Are freight brokers dispatchers’ archenemies?

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Freight brokers are playing a huge part in the transportation business across Northern America. While brokers are a crucial part of the logistics industry, many will argue that they are an unnecessary burden, taking a large cut from the ever-shrinking money pot, called the trucking industry.

What is a freight broker?

According to Wikipedia, A freight broker is an intermediary between a shipper and a freight service provider. Freight brokers can specialize in certain types of freight, such as equipment hauling on lowboys, oversize, bulk tanker, auto, or other types of freight transportation.

A freight broker in the United States must be licensed by the Federal Motor Carrier Safety Administration (FMCSA) and be granted authority as verifiable via the FMCSA Licensing & Insurance database

What is the problem with freight brokers?

Trucking carriers, especially owner operators and 1-5 truck count size businesses, claim they can easily work directly with shippers, taking out the middleman, in this case, the freight broker. Brokers are taking a percentage off the freight moving prices and carriers say, they would keep that chunk of money for themselves, or at least share it with the shippers. In this scenario, trucking companies would be able to book freight directly with warehouses, factories, distribution centers, and others who need their freight shipped.

If you are a broker, here are some downloads you might find useful.

What is a trucking carrