish truckers out of danger and plop them lightly back onto Rainbow Road.

caution symbol
No, the trucking industry is dangerous. Do-overs aren’t available and unsafe practices aren’t acceptable.
caution symbol
Fool me once, shame on you.Fool me twice... won't happen because you've already been removed from my carrier pool.

As such, freight brokers practice vigilance in every aspect of their carrier vetting routine. To do this, brokers look for a number of things, both in the initial stages of carrier selection and with regularity after each company has cleared the first hurdle.

Carrier vetting, for a good freight brokerage, isn’t a single act but, rather, an endless journey with checks and double-checks and then a couple more checks.

Let’s start with the basics though.

The 3 things

that help brokers ensure carrier safety

— and reliability — from the onset are:

1
Verifying the amount of insurance a carrier holds.
2
Checking their CSA ratings.
3
Verifying their level of active authority.

Why Does Carrier Insurance Matter?

Maintaining the federally mandated $1 million of auto liability insurance necessary to operate as a commercial motor carrier is unavoidable.

Having this coverage — as outlined by the Federal Motor Carrier Safety Administration (FMCSA) — is the bare minimum a trucking company can do to display its dedication to safe practices.

Federal Motor Carrier Safety Administration (FMCSA) logo

It’s also, coincidentally, non-negotiable.

Without the necessary insurance documentation, trucking companies aren’t allowed to operate as trucking companies. And until their situations are amended, the companies without this coverage simply own some class-7 and 8 semi-trucks and a grouping of trailers. Nothing more.

Freight brokers recognize the importance of auto liability insurance and look for carriers with a track record of maintaining it.

Vetting Carriers for Compliance, Safety
and Accountability (CSA) Ratings

The second method freight brokerages use to vet the quality of the carriers in their network is to verify their current CSA ratings. These ratings — which carriers receive following a thorough audit by the FMCSA — help brokers keep unsafe companies away from their customer’s supply chains.

Based on their adherence to all federal safety laws, regulations and guidelines, a carrier’s CSA rating will fall into one of these four categories:

CSA rating scale

 

Given a rating of “None” means that the trucking company is still waiting in line and hasn’t been audited by the FMCSA yet. Although “None” isn’t as desirable of a rating as “Satisfactory” — signifying pristine adherence to governmental stipulations — many good brokers utilize these carriers.

On the other hand, the unreliability and failure to demonstrate safe practices that accompany carriers with…

CSA ratings of "Conditional" and "Unsatisfactory" won't be accepted by brokers that prioritize safety.
Rolodex

Should a company with low CSA ratings pop onto their radar, brokerages that prioritize safety in their network won’t add them to their Rolodex of approved carriers.

Many freight brokers employ automated systems that consistently check the carriers in their network for CSA ratings, level of insurance and active authority.

Should one of their current partners see their rating drop from “None” to “Conditional” following an initial first audit, good brokers will remove this company from their network until their CSA rating is raised.

There are too many good trucking companies out there to get hung up working with an unsafe one. The best brokerages know this and vet their carriers accordingly.


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Verifying Their Level of Active Authority

With low barriers to entry, companies pop in and out of the trucking industry all the time. Because of this, the federal government takes precautions to ensure only the safest carriers are allowed to offer their services.

A carrier’s ability to operate as a for-profit business is based on their “active authority.” As such, freight brokerages keep a diligent eye on the active authority of their trucking partners.

In order to maintain active authority levels, trucking companies must meet, and hold to, several criteria. This includes but isn’t limited to:

Proof of insurance and adherence to all governmental stipulations

Automobile insurance

(must have the minimum level for commercial use)

General liability insurance
Cargo insurance

Should a carrier fail to meet any of the FMCSA’s rules and regulations, their active authority will be revoked, leaving them sidelined from duty.

Believe it or not, sometimes trucking companies lose their authority after a freight brokerage has already given them a load to haul. In these situations, it’s the broker’s job to inform each carrier of their predicament and work to amend the situation.

Luckily, the best freight brokers have a tried and true system in place for when a carrier they’re using loses authority in transit.

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How Should a Freight Brokerage Monitor the Safety of Its Carriers?


Chapter 4

How Does a Freight Brokerage Find the Best Carrier for You?

Ok. Now that you understand the three most important safety metrics freight brokerages use to vet potential and current carrier partners…

let's dive deeper.  Scuba diver

Bubbles

And, boy oh boy, is there some depth to this topic. I wouldn’t call it a journey to the center of the earth, but it’s close.

I mean, some of this industry’s largest freight brokerages hold networks of tens of thousands of carrier partners.

No, read that again.Scuba diver diving

 

Not ten thousand...

tens of thousands.

With this many companies in the mix, it’s easy to wonder how good freight brokerages possibly keep track of every company in their network, let alone ensure only the best-fit trucks are on their customer’s loads.

It doesn’t seem humanly possible. But I’m here to tell you it is. This nation’s brokerages have been at this for a while. During which time, they’ve worked out the kinks.

To do this, the safest freight brokerages employ and maintain automated systems. Systems that aren’t on the free market because they’re home-grown masterpieces catered to the needs of each individual brokerage.

Sure, these internal systems are expensive to produce and maintain, but shippers, and good business, are worth it. You’re worth it.

Internal Carrier Vetting Systems

It’s impossible to generalize how most freight brokers’ internal carrier management systems work. That said, here are the four things that — in order to be most effective — these systems should be capable of:

1
Automating carrier safety monitoringGroup 1655
2
Cataloging each carrier's track record
3

Recording the size of each carrier's operation

(how many trucks/trailors do they have?)

4
Recording all prior experience working with each carrier
1. Automated Carrier Monitoring System

When you boast a network of tens of thousands of carrier partners, you’ll need some assistance from the technology fairy.

According to British anthropologist Robin Dunbar’s theory — aptly named “Dunbar’s Number”...

Group 1656Human beings are only capable of truly maintaining connections with a maximum of 150 people at a time.

I must say, based on my Facebook page, this seems low. . .

Either way, let’s assume Dunbar is correct. This would mean that in order to maintain steady and insightful relationships with each carrier in a network of 30,000, a freight brokerage would need no less than 200 employees.

Each of these employees would need to have no one in their lives beyond the 150 carriers they’ve been assigned. . . ouch.

Monitoring the safety of a network this large — or any size really — is made easier through automated systems.

As such, freight brokerages around the nation and the world utilize systems to make their jobs a bit easier.

Among other things, these technologies are designed to keep supply chains sound by automatically restricting the usage of carriers that don’t meet specified criteria.

To do this, good freight brokerages utilize:

Automated 90-day authority restrictions

This prevents freight brokerage transportation professionals from giving freight to companies who’ve had legal operating authority for less than 90 days. Since companies pop in and out of the transportation landscape all the time, filtering carriers based on their experience is central to a safe supply chain.

Automated dispatch restriction for safety scores

As previously mentioned, safety scores matter. Good freight brokerages don’t play around when it comes to these ratings and employ automated restriction technologies to help them weed out unreliable carriers from contending for freight.

Automated third-party reporting technologies

By integrating external systems into their automated network, freight brokers can double down on their commitment to fully understanding each carrier. Technologies such as Carrier 411 and TIA WatchDog give brokers the information they need to vet carriers based on their history in the transportation industry.

Together, these automated systems create an ecosystem of safety for brokerages to rely on. Multiple times per day, these automated systems should be refreshed, granting the most up-to-date information at the touch of a button.

2. Catalog Each Carrier’s Operational History

Once an automated system is in place to monitor and update carrier safety metrics, the real fun begins.

Enter: internal rating systems.

 

Safety in the transportation industry isn't just important, it's non-negotiable.

As such, freight brokerages don’t have much of a choice where safety is concerned. Sure, they could choose to forgo vetting partners for safety ratings, level of insurance and active authority, but that wouldn’t end well for anyone.

At the end of the day, prioritizing a safe transportation supply chain isn’t a choice. Boasting a quality network of partners, though, is a whole different story.

If a freight brokerage wanted to, they could develop an internal system for vetting trucking companies, accept any CSA Rating above “unsatisfactory,” require the minimum level of insurance and field some calls. They may even move some freight successfully, who knows.

With this nonchalance comes risk and with too much risk, eventually, comes failure.


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The best freight brokerages —

the companies that you'll want to partner with

— go well beyond automated safety monitoring.

Beginning with cataloging each carrier’s track record, freight brokerages that care about their quality of service make it a priority at every turn.

Keeping a visible record of how many loads each carrier has delivered, how long they’ve been in business, where their trucks are located and what lanes they like to haul is critical to supply chain quality.

The more a freight brokerage understands its partner carriers’ core competencies, the better. And the best brokerages make this information central to their vetting process using a centralized, internal system.

3. Record the size of their operation

With so much freight to move in the U.S., the length of each trucking company’s reach matters greatly. Freight brokerages like to partner with larger trucking companies — companies that are more likely to have a truck available when their customers need it.

Carriers with more trucks, trailers and transportation assets are able to cover a freight broker’s load more consistently.

Brokers that make quality service a priority consistently rank their carriers based on the number of trucking solutions they own.

Holding everything else the same (track record, reliability history, safety scores, etc.), carriers with larger fleets are often rated higher within a freight broker’s system — based on the likelihood they’ll have a truck available — than smaller operations.

Internally, this helps a freight brokerage’s sales representatives offer their services consistently as they search for their customer’s best-fit solutions.

4. Record All Prior Experience With Each Carrier

Outside of carrier safety monitoring and reporting, this is the most important aspect of a freight broker’s internal carrier rating system.

You see, most freight brokerages have more than one representative working for them. Some may even have hundreds of employees. Each of these employees, although working with a different collection of customers, pull from the same pool of carriers.

As you may suspect, with so many moving pieces, information can sometimes get lost in the mix. Signals can get crossed and important details can be forgotten. When this is the case, quality of service suffers, an unacceptable outcome for many great brokers.

To combat this,

the best brokerages will maintain and update an intricate record of past experience with all of the carriers in their network.

If a carrier falls through, this is noted for next time. Should something happen in transit resulting in a load failing, this is recorded. Anything, positive or negative, that happens throughout a broker’s interaction with their carrier partners should be diligently taken down for future reference.

All records of past experience with each trucking company contribute to their final ranking within the freight brokerage’s system. This makes it easy for the best brokerages to ensure quality service to their customers.

Scuba diver sittingSure, safety is important in the transportation industry, but coming through when it matters is certainly a close second.

Chapter 5

How Do Freight Brokers Track Your Freight?

So now you know that a freight brokerage serves as the intermediary between a shipper with goods to move and the carrier with the truck and trailer capacity to do so. Additionally, you know how a good brokerage utilizes internal and external technologies to help them find, vet and select their carrier partners.

But what happens once your freight leaves your door? After your brokered carrier takes off with your freight in hand. What then?

It’d be nice to know where your freight is located every step of the way, wouldn’t it? Visibility over how far your freight has traveled and how much further it needs to go could really help you during the planning stages.

If only there was some kind of freight tracking tool your provider could offer you. That’d be great. . . if only.

Luckily, to come through for their customers when it really matters — and step in when things go awry — freight brokerages offer load-tracking capabilities.

Clock icon

In such a fast-paced industry —

subject to so many factors out of our control

— no matter how hard transportation companies work to avoid them, issues pop up.

Whether it’s a truck breakdown or delays due to road construction, load-tracking technologies grant brokers the in-transit visibility needed to keep their customers informed.

Many shippers like the oversight and continual updates offered by these technologies. And, where quality service matters, freight brokers answer the call using load-tracking technologies.

That said, providing in-transit tracking for their customer’s freight isn’t offered by every brokerage. Since these technologies are purchased at a cost to the companies that employ them, not every brokerage is capable of making this investment.

For the brokers that are, however, load-tracking capabilities are offered in one of two ways:

Using electronic logging devices (ELDs)
Electronic Logging Device (ELD)
Tracking via mobile applications
iPad and iPhone

Load-tracking with ELDs

Most of this nation’s truckers are required to log their on-duty service hours using ELDs situated within their cabs. Although the FMCSA’s ELD mandate only applies to commercial motor vehicles manufactured after 2000, these devices are becoming increasingly common.

As these technologies become further ingrained into the anatomy of freight movement, their use-cases continually evolve.

Most recently, ELD technologies offer compatibility with many software that enable load-tracking capabilities for freight brokers. This includes but is not limited to:

Electronic Logging Device (ELD)
iPad and iPhone
iPad and iPhone

These software systems help brokers secure in-transit tracking of their customer’s freight and give brokers and their customers the oversight they need to maximize their supply chains and make adjustments where necessary.

Load tracking with mobile applications

The ESPN, Robinhood finance and Apple Music applications aren’t the only tools occupying the pockets of this nation’s truckers. Load tracking apps like those offered by Trucker Tools and Macropoint are also along for the ride.

Trucker Tools logo
Trucker Tools
Macropoint logo
Macropoint

Applications like these grant brokers a second method for overseeing their customer’s freight during transit. Information like departure time, in-transit location and estimated delivery timeframes can all be relayed through these tools.

When used correctly, load tracking through mobile applications can be highly beneficial to all parties involved as clear communication becomes easier.

Graphic of two pieces of paper
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How Do Freight Brokers Track Shipments?


Chapter 6

What Are the Different Types of Freight Brokers?

There’s a lot to consider when it comes to the freight brokerage business. Understanding how freight brokers find and vet carriers — although important — is only a slice of the pie, a cog in the machine, a sliver of the picture.

Needless to say, I still have so much to teach you. Judging by all of the white space beneath my cursor, though, I reckon we’ll be just fine.

You see, not only is the freight brokerage business an intricate service offering but there’s actually no single “best way” of doing it. Just like any business, there are good companies and bad ones. Businesses that do their job better than the rest and businesses that struggle.

But that’s not what I’m talking about. No, I’m referring to fluctuations in the way freight brokerages run their business, not merely how good they are at their jobs.

Structurally, there are five main types of freight brokerages. Each asks different things of their employees, offers separate services to their customers and makes their mark on the transportation world in various patterns.

It’s important that you understand what the different types of freight brokerages are so you can choose the best kind for you. You’re not alone in your journey toward a smooth supply chain. In fact, your path may be more crowded than you ever would’ve thought.

Up until this point, the freight brokerage industry has seemed stagnant — an immobile, immovable constant. In actuality, though, the freight brokerage business is dynamic, nomadic and unpredictable. There is no “right way” of offering this third-party service, just like there’s no “right way” to feel.

Companies in this industry simply do what works best for them. You should do what’s best for you. To help you figure out what that is, read on as we discuss the most common types of freight brokers.

The 5 types

of freight brokerage companies that you’ll

likely run into throughout your search are:

1
Agent-model freight brokerages
2
Traditional freight brokerages
3
Asset-based freight brokerages
4
3PLs
5
Digital freight brokerages

The type of freight you’re moving — although important — doesn’t really matter when deciding what type of freight brokerage to choose. Instead, I invite you to put that aside and look at each model through a different lens.

Before we proceed, ask yourself:

"What type of partnership am I looking for?"


"What's most valuable to me in a transportation provider?"


"Can I sacrifice price for service quality?"

Depending on your answers to these questions, the identity of your right-fit partner should become a bit clearer.

Freight Brokerage Type #1:

The Agent-Model Brokerage

Around our nation, agent-model freight brokerages aren’t hard to come by. When run correctly and structured appropriately, these freight brokerages can offer services at the highest level.

If you’re searching for a company that prioritizes customer satisfaction and quality service, look no further. Agent-model freight brokerages truly excel in this regard.

Under this structure, 1099’d “employees” handle every aspect of the freight transportation process under the umbrella of a corporate brand.

Graphic of umbrella under rain

Where other types of brokerages comprise separate parties — each dedicated to a specific set of duties — this isn’t true of agent model brokerages. Given the title “Freight Agents,” the workers at these brokerages are charged with maintaining and overseeing freight movement at every turn.

This includes vetting the carriers they use, maintaining fruitful relationships with their network of partners and brokering freight for their customers.

Dedication to their customer’s goals and timeframes is the main selling point of this type of brokerage.

Using an Agent-Model Freight Brokerage

Advantages

1
Since freight agents aren’t given a regular salary, offering their service is the only way they make money. As a result, their dedication and commitment to creating quality partnerships with their customers is hugely important.
2
To cultivate an ongoing relationship with their customers, these brokerages strive to understand each shipper’s business intimately. Understanding their processes and anticipating their needs as time goes on.
3
Most agent-model brokerages don’t employ separate carrier representatives — individuals in charge of maintaining relationships with trucking companies. Instead, this duty falls onto the freight agent’s shoulders, giving them an intimate understanding of each carrier’s competencies and strengths.
4
Increased understanding of both their customers and their carriers allows agent-model brokerages to become a true extension of each company’s supply chain. This helps them find the absolute best-fit situation for all parties.

Disadvantages

1
Many times, agent-model brokerages are only able to offer a slim number of transportation services. Since these companies don’t have the resources of larger firms, it can be difficult for them to expand their offerings — leaving their customers with limited options.
2
Agent-model freight brokerages typically don’t have much infrastructure behind them. This can lead to issues servicing customers when times are tough as taking a loss on a mispriced shipment isn’t an option.
3
These freight brokers don’t own any trucks, trailers, nor do they employ any drivers. As a result, supplying a “guaranteed” truck for their customers is impossible.

Freight Brokerage Type #2:

Traditional Freight Brokerages

Being traditional is cool. If it ain’t broke don’t fix it, am I right?

Too many businesses fall into the trap of making unnecessary changes. It’s just that nobody wants to miss the boat. Especially with horrific case studies about how a failure to act costs good companies everything.

Ever heard of Blockbuster video? They didn’t change a thing and — in a matter of a few years — plummeted from their position as an industry titan, into a bankrupt corporation; $900 million in the hole. Needless to say, this isn’t an enviable state of affairs.

Headstone with Blockbuster logo on it

Luckily, traditional freight brokerages are nothing like the video-rental giant whose story will live in infamy. In fact, I’d venture to say that many of the brokerages that would be considered “traditional” are some of this industry’s most innovative.

Traditional freight brokerages are structured as split-model operations consisting of a sales team and a group of carrier representatives.

While each sales representative works to find customers and book shipments, a traditional broker’s carrier representatives locate and vet the carriers used to move them. Together, these divisions show each of their partners the attentiveness they deserve.

Unlike an agent-model brokerage, traditional brokers give their sales reps a base salary and benefits coupled with a small amount of the gross margin on each load. This helps these workers keep the best interest of each customer in mind as they’re not fully reliant on earning a commission.


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Using a Traditional Freight Brokerage

Advantages

1
Because they have both carrier and sales representatives, traditional freight brokerages are able to compile a wide network of partnerships. Where maintaining relationships may be difficult without each of these divisions, a traditional freight brokerage’s structure makes this possible.
2
Traditional freight brokers have an easier time sticking to their rates than other transportation providers. Because of their infrastructure, larger brokerages, in particular, are able to take a hit and provide their service, even if their original rate is a little low.

Disadvantages

1
These freight brokerages don’t own any trucks, trailers or physical assets of any kind. As such, they can’t guarantee capacity or dispatch a driver to their customer’s freight.
2
Some of the largest brokerages hold thousands of partnerships. This can make it difficult to get the personalized service of agent-model brokerages.

Freight Brokerage Type #3:

Asset-Based Freight Brokerages

The third type of freight brokerage that you’ll likely run into during your search for a partner is the “asset-based” freight brokerage.

In the transportation industry, people love “assets.” Assets (like trucks and trailers) keep this world moving and owning them — although a large investment — can be a great. . . well, asset.

Freight brokerages that hold the title of “asset-based” are trucking companies that also maintain legal permitting to operate as a brokerage. Aside from the fleet of trucks, trailers and drivers — that they enjoy utilizing — these companies also have a network of carrier partners.

Many times, the mix of these two carrier “pools” allows asset-based brokerages to offer transportation services through a number of avenues.

Using an Asset-Based Brokerage

Advantages

1
Using their fleet of trucks, many asset-based brokerages are able to guarantee their customers a truck. This can be highly valuable for shippers

in times of urgency.

2
Asset-based brokerages are able to supply a wide array of services to their customers — be it using their asset fleet or carrier partners. These companies are able to serve customers in ways that strictly

asset companies

— or other brokerage types — simply can’t.

Disadvantages

1
Since owning and maintaining a fleet of assets is such an investment, these brokerages often prioritize keeping their trucks moving. This can be detrimental to shippers as they aren’t given a true best-fit solution.
2
Putting their asset trucks first can sometimes raise their customers’ prices.

Deadheading in one of their trucks

will cost more than finding a brokered solution in the area.
Freight Brokerage Type #4:

Third-Party Logistics Provider

This type of provider is the most hands-on. Third-party logistics companies (3PLs) basically become their customer’s supply chain logistics department.

Freight transportation, warehousing, inventory rollout and supply chain fulfillment are the core aspects of the 3PL service offering.

If you’re completely overwhelmed and want peace of mind in knowing that your supply chain is in competent hands, consider a 3PL. Many shippers have found great benefit in utilizing the expertise of these companies.

That said, fully outsourcing your supply chain logistics and failing to learn these skills in-house can be crippling. As such, it’s important that you see the full picture before going down this road.

Here it is, gaze away:

Using a 3rd Party Logistics Provider

Advantages

1
Working with a 3PL completely removes the stress and responsibility of managing a transportation supply chain.
2
Using a 3PL saves companies time as they’re able to focus on other aspects of their business and leave the transportation to the experts.

Disadvantages

1
Businesses that utilize a 3PL don’t develop the skills needed to manage their transportation supply chain, leaving them at a disadvantage.
2
3PLs can hinder their customers by making them wholly reliant on their services. Separation from these companies can be difficult for many shippers.
3
Working with a 3PL can often raise an added barrier for shippers who want more control over their transportation network. This makes it difficult for these companies to exercise control over certain aspects of this process.
Freight Brokerage Type #5:

Digital Freight Brokerage

We live in the digital age. There’s no going back now and, honestly, I'm ok with it. Grubhub is nice, Food Dudes is cool and now I can make a dinner reservation at the touch of a button. Hmmmm, maybe I just like food-related technologies? Don’t judge me.

Digital freight brokerages have fully embraced our shiny new reality. And, while Elon Musk continues to dig a hole under Los Angeles, digital brokers are cementing their role in this industry.

Elon Musk

Think of digital freight brokerages as matchmaking websites. On these platforms, shippers are able to find a truck for their freight and do so rapidly.

Using various technologies and algorithms — and with minimal employees — digital brokers provide their services. Fewer overhead expenses allow these companies to quote freight at what is normally the lowest price.

If you’re looking for a purely transactional transportation provider, though, digital freight brokers may meet your needs perfectly.

Using a Digital Freight Brokerage

Advantages

1
Speed is a large selling point of these brokerages. Their freight rates are generated miles quicker than any of the other brokerage types.
2
Since these brokerages rely heavily on their technologies they don’t need many employees, nor do they boast high overhead costs. This helps these companies offer low rates and stick to their pricing — even if they take a loss.

Disadvantages

1
If you’re looking to develop a relationship and ongoing partnership with your brokerage, this won’t be possible with a digital broker. These businesses offer solely transactional services.
2
Digital freight brokerages, to this point, aren’t able to offer a wide array of transportation services. For the most part, digital brokers can only reliably quote personal dry van and flatbed freight. As such, don’t expect to move heavy haul, more specialized goods or any load with special needs using a digital freight brokerage.
3
Since transactions with a digital broker seldom involve an actual person to pivot when problems occur, don’t expect to receive good service should something go wrong on your load.

What is the Best Type
of Freight Brokerage?

As you can see, there are pretty specific differences between each of these freight brokerage types. Each of them goes about offering transportation services in different ways. Each of them boasts separate sets of core competencies, advantages and disadvantages.

And, each of them fit a different type of customer, a separate set of needs.

That’s not to say that you can’t add more than one kind of freight brokerage to your network. These companies aren’t oil and water; they’ll mix quite well. In fact, locking your business into using only a single type of brokerage could be harmful.

Don’t clip your wings. Take flight. Use a digital brokerage for a last-minute shipment, an asset-based broker for time-sensitive hauls. Create a fruitful, ongoing, relationship with a traditional brokerage and use an agent-model provider for their expertise.

Businesses are dynamic and as your needs fluctuate, so too should your provider type.

Well, you made it this far. Should we talk about your money now?

I think we shall...

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What are the Different Types of Freight Brokers?


Chapter 7

How Does a Freight Brokerage Price Freight?

Partnerships are important to your business. No great success story is truly ever written alone. That said, the more you understand your partners — what makes them tick, how they offer their services and what their goals are — the better off you’ll be.

Just like many other transportation providers, a freight brokerage’s method for pricing freight is done in one of two ways:

Pricing Methods
1
Spot rate pricing
2
Contract rate pricing

Whether your brokerage quotes your freight using the spot market or locks in your rate for the long term depends on your needs.

As the amount of truck capacity your business requires increases, and the frequency of your shipments ramps up, the type of pricing you receive from your brokerage will change.

As we continue, I want you to keep this in mind: The transportation landscape is always changing and so too will your needs. For this reason…

it's very likely that you'll receive both spot and contract prices when working with a freight brokerage as time goes on.

So make sure not to doze off in the following sections. This isn’t Calculus class —

you'll actually use this information
someday soon.

What Are Spot Quotes and
How Do Freight Brokers Use Them?

Spot quotes are freight rates calculated to match the current price of obtaining a solution for your load. These rates are based on what market conditions — at the time of quotation — dictate the transportation of your goods will cost.

Spot quotes — when given by your freight brokerage — are based on a number of cost indicators that impact the final price you’re given.

This includes, but is not limited to:

Supply and demand in your origin.

The number of trucks able to haul your load as compared to the number of other shippers that want that truck’s space.

The specifics of your freight.

Does your freight require special permitting or accessorials? If so, this will increase your spot quote.

The distance your load needs to travel.

The way your spot quote is calculated is based on your length of haul (LOH). For longer hauls (400+ miles), expect to pay a rate-per-mile. Shorter hauls, however, may require a set “day rate.”

The urgency of your shipment.

Spot rates increase exponentially as the amount of warning you give your brokerage — prior to the moment your freight needs to load — diminishes.

Supply and demand in your destination.

Finding a trucker to go into a remote area, where locating their next load will be difficult, can increase your spot rates.

Fluctuations in the cost of transportation services happen on a dime. As a result, spot quotes are known for their instability and expire quickly.

Since these quotes change from one shipment to the next — and don’t lock in long-term commitments for any party — they can be frustrating for shippers looking for cost savings.

Too often, shippers are left wondering why their brokerage has come back to them for more money — beyond their original quote — when the market adjusts.

Although the best freight brokerages are able to dig into their convictions and stick to their spot rates for an extended window of time — maybe even taking a hit when price adjusts — this isn’t a universal truth.

You see, the best freight brokerages price their customer's freight "to execute." This is the exact dollar amount it'll take to execute the shipment

— no more, no less.

To illustrate how this is done, here is a quick lesson on how freight brokerages use the spot market to price your freight.

How Does a Freight Brokerage
Use the Spot Market?

To find a truck for their freight, shippers bring each load to their trusted freight brokerage for assistance. In doing so, these companies relay all important information such as timelines, freight dimensions and pick-up and drop-off locations to their selected partner.

Following this interaction, and the information provided by each shipper, freight brokers start making decisions.

Using an internal database — to sift through their wider network of carriers — freight brokers match all high-rated, competent, trucking companies capable of hauling it to their customer’s load.

Next, good brokerages check each load against shipments — with similar requirements — they’ve moved in the past. By referencing prior successful transport, freight brokerages are able to verify — and estimate — where the cost of this latest shipment should be.

That said, the spot market is always moving. To stay on top of current market conditions, brokers utilize internet load boards like DAT and truckstop.com.

These websites help brokerages ensure that the rate they’re quoting — a rate carefully calculated based on the specifics of each load — will get the job done.

Note, these quotes are only usually good when projected 24-72 hours out and sometimes may need adjustment.

Since this shipper hasn't locked themselves into a contracted rate — for whatever reason — their spot quote is only good to secure a one-off solution for their business.

When Does a Freight
Brokerage Use Spot Quotes?

Where applicable, spot quotes can be a great resource for shippers searching for truck capacity. Unfortunately though, what spot quotes offer in short-term efficiency, they lose in price stability.

Paying the current market price and securing capacity on short notice (although more expensive) are huge upsides offered by spot quotes. As such, for the shippers without consistent truck capacity demands, this system for pricing freight works wonders.

That said, many freight brokerages realize that solely offering their customers spot prices leaves them with missed opportunities. As a result,


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freight brokerages only give their customers spot rates until it fails to make financial sense for them to do so.
Example

Let’s take Bamboozled, a manufacturer of bamboo snow shovels, for example.

For many portions of the year, Bamboozled works with their freight brokerage to find trucks using spot quotes. Late spring to early fall isn’t peak season for Bamboozled — a nationwide manufacturer — leaving them with little outbound freight.

As soon as mid-fall comes around, however, everything pivots for Bamboozled. No longer is the sun shining across the Midwest. And as the weather outside changes — bringing with it the promise of a cold, dark winter — Bamboozled’s transportation plans take a new course.

Graph illustrating the demand for shovels

Now the sporadic spot rates that sustained Bamboozled through their offseason won’t meet the mark as their capacity needs rise. Gotta get those shovels onto store shelves. Gotta save American driveways before the snow sets in.

Recognizing this shift, Bamboozled’s freight brokerage takes initiative, opting to move their freight under a contracted rate. This helps Bamboozled manage their hastened supply chain, budget for future payments and continue the business of cleaning Midwestern sidewalks.

When a shipper’s demand for truck capacity meets a momentary influx, spot quotes are the way to go. There are a lot of instances where spot quotes simply don’t make sense though.

I bet you know where I'm going with this. I’ve teased it a bit up above. Yeah, let’s talk about the other way freight brokerages price freight, using contract rates.

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What are Spot Market Quotes and How Does a Freight Brokerage Use Them?


What Are Contract Rates and
How Do Freight Brokers Use Them?

The word “contract” can sometimes have a negative connotation for me. I guess it feels. . . constrictive. Like, by signing a contract, I'm stuck or tied down in some way. Unable to do things I'd otherwise do.

If you feel the same way — if the thought of signing a contract leaves you with a churning stomach and dry mouth — that’s okay. I’m here to give you the green light on this one. Contract rates, when presented by a freight brokerage to their customers aren’t meant to lock them into something predatory.

These are just another way for a freight brokerage to serve customer needs beyond what would be possible by spot quoting their freight.

Great freight brokers use contract rates to simplify a process that can otherwise be difficult to get right. And, for the shippers that use them,

contract rates are a valuable tool, allowing them to budget and plan for upcoming transportation expenses.

Although these rates are calculated using a similar set of variables as spot quotes, contract rates are good for a fixed length of time. Usually, these contracts are signed — by both brokers and shippers — with the intention of holding rates steady for a specified period (usually one year).

Many times, a freight brokerage will recommend that their customers transition away from spot to contract rates when it makes sense for them to do so.

Why Would a Freight Brokerage
Utilize Contract Rates?

Since contract rates aren’t subject to fluctuations in the overall trucking market, they can offer shippers security in both capacity and pricing. And because they have a contract with their broker, shippers are able to forecast their spending well into the future.

More importantly, though, great brokerages strive to create long-term, mutually beneficial partnerships with their customers.

This process is made more difficult by consistently utilizing spot rates in a one-off fashion. Instead of continually working to generate these quotes — which don’t lock in any ongoing commitment — contract rates help brokerages facilitate healthy partnerships.

In a nutshell, a shipper-broker contracted rate allows freight brokerages to completely align themselves with their customer’s needs. And as time goes on, contract rates promote long-term partnerships between parties.

Learn more about the pros and cons of spot vs. contract rates.

Chapter 8

How Does a Freight Brokerage Make Money?

Now that you understand how a freight brokerage prices your freight, you’re likely wondering what’s in it for them.

What do they receive in return for getting your goods moved?


Will they upcharge you to turn a profit?


Wouldn't it be more cost-effective to work directly with the carrier yourself?

It just doesn't add up, does it?

Gross Revenue:

The total amount of money a freight brokerage makes from selling its services without subtracting any expenses.

Gross Margin:

This is the percentage of overall dollars a brokerage is left from revenue-generating activities after subtracting the costs incurred while executing their services.

Net Margin:

Net margin is displayed as a percentage and indicates the portion of money a brokerage is left with after paying all expenses. For a healthy freight brokerage, a net margin in the range of 3-8 percent is quite common.

Together, these metrics give freight brokerages the information they need to make any necessary adjustments to their strategies. Since brokers keep the lights on by taking a portion of the total dollar amount their customers pay, making a huge amount of money on a single load simply isn’t feasible.

Instead, a freight brokerage looking to survive, stay in business and make waves in the transportation world will need to adopt a long-term mindset. To do this, these brokerages focus on providing their service at the highest possible level, cementing their place as an integral part of their customers' supply chains.

But what must a freight brokerage do to bring as much value as they can to their customer’s transportation supply chain?

Ask and you shall receive, my friend…

ask and you shall receive...

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How Does a Freight Brokerage
Earn Their Money?

For a freight brokerage to increase their gross margin — and therefore the amount of revenue they’re left with — they need to save their customers money on each transaction.

If you’re anything like me though, it can be hard to believe that any service provider is truly trying to save their customers money. And, if my most recent $37 haircut is any evidence, many times they’re not.

This conundrum is compounded further when you consider that the sales representatives at many freight brokerages — including those of the agent-model and traditional variety — take home “commission dollars.”

Sure, this fact may press a bad freight brokerage to increase rates for the sole purpose of turning a profit. But, in a free market economy where shippers have so many other options and fruitful long-term partnerships are hard to come by, good brokers never would.

Instead, the best freight brokerages work to develop a skillset of service comprised of trucking market visibility, technology usage and expertise.

To save their customers money — and turn a profit —freight brokerages must become the greatest version of themselves.

Maintaining a firm command of their craft throughout these three avenues helps them do just that.
Utilizing Trucking Market Visibility Utilizing Technologies Leaning on Their Transportation Industry Expertise

Cost-Savings Tactic #1:

A Freight Broker's Trucking Market Visibility

The business of brokering freight is nothing if not complex. With so many trucks zooming down America’s freeways, it can be easy for inexperienced companies to get lost in the mix.

Good brokers, however, lean into this challenge. Just because there’s so much going on in the transportation industry doesn’t mean that their customer’s best-fit transportation solution isn’t out there.

Through communication with their carrier representatives (in traditional brokerage models) and the use of online databases, freight brokers are able to pinpoint the right solution for their customer’s needs.

This right-fit solution might be a trucker who just finished a shipment and is looking to get back home. In these situations — when a driver is looking for “backhaul” freight — the price of their trailer space tends to be a bit relaxed. Good brokers know this and work to save their customers money using their trucking market visibility.

Cost-Savings Tactic #2:

A Freight Broker's Technology Usage

The largest marker indicating whether a brokerage will be successful long term is its ability to adapt — to change with the world around it.

Since change is such an inevitable, unwavering truth in today’s society, a broker’s ability to adjust to it matters greatly.

 
The best brokers, recognizing the benefit of each new technological innovation in their business, work to utilize them fully.
To add value to their offerings, brokers use tools like:
Automated safety systems
Internal load-tracking systems
Internal carrier-ranking portals
Transportation analysis software

Sure, a new load-tracking software system boasts a heavy front-end cost and limits a broker’s ability to hit it big with Dogecoin investments.

 
Good freight brokers, though, shoulder the price of these tools to help them do their jobs better, providing service at a higher level.

Transportation analysis software, internal carrier ranking and safety systems and internet load boards help brokers save their customers money by matching their freight with the absolute best-fit solution for their needs.

So treat yourself to that extra month of Stitch Fix; this one’s on us.

 

Cost-Savings Tactic #3:

A Freight Broker's Transportation Expertise

If you take nothing else away from this article, I want you to understand this:

Good freight brokers are truly transportation experts.

Moving freight efficiently and pricing it effectively is their job. Helping shippers meet deadlines is their competency. Providing the right solutions to meet their customer’s needs is their expertise.

Although millions of freight shipments are moved around the U.S. each year, every one of them is different.

 
Like a snowflake or a fingerprint, no two shipments are the same and the best brokers understand this.

Whether it’s an out-of-the-box transportation solution to meet a last-minute, unique, set of demands, or otherwise, freight brokers take pride in getting the job done.

To meet the various needs of many customers, freight brokers must have finely tuned skills developed through continual training, proactive education, years of experience and, oftentimes, past failures.

Icon of hand holding chopsticks

It takes a keen eye to hit a 90 mph fastball,
a high IQ to win the Scripps National Spelling Bee
and at least three fingers to operate a pair of chopsticks.

To be a great freight brokerage — a brokerage that turns a profit while also saving shippers money — takes expertise. And the best ones. . . well, they’ve got it in spades.

Rest assured that the money you spend to work with a freight brokerage won’t leave you subject to an upcharge. The right freight brokerage won’t make extra money at your expense. Their trucking market visibility, technology usage and transportation industry expertise are what will end up saving you money. . . so they can make theirs.

Still not sold on freight brokerages?

 

Unsure of whether a freight brokerage can actually bring anything special to the table?

I’m not here to convince you otherwise or back you into anything.

My sole purpose in writing this is to give you all the information you need to make the right decision for your business, nothing more.

I wouldn’t dream of telling you all the good things about using a freight brokerage to try and sway your mind. . .

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How Does a Freight Brokerage Make Money?


Chapter 9

What Are the Advantages of Working With a Freight Brokerage?

You know that old "used car salesman" stereotype?

The one that paints a very pungent picture of what it means to be a car salesman?

A picture of multiple salespeople rushing to every individual that pulls onto the lot, trying as hard as they can to secure their business?

The stereotype that illustrates pointed advice framed to give high-interest rates the glimmer of cost savings? Dangling the fear of being left stranded with a set of keys in your hand, your name on the dotted line and a hollow feeling in your stomach?

Yeah, that stereotype.

Well, that stereotype is also commonly passed onto the business of freight brokerage.

Adjectives like…

pushy | disruptive | intimidating

…can sometimes be used to describe freight brokers. And in all honesty, for the worst of us these words may ring true.

With such a large transportation market — and more than 17,000 brokers in operation — the painfully bad few tend to drag the reputation of the great ones directly through the sludge; dirtying the fabric of a highly competent service industry.

There’s nothing good brokers can do to combat this stereotype other than with action. And, the best companies offer five core benefits to their customers. Benefits that are plenty capable of wiping the slate clean — and they often do.

Top 5 Benefits

of working with a freight brokerage to

move commodities of all kinds:

1
The partnership you’ll gain
2
The convenience you’ll enjoy
3
The money you’ll save
4
The flexibility afforded to you
5
The oversight they administer

In the best scenarios when you’re super-duper lucky, when the stars align and the heavens open wide, you’ll receive each of these benefits in your freight brokerage relationships. Only then will your transportation supply chain reach maximum efficiency and you’ll finally be. . . just kidding.

Many of this nations’ providers can give you each of these benefits and more. Let’s talk a bit more about the top benefits of using a good freight brokerage.

Benefit #1:

The Partnership You'll Gain

The best freight brokerages are constantly working to develop long-term partnerships with the companies they work with. If human beings are social animals then freight brokerages are social corporations.

From each shipment to the next, a good freight brokerage works to ensure their customer’s needs are met and deadlines are kept.

To do so, good brokerages clearly communicate their capabilities and expectations with their customers, working to bridge any gap they may have in transporting their freight. Over time, with a bit of nurturing, a one-off shipper-broker load can turn into a standing relationship built on a foundation of trust and mutual understanding.

And, for many shippers, having a competent ally in the transportation world can be incredibly beneficial as their brokerage becomes a constant resource for them to turn to, no matter their needs.

Benefit #2:

The Convenience You'll Enjoy

A huge selling point of working with a freight brokerage is the convenience of having a capable, knowledgeable, provider at your side.

Since a brokerage takes care of things like vetting trucking companies, tracking your freight and communicating with all parties, these tasks are removed from your plate.

You see, taking the time to sit down and vet a myriad of trucking companies to ensure that you select the best one for your needs is highly time-consuming. And, without the proper level of expertise and investment into the right technologies, this process can prove impossible.

This is where a brokerage makes its mark. By offering shippers exactly what they need — without the burden of finding the solution for themselves — freight brokerages become an integral extension of many supply chains.

Benefit #3:

The Money You Can Save

I’ve said it before and I’ll say it again, freight brokerages can save their customers money. And, when you consider that doing so is the only way that any of this works, it makes sense.

No one likes to use a transportation service — a service that’s often seen solely as an expense — that’s overpriced. To mitigate this issue, freight brokers use their expertise to pad their customer’s bottom line.

Through clear communication over expectations and the specific needs of each shipment, brokers utilize their thoroughly vetted network of carrier partners to locate the right truck for each load. And, whenever cost-savings are an option, they jump at the opportunity.

As transportation experts, freight brokers lean on their knowledge to make the tough decisions for their customer’s freight. One common instance where this comes into play is when the time comes to select the correct trailer type for each load.

graphic highlighting a wide variety of trailers

 

The ratio of the number of loads looking for a solution in a certain area to the number of trucks ready and able to haul them — referred to as the "load-to-truck ratio" — has a heavy influence on the price of getting freight moved.

With this knowledge and their understanding of the dimensional capacities of each trailer, freight brokers are able to expand their customer’s options beyond what’s immediately evident — saving them money.


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Example

Let's say that you have a load of palletized rebar prongs that require protection from the elements in transit. On the surface, there are two obvious solutions for hauling this kind of freight:

T_11604_G_411117_Rick Steihauer01
1
Using an open-deck trailer with tarps
T_11604_G_411117_Rick Steihauer01-1
2
Using a Conestoga trailer

 

Both of these are competent solutions and do an apt job of moving palletized freight requiring protection from the elements. That said, in the interest of expanding their customer's pool of carrier options, a freight broker may consider a third solution:

IMG_20210626_075556888_Michael Yoes_G_532248
3
Utilizing a dry van trailer

 

You see, since this type of freight can be loaded from the back using a pallet jack or forklift, using a dry van to haul it is a perfect solution.

In recognition of this, the best freight brokers will be able to find the most cost-effective solution for their clients by leaning on their carrier partners. Carriers that offer services across open-deck, Conestoga and dry van trailer types.

 

Benefit #4:

The Flexibility You'll Be Afforded

Because of the firmly cemented carrier base at their disposal, freight brokers are able to offer flexible solutions to their customers in the form of service offerings.

From reefer transport to less-than-truckload (LTL) and heavy haul trucking, if you need to move some goods, it’s likely that your broker will be able to get the job done.

Some of the greatest freight brokers are constantly looking to expand their offerings, to add additional services to their catalog. As such…

Modern dark blue semi truck reefer trailer profile on green road
IMG_5797_Kyle Jensen
IMG_8714_1
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the right partner can become your one-stop shop for all of your transportation needs.
Benefit #5:

The Oversight a Freight Brokerage Administers

Logistics professionals have a lot going on throughout the day. Remember: a wise gal once said “managing a transportation supply chain isn’t simple these days” (where have I seen this before? 🤔).

Freight brokerages that are worth their salt know this. These companies understand the importance of putting the customer first, the important role they play in making their partner’s lives easier. And, at the end of the day, the freight brokerage you want in your corner is one that will remove stress from your day.

To do just that, freight brokers take the helm, steering your transportation supply chain in whichever direction it needs.

The duties they handle include, but aren’t limited to:
Scheduling pickups and drops
Filling out any necessary documents
Ensuring all paperwork is in order
Finding the absolute best solution for your needs
Dealing with any issue that may arise (truck breakdowns, bad weather, etc.)
Communicating in-transit details
Offering load-tracking capabilities on many loads
Moving your freight is complicated enough without your freight brokerage making it more difficult.

That said, trusting your partner’s expertise to oversee your freight from start to finish can be a bit of a leap. The level of your involvement, however, is totally up to you.

Simply communicate your expectations and desires to your broker. The good ones will adjust their participation accordingly, giving you space where needed and assistance when requested.

It's really as simple as that.

 

Ok.

I think it's high time we talk about the elephant in the article. We simply have to discuss the common problems shippers run into when working with bad brokers.

Honestly, I’m not sure why you’ve been so set on avoiding it up to this point. . . sheesh 😏.

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The Top 5 Benefits of Using a Freight Brokerage


Chapter 10

What Are the Disadvantages of Working With a Freight Brokerage?

Not everything is always rainbows, unicorns, Reese’s Pieces and butterflies, my friend. I’m sure even Brad Pitt has a blemish here or there — though I fail to see one from where I'm sitting (what a dreamboat).

Yes, it’s fair to say that not every freight brokerage is created equally.

There's certainly a bad seed (or 2,000) out there.

 

And unfortunately enough, companies with these tendencies fail on their customers frequently enough that we’ve been able to compile a pretty reliable list of problems.

That said, not every disadvantage you’ll run into when working with a brokerage is the same. Some pop up on an individual scale while others are simply due to the nature of this business. All of them, though, are important for shippers like you to note so that you can avoid their impact on your supply chain in the future.

Top 5 Problems
you may run into when utilizing a freight brokerage for your shipments:
1
Communication issues
2
Insufficient quality of service
3
Their ability to stand by their quoted rate
4
Accountability issues
5
Their ability to guarantee a truck for your freight

For your benefit, I've also left some tips to help you avoid the impact of these problems should you run into them in the future. You deserve the highest level of service possible, but if you run into issues with a bad broker use these tips to help you through them.

Problem #1:

Communication Issues

Communication is key to a broker’s ability to do their job correctly.

Scratch that.

Communication is key to every relationship.

 

Just ask Ross and Rachel. . . too soon?

Often, though, freight brokers aren’t good communicators. Important information like pick-up and drop locations get lost in translation, consignees are misinformed about drop-off times and delays occur.

This leaves the companies that work with these shoddy brokers at a severe disadvantage.

They aren’t given the benefit of a brokerage that understands their needs. Instead, they’re left with little idea of what to expect after tendering their freight.

This is damaging to their entire supply chain as things are thrown off course due to a lack of communication on their transportation provider’s part.

Tips for avoiding brokers with communication issues:

Be sure that your broker communicates with you from the start. Ask them plenty of questions about their load-tracking capabilities and track record moving your commodity. Make sure you’re given a single point of contact and get that person’s information.

Gauging the way they respond during your initial interaction will help you avoid this costly problem.

Problem #2:

Insufficient Quality of Service

Before anything else, freight brokers are service providers. Offering their service at a high level — a level that saves their customers money — is the only way they keep the lights on.

That said, this industry is full of companies that offer freight brokerage services well below par.

Brokers like this consistently fail on their customer’s freight, make it difficult to get an explanation as to why and up-charge their customers unnecessarily. Too often, good companies fall victim to brokers that are looking to solely turn a profit at their expense and nothing more.

Luckily, brokers like this rarely stick around long. Without offering reliable service, their customers have no reason to bring them repeat business. As a result, these businesses — which sometimes amount to no more than an individual with a computer and time to kill — are scrubbed from the marketplace.

Tips for avoiding brokers with poor service quality:

Before you fall into the arms of an unworthy brokerage, be sure to select a partner with a long history of operation. This industry has low barriers to entry, making it easy for brokers to pop in and out at will. As such, make sure your broker has been around the block a few times.

Ask them for references of current and past customers — getting both is preferable.

Reach out to these companies and ask questions like:

What was/has been your experience with this broker?


What is their service level like?


Do they communicate well?


Have they been reliable?

Problem #3:

A Broker's Ability to Stand by Their Quoted Rate

Pricing in the transportation industry is dynamic.

Every day the going rates for trucking services change.

 

This makes standing by the rates they give customers, difficult for bad freight brokers that haven’t priced freight appropriately.

You see, many times freight brokers don’t give the shippers they’re working with accurate pricing details. This is done in an effort to win their favor, secure their business and achieve some short-term gains.

And since many companies see their transportation dollars as solely an expense, they select the cheapest option; an option that usually takes the form of a freight brokerage with low overhead costs.

Since these brokerages — that seemingly only care about making a quick dollar — don’t ask for the amount of money needed to actually secure a truck for their customer’s freight, they do one of two things:

1
Come back to their customers later asking for more money.
2
Fail on their customers’ load, leaving them hanging and scrambling for a plan B.

Both of these options are damaging to the health of a shipper-broker relationship. As such, these partnerships inevitably fail. Leaving some companies without a solution for their freight and the burden of paying for a last-minute truck.

Tips for avoiding this issue:

Ask your broker how they price your freight and what they do when the market fluctuates. Before you give them your business, make sure they have reliably moved freight like yours before. To verify this, ask them what their track record is for moving these kinds of goods.

Competent freight brokers have nothing to hide and will supply this information willingly.


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Problem #4:

Accountability Issues

Not every brokerage is cut from the same cloth. Even though a good partner will stick by your side until your freight is delivered, the bill of lading is processed and the job is done, some won’t.

Brokers that give all of us a bad name are out there.

These providers slink into the shadows while there’s still work to do before a load reaches its destination and their obligation to it is finished.

While good brokers will pick up the phone and find their customers a solution when things go wrong, the bad ones abandon their partnerships.

Instead of finding their customer a power-only solution for a decommissioned truck — a truck that they arranged — a bad broker may wash their hands of the situation.

If you’re anything like me, personal and professional accountability is non-negotiable in the partners I engage with. That said, there are plenty of companies that simply don’t value these things. You’ll want to steer clear of them.

Tips for avoiding brokers with accountability issues:

This is where asking for references before you ever do business with a broker is key. Learn from their past customer experiences by finding out what their interactions with this brokerage were like, did they step up when something went wrong? Find out by asking for references.

Additionally, you’ll want to question your potential brokerage about what they do when something goes wrong on a load. It’s the trucking industry; there are a lot of unknowns and things are bound to go wrong from time to time. A trustworthy broker that values accountability won’t duck these questions. Instead, you’ll walk away with a far deeper understanding of their character, processes and culture.

Problem #5:

Many Freight Brokers Can't Offer "Guaranteed" Capacity

This one is more universal than the others. In fact, you’ll find that it’s difficult for most trucking companies — freight brokers or not — to definitively “guarantee” capacity for their partners.

Freight brokerages in particular simply aren’t able to point to a driver and dispatch them to their shipper’s load. It’s just not possible. Many of them don’t have any physical trucking assets of any kind, and those that do often struggle to guarantee one for their customers.

As such, if you’re looking for a company with a truck ready, willing and waiting to pick up your freight “forced dispatch” style, you’ll be disappointed by your freight brokerage.

Tips for avoiding this issue:

There are two things you can do to combat issues with a brokerage’s inability to “guarantee” a truck for your freight.

First, be sure to pick a brokerage with a sizable carrier network. The more options your broker has to choose from, the more likely it’ll be that they can find a truck for your needs.

Second, when it comes to finding your freight a solution, lead time goes a long way. Be sure to give your partner 24-72 hours of warning prior to the moment your freight needs to load. Doing so will grant your partner enough time to find you a great, reliable solution.

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Top 5 Problems With Freight Brokerages (+ Solutions)


Common Freight Brokerage Misconceptions

At this point, we’ve covered just about all of the high-level information you need to know about the freight brokerage business. From how a freight broker finds the carriers in their network to how they make money, you’ve put in some time reading this.

However, I don't want you to walk away from this guide with any knowledge gaps.

Setting this guide down and continuing on without truly understanding whether a freight brokerage is the right partner for your business would be a travesty.

Graphic of classic telephone game

That said, you’ve probably heard some things about the shortcomings of freight brokerages in the past. And even if you haven’t yet, it’s likely you will. You see, the business of brokering freight is given a bad reputation in this industry based on eight common misconceptions.

Misconceptions that aren’t universally true.

Similar to how the phrase “Hannah ate a lemon meringue sandwich” turns into “Nana made a silly mundane bandwidth” during a round of telephone, these myths about freight brokerage become warped over time.

In the interest of transparency

 

…let’s talk a bit about each of them so that you’re not caught off guard when they pop up in the future.

8
Most Common
Misconceptions

shippers have about

freight brokerages are:

1
Freight brokers are motivated to charge their customers more and carriers less.
2
Brokers don’t vet their carriers, they’ll work with whomever they can get.
3
Brokers can’t hold their carriers responsible.
4
It costs more to work with a brokerage than an asset carrier.
5
Brokers bid low on lanes to get business but can’t follow through.
6
Brokers respond slowly when things go wrong.
7
Brokers can’t provide load-tracking capabilities.
8
Brokers aren’t efficient at finding truck capacity.

Based on what you’ve already learned about this business, you should be able to see past these myths on your own but let’s quickly bust them anyway.

Adam Savage and Jamie Hyneman better watch out, we’re about to give them a run for their money.

Misconception 1:

Freight brokers are motivated to charge their customers more and carriers less

This misconception is based on the fear that freight brokers are only concerned with turning a profit on their customer’s freight. Shippers who hold this belief worry that they’re overpaying for their cargo simply because a freight brokerage wants to make some extra margin dollars at their expense.

This is not universally true though. As you now know, freight brokerages turn a profit by saving their customers money on the loads they’re given. In doing so, a broker’s gross margin grows as repeat business flows from an initial job well done.

Misconception 2:

Brokers don't vet their carriers, they'll work with whomever they can get

Although this may apply to some of the worst brokerages that don’t prioritize safety in their network, this blanketed statement doesn’t apply to the industry as a whole.

A good broker’s carrier vetting process is one of diligence and automation. When properly managed, not a single untested carrier is granted a load and unsafe partnerships are quickly amended.

Misconception 3:

Brokers can't hold their carriers responsible

While it’s true that a freight brokerage doesn’t physically control any of the trucks, trailers and drivers arranged to transport their customer’s freight, this misconception is just that — misconceived.

You see, trucking companies are constantly working to get the most out of their owned equipment assets; their investments. Maintaining a healthy relationship of give and take with their brokerage partners helps them substantially toward this end.

And so, freight brokers — especially the most successful ones — are given a large amount of leverage over the performance of their networks. And, should a carrier boast a history of falling through on their commitments, good brokers simply move on to the next — more reliable — carrier.

Misconception 4:

It costs more to work with a broker than an asset carrier

This one seems like it would make sense. I mean, the companies that actually own the trucks needed to move your freight should be able to price freight more competitively than a broker, right?

Actually, not always.

Since brokers — by utilizing their network — can extend their reach beyond a single fleet of trucks and trailers, their price elasticity can be greater than an asset company’s.

Purchasing a fleet of trucks and trailers and employing their drivers is a hefty expense that many trucking companies need to justify. As a result, the price of using a carrier’s assets — especially in a tight market — can get hefty.

As such, it’s not always true that sticking with an asset company will be less expensive. In fact, good freight brokerages can measure your needs against overall market conditions and pick your best fit solution from the field. This level of oversight can turn into cost savings.

Misconception 5:

Brokers bid low on lanes but can't follow through

As you’ll learn, some freight brokers — companies without regard for courtesy or the value of following through — solely work to underprice the competition.

These businesses carve out a niche — their very own blue ocean — by offering freight brokerage services at what seems to be a discount. Unfortunately, the shiny price tags that these brokers offer simply aren’t enough for them to actually follow through with your delivery.

Simply put, the price of getting freight moved is the price of getting freight moved. This price may increase as you give your provider less time or based on current market conditions. As such, bargain-basement prices — especially when offered by a freight brokerage — aren’t reliable.

Sure, this misconception may be true of the worst brokers but it’s not universally applicable. The best brokers alway price freight based on what it’ll take to execute each shipment. Nothing more, and certainly, nothing less.

Misconception 6:

Brokers respond slowly when things go wrong

The tedium of the workday can drag on. . . and on for workers in most industries. This isn’t true of the business of freight brokerage. It’s fast-paced. And in an industry like transportation — a world subject to a number of variables — sometimes, things go wrong.

Even though it’s true that brokers don’t have a physical “power-only” solution for their customers' freight following a truck breakdown, for example, it doesn’t mean they won’t find a timely solution.

Good freight brokers are true masters in their craft;

this includes responding to issues in a hastened manner. By leaning on their network of partners in your load’s area, you can rest assured that your freight will be taken care of.

Misconception 7:

Brokers can't provide load tracking capabilities

For a broker to offer load-tracking capability, everything must start at the driver level.

Only truck drivers can decide whether they’ll allow a freight brokerage in-transit visibility and — for whatever reason — many don’t.

Since load-tracking is such a valuable tool, freight brokers rely heavily on the trucking companies that grant them this level of oversight. Though some carriers don’t let brokers employ load tracking using ELDs or mobile applications, many do.

You see, offering these capabilities increases the value each carrier brings to a broker's network which, in turn, increases the likelihood that a broker will bring them freight.

More often than not, freight brokers utilize companies that give them load-tracking capabilities. If you’re looking to utilize these capabilities on your load, the freight brokerage you choose will be able to provide them.

Misconception 8:

Brokers aren't efficient in finding truck capacity

Trucking companies find and supply trucks for their customer’s freight by understanding the competencies of their network and the needs of their drivers. The more trucking companies plan and communicate with the shippers they work with, the better off they are.

Good freight brokerages succeed in a lot of the same ways. Through transparent communication about their competencies and where expectations should be set, brokers provide their service at the level their customers need.

And, should an area of weakness rear its head,

 
the best brokerages work to expand their reach by adding additional carriers to their fold.
Timing is everything in most industries.

Good brokers know this and work to make the lives of shippers smoother, day in and day out.

 
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Can I Trust a Freight Broker? (Debunking 8 Freight Brokerage Myths)


Chapter 11

How to Select the Right Freight Brokerage for Your Business

As a kid in the upper midwest, the fleeting summer months always seemed special. Maybe because the cold weather was inevitably coming and, deep down, I knew it.

Every year my family and I would travel to a cabin in the heart of lakes country. During our second year, I stumbled upon a quaint raspberry patch owned and operated by a sweet elderly couple.

That field of fresh berries became a staple piece of our yearly itinerary. Searching for and selecting the ripest berries became a welcome competition between my brother and me. But, it quickly became apparent that the best tasting raspberries weren’t always the ones we thought.

Often, the biggest, brightest, pinkest berries left a sour taste in my mouth while berries of the smaller, dark-red variety — although less visually appealing — stole the show.

Graphic of raspberries

 

Initially, I left the grove with a carton full of giant, plump, delicious-looking berries only to be let down when the time came to, finally, consume my winnings.

You see, I didn’t know what to look for in a good raspberry and, without this knowledge, missed the mark. But I adjusted. I learned from my mistakes and, eventually, developed a keen eye for selecting only the most scrumptious berries. . . Smuckers, here I come.

This pattern holds true when it comes to the freight brokerage selection process. Picking the right provider for your business isn’t as easy as selecting whichever company simply looks the best at first glance.

No, to make the correct selection decision, you’ll need to understand the makings of a great broker and choose accordingly.

Don’t walk away from your freight brokerage partnership with a sour taste in your mouth and an aching gut — which was commonly the case with my raspberries.

You deserve the benefits stemming from working with a competent freight broker. It’s time you found your dark, delicious raspberry in a grove of bright shiny misfits.


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Top 5 Things to Consider When
Selecting a Freight Broker

Finding your right-fit brokerage won’t be the easiest thing you’ve done. Heck, it might not even make the top 10. You see, many shippers hit stumbling blocks along the road to finding a partner.

That said, choosing a great freight broker is far from impossible and, when done correctly, is certainly worth the effort.

Here at ATS Logistics, we’ve been around for over three decades. And, in our experience working with shippers across the nation, there are five overarching things shippers need to understand about every freight broker they utilize.

These 5 Things

shippers must understand in order to select

the right brokerage for their business are:

1
What are this freight broker’s strengths?
2
What is the size of this freight broker’s network and what is their carrier selection process?
3
Does this brokerage utilize technologies and offer load-tracking?
4
What is this broker’s track record and are they reliable?
5
What are this brokerage’s overhead considerations?

The fact of the matter is, though, to gain an in-depth understanding of how each brokerage stacks up, you’ll need to lean in and ask them the tough questions.

You’ve got enough to worry about in your day-to-day life. There’s no need to let your freight brokerage add to this burden. Let’s go through each topic you’ll want to cover with your potential broker as well as some questions to guide your search.

It’s time to find a broker that’ll be with you through highs, lows and everything in between.

1. Understand Your Potential Broker's Strengths

Any successful partnership requires a comprehensive and mutual understanding of each party’s proficiencies. This makes working together and meeting your goals easier as you lean on your strengths where needed and theirs in areas that challenge you.

No one succeeds on their own. It’s as simple as that.

John Lennon’s guitar and songwriting skills coupled with Paul McCartney’s on-stage prowess and angelic vocals is what helped the two of them form The Beatles in 1957. Each of these men, without the other, would never have become the rock and roll icons they are today. They simply didn’t have the skillset individually.

Lennon and McCartney changed the course of music history by recognizing the other’s strengths and working together to create some of the world’s best music.

This pattern of two individuals working together to turn their individual strengths into a collective skillset is seen repeatedly throughout history, in some of the most impactful partnerships.

From William Procter and James Gamble, whose collaboration gave us household items like Tide and Bounty, to Orville and Wilbur Wright who partnered to give the whole world wings, the importance of leaning on and understanding your partner’s strengths cannot be overstated.

That said, great partnerships are borne of respect and understanding. Without acknowledging these things, even the most well-intentioned relationships flounder and, inevitably, fail.

This couldn’t be more true of the relationship shippers like you foster with their freight brokerage.

If you want to reach mutually beneficial pastures, you’ll need to understand where their strengths lie. This will help you determine where they fit in your supply chain, where they can help you and where they plainly can’t.

Question Checklist

Ask your potential brokerage the following questions:
 

"What are you good at?"

Why it's important to ask this:
Some brokers are excellent at moving dry van freight, others have a heavy network of open-deck carriers, while more still are great at servicing longer lengths of haul. Expect your brokerage to respond with a list of their core competencies so that you can decide whether they fit your needs.

What to look for: 
If you ship various types of freight and often need different kinds of trucks or trailers, find a brokerage that offers a wide variety of capacity across equipment types. You want a provider who will grow with you, having a breadth of offerings will help them do this. Whether you need multiple trailer types or not, make sure that they’re good at moving your type of freight.

 

"What type of freight commodities do you move most frequently?"

Why it's important to ask this: 
Brokers tend to lean into their strengths and as a result, move the same kind of freight frequently. Asking them about the type of freight they’re moving most often will give you an idea of their comfort level moving your commodity.

What to look for:
Look for a brokerage that is transparent about the type of freight they prefer to transport. Ask how they determine if their carriers’ drivers are trained/prepared at hauling freight like yours. This will help you discern how they’ll perform as a potential partner and whether they’ll be capable of transporting your cargo safely and free of damage.

 

"What are you not so good at?"

Why it's important to ask this:
It can sometimes be difficult for anyone, brokers included, to admit where they’re deficient. By asking your potential partner this question, you’ll walk away with a far better understanding of what they’re not necessarily experts in. By truthfully answering this question, your broker will also be giving you a glimpse of the transparency that’ll come with working with them.

What to look for:
Brokers who are plainly truthful when you ask them this question make good partners. That said, even though you might admire their candor, don’t ultimately select a brokerage that says they’re not good at moving your freight just because you want to reward their honesty. At the end of the day, you need a competent partner.

 

"What are your preferred lanes?"

Why it's important to ask this: 
The routes and distances your brokerage services most frequently will give you insight into how large their reach is and whether their strengths in this respect will assist your business.

What to look for:
Look for a freight brokerage that services lanes that match your needs. For example, if the majority of your shipments are from Dallas to Houston, you won’t want a partner without experience, or network options for, moving goods along this stretch of Interstate 45.

2. Carrier Network Size and Selection Process

Step two in your freight brokerage selection journey is ensuring that when it’s time to get your shipment moving, they’ll have the resources needed to get the job done.

The last thing you want to do is give your freight to a broker who says they’ll find you a truck only to have them fall through because they didn’t have the capabilities or the network you needed.

Find a brokerage that has a sizable network of carriers in your area so you’re not left stranded without a truck at the time of pick up.

Additionally, the size of each broker’s network says a lot about their operations as a whole.

Think about this:

When entering into a partnership, especially one that you hope will be ongoing, dynamic and fruitful, do you want:

  1. A partner whose history displays a significant deficiency in their ability to maintain viable relationships and to find willing partners?
  2. A partner who continually adds new partners — who are eager and willing to share their business with them — while at the same time successfully maintaining relationships with other long-time associates.

I’m guessing the latter. This is why finding a brokerage that maintains and adds to their carrier network with diligence, accepting the best carriers and omitting the worst, is key. Trucking companies won’t do business with a brokerage that doesn’t help meet their goals. Why should you?

The second step is finding a brokerage who properly vets the carriers in their network for things like safety, track record and reliability history. All of these are metrics for identifying a healthy trucking company and good brokerages know this.

Question Checklist

To help you find a brokerage with a sizeable, well-vetted, carrier network that will meet your needs, ask them the following questions:
 

"How many carrier partners do you currently have?"

Why it's important to ask this:
There are more than 700,000 trucking companies in the U.S. and 98 percent of them have fewer than 20 trucks in their fleet. As such, brokers need to have many good companies in their network to serve their customer’s needs. That said, some brokerages have minuscule networks, while the largest have expansive networks of more than 100,000 partners. Although smaller brokerages may have their own niches and specialties, understanding the size of their network is an important factor in making your final decision.

What to look for:
Find a brokerage that has a network large enough to meet your needs. The more options your broker has to choose from the more likely they’ll be to find a truck for your needs at a reasonable price. Additionally, you’ll want to find a partner who prioritizes quality over quantity in their network, ask them how they manage different types of carriers. Keep in mind: one reliable, safe carrier partner is better than 100 bad ones.

 

"What is your carrier vetting process?"

Why it's important to ask this:
Some brokers may prioritize quantity over quality. As such, it’s important that you don’t base your decision on the size of a brokerage’s carrier network alone. A proper vetting process will show you whether this broker truly cares about their customer’s freight. Do they have the processes to ensure they utilize the industry’s most qualified carriers? Let’s find out.

What to look for:
Look for a brokerage that closely scrutinizes a carrier’s performance record, CSA rating, load count history, equipment type specialization and company history. All of these factors give brokers a good metric for determining carrier quality, longevity and reliability. Selecting a broker who vets their carrier network in this way will help to ensure that you have the highest and most consistent quality carriers on your loads.

 

"How old is your longest carrier partnership?"

Why it's important to ask this:
The length of their relationships should provide you a good indication of how this broker really performs as a partner with their carriers. Partnerships, especially in the fast-paced transportation industry, can be challenging to establish and even more difficult to maintain. The longevity of their longest carrier relationships will tell you whether this broker will put in the work when times are tough and come through for you when you need them.

What to look for:
Look for a broker with a demonstrated history of longstanding relationships. Brokers who don’t maintain long partnerships should be excluded from your search.

 

"How often are you adding new carriers to your network?"

Why it's important to ask this:
Great freight brokers, especially those with a growth mindset, are constantly looking to add valuable carrier partnerships to their networks. This helps these brokerages adequately compete in the marketplace and provide consistent service as their customers grow.

What to look for:
Find a brokerage that frequently looks to add great trucking companies to their network across equipment types in all areas of the country. These brokerages are expanding their offerings and core competencies — something you’ll likely want and need in a partnership.

3. Technology Usage and Load-Tracking Capabilities

We live in the digital age, a time in our country’s history where self-will runs riot on the back of countless technological tools built to help us in our day-to-day routines.

Did you know that there’s currently an egg tray on the market that sends push notifications directly to your cell phone to let you know when you’re running low on eggs?

Yep. . . Genius.

Just like the “Quirky Egg Tray” is designed to answer the question of “Do I have any eggs at home?”, the trucking industry has an abundance of tools and technologies available to answer questions like “Where’s my freight?” and “What’s this carrier’s track record for on-time deliveries?”

These technologies are designed to make the lives of shippers, carriers and consignees easier. Additionally, the technologies available to brokers make it easier to provide visibility to their customers and keep all freight, and the motoring public, safe.

That said, not all brokerages use the latest and greatest technologies to help their customers thrive. Some brokers are resistant to them, while others simply may not have the resources to stay up to date. In either case, most of those without technology are simply unable to understand the advantages they can provide or how to utilize them correctly.

It’s vital that you find a brokerage that’s masterful in offering and maintaining progressive technologies if you want/need to use them. Beyond this, find a broker that has the ability and commitment to balancing technology with the one-on-one personal service you need.

There’s a time and a place for each, and a good broker will be able to provide both.

Question Checklist

Here is a list of questions that will help you determine whether a freight brokerage is technologically savvy enough to meet your needs.
 

"What load-tracking technologies do you utilize?"

Why it's important to ask this:
There is a wide variety of technologies available for a freight brokerage to track their customer’s freight while in transit. These technologies provide visibility to brokers and shippers alike, so that should something go wrong, they’re able to step in quickly and find a solution.

What to look for:
Look for a freight brokerage that utilizes electronic logging device (ELD) technologies such as Qualcomm, Omnitracs, KeepTruckin or Flex Fleet GPS to keep a careful watch on your load. Alternatively, phone applications such as TruckerTools, MacroPoint, DAT and Truckstop are great load-tracking mobile technologies many of the best brokers utilize.

 

"What technologies do you use to promote safe freight transportation?"

Why it's important to ask this:
Safety is the most important aspect of the freight transportation process. No one’s life should ever be at risk. That said, the stakes are high due to the size and weight of many shipments as they cruise down the highway.

As your freight moves down the road, it’s not just the value of the freight you’re moving that can be at risk, it may also be your public brand and reputation. As such, finding a partner with the appropriate safety practices is very important.

What to look for:
Find a brokerage that utilizes automated dispatch technologies to prohibit unsafe drivers from attaining your freight. Find a brokerage that has its own department dedicated to safety and safe practices. Better yet, some go far beyond the road, making safety a cultural imperative at the core of their entire company. Most importantly, pick a freight brokerage that is upfront and honest with you about their safety practices and values.

 

"What is your process for staying up to date with technologies?"

Why it's important to ask this:
Technologies in this industry are continually being revamped and updated with new capabilities. As new technologies surface, it’s important to find a brokerage that continually tests, locates and progressively updates these systems.

What to look for:
Find a broker who not only responds to this question but is able to give specific examples of the last time they updated their technological offerings.

 

"Do you offer a customer portal?"

Why it's important to ask this:
The best brokerages offer their customers access to their load’s tracking information, timelines and various other information on easily accessible online customer portals. These portals streamline transparency and communication to ensure you can track your load’s progress when and where it works for you so that everyone is on the same page.

What to look for:
Find a brokerage that offers the highest possible level of transparency. If a customer portal will help you feel more comfortable, find a brokerage that offers one.

4. Freight Brokerage Track Record and Reliability Considerations

With over 17,000 freight brokerages in the U.S., selecting one with a good track record of on-time deliveries and customer service is important.

Often this can mean the difference between happy customers coupled with supply chain efficiency and your load’s inevitable failure.

As you may suspect, brokers who frequently fall off and don’t come through for their partners, don’t advertise these deficiencies.

You’d never let a dentist with a track record of malpractice give you anesthesia and remove your wisdom teeth.

Nor would you trust that your broke, gambling-addicted best friend is giving you reliably actionable financial advice when he tells you that picking the Jets to route the Buccaneers this Sunday is a “sure thing.”

So why would you pick a brokerage that doesn’t reliably come through for their customers?

That’s right, you wouldn’t.

That said, without knowing the warning signs, it can be difficult to discern whether a freight brokerage is truly reliable or not.

Question Checklist

To help you do so and avoid the mishaps, delays and frustration that accompany unreliable brokerage partnerships, ask freight brokers the following questions.

If for any reason, a brokerage has trouble transparently answering questions about their history, values and track record, this is a red flag. There are too many good brokers out there to waste time or get stuck utilizing the bad ones.

 

"What is your on-time delivery rate?"

Why it's important to ask this:
Great brokers will have a calculated rate for on-time deliveries. Asking them to give you their specific number should be an excellent way to tell whether they care enough about their customers to calculate this number and whether they’re good enough to boast it.

What to look for:
Find a brokerage who’s upfront and honest when you ask them this question. Their on-time delivery rate won’t be 100 percent but their answer should accurately display their capabilities and the dedication they show their customers.

 

"What is your experience moving my type of freight?"

Why it's important to ask this:
Often, brokers have networks of carriers that specifically cater to certain types of commodities more than others. Additionally, freight brokers sometimes avoid freight that they don’t have expertise in moving, as they can’t help these shippers adequately.

What to look for:
Look for a brokerage that has a demonstrated track record of successfully moving your specific type of freight. If they skirt the question or say they’re uncomfortable in their ability to help move your product, find one that is. If they vaguely hint that they’d be able to move your freight, ask them for references to verify that they can actually move your commodity.

 

"How do you make sure that shipments deliver on time?"

Why it's important to ask this:
Although it’s not always possible, delivering freight to its destination on time is always the goal. As such, it’s important that you ask your freight brokerage about the steps they take to make sure that, barring unforeseen circumstances, their customer’s timelines are kept.

What to look for:
The right brokerage should smoothly answer this question by clearly stating the steps they take to get your freight delivered. This includes using internal vetting systems to find the best available carrier for your load, tracking your shipment regularly, ensuring all necessary paperwork and fees are handled and facilitating clear communication between all stakeholders.

 

"What do you do when something goes wrong?"

Why it's important to ask this:
This is trucking. Something is bound to go wrong eventually; whether it’s a truck breakdown in transit or severe weather offsetting your timelines, you’ll need to find a broker with a good process for finding a solution when things go south.

What to look for:
Find a broker who has a tried and true process for finding a solution to their customer’s issues. Follow up with questions about specific scenarios depicting when something went wrong and the steps they took to amend the situation. Or use some of your own past experiences with shipping when something went wrong and ask the broker how they would’ve handled it. Compare it to what actually did happen and whether it would have changed the outcome.

5. Freight Brokerage Overhead Considerations

A crucial piece of finding your right-fit freight brokerage that’s often overlooked is vetting this potential partner based on overhead metrics like:

Financial health
Number of employees
Size of company
Areas/regions of operation

Not all brokers boast the same level of financial stability, workforce quality or service area capabilities. A lot of brokers pop in and out of this industry frequently. This can make finding a stable one, with a solidly entrenched infrastructure, difficult.

You don’t want your brokerage to fall off the face of the earth when you need them to find capacity for you, especially with urgency. Some brokers offer stability to their customers and employees as well as warehousing services and offices throughout the nation.

Finding a brokerage that has a clear path forward without the crippling weight of unpaid debt and an under-compensated workforce will make for a fruitful partnership.

But how can you ensure that the sky isn’t falling in your potential partner’s operations like it did on Chicken Little all those years ago?

Question Checklist

Ask them the following questions and, if nothing else, the provider you select will have the financial capabilities and infrastructure needed to have your back when and where it counts.
 

"How long has your company been in operation?"

Why it's important to ask this:
The business of brokering freight doesn’t have high barriers to entry. Brokers pop up seemingly every day and often aren’t able to come through for their customers due to inexperience. Companies that don’t come through for their customers don’t succeed, which means that longevity in this business is earned and relatively speaking, pretty rare. New brokers pop up every day, but many disappear without a trace as well.

What to look for:
Pick a brokerage that has been in the industry for a substantial period of time. DO NOT select a brokerage that has been working in the transportation industry for a matter of months or a year. This isn’t enough time to develop competency.

 

"How many employees does your brokerage have?"

Why it's important to ask this:
Brokering freight isn’t a lonely business. Good brokers are always looking to expand. After all, properly managing many successful partnerships takes more than one or a few individuals. Brokers with good financial standing continually grow and aren’t afraid to add good people to their payroll when the situation calls for it.

What to look for:
Look for a brokerage that has many employees across many specialties. Ask them to describe how their workforce has changed over the past several months/years. Don’t pick a brokerage that is downsizing or has limited manpower resources.

 

"How do you make money?"

Why it's important to ask this:
Too often people aren’t sure how the freight brokerage business works and don’t understand how brokers make money while also moving their freight at competitive rates. Don’t be afraid to ask.

What to look for:
A good brokerage has nothing to hide. They provide a valuable service in helping you find the best-suited capacity for an affordable price. Many logistics professionals will attest that there is deep value in this kind of sustained partnership. Find a brokerage that quickly and transparently explains their gross and net margin figures as well as how they leverage their network to provide their customers competitive pricing while at the same time adding value.

 

"How are you structured?"

Why it's important to ask this:
Not all brokerages are modeled the same; freight brokerages come in all shapes and sizes, each with their own set of advantages and disadvantages for different sets of shippers. From traditional to agent models, it’s important that you understand the structure of your brokerage.

What to look for:
Find a brokerage who clearly and transparently tells you what kind of model they operate in and how this can benefit your business. You want your brokerage to see themselves as your right fit and their structure should match your needs.

Chapter 12

Arm Yourself With the Tools to Succeed

 

Whew. We made it.

Now that you have a comprehensive understanding of:

what a freight brokerage does
how they price your freight
how they make money
what they bring to the table
where they fall short

You're ready to begin the process of selecting yours.

It’s been an absolute pleasure describing the business that I’m so passionate about. Freight brokers are an essential piece of the world’s supply chain and if you add the right one to your network, you certainly won’t regret it.

I know that selecting the right one, however, can be difficult.

And during the selection process shippers sometimes make mistakes. Mistakes that lead to unhappy customers, failed loads, over-extended budgets and damaged partnerships. Needless to say, you’ll want to avoid these mishaps in your own selection process.

Over the past three-plus decades as a traditional freight brokerage, we’ve noticed a pattern emerge in the mistakes shippers make when selecting a bad brokerage. To help you become the supplier that always delivers, we’ve put together a comprehensive guide for avoiding them.

Issues like shoddy reliability, inconsistent communication and problems stemming from feeling like just a number shouldn’t paint your freight broker experience in a negative light.

Download the Freight Brokerage Selection Checklist_CTA

Finally, should you have any additional questions, please don’t hesitate to reach out to us here at ATS Logistics. We are always happy to help you in any way you need.

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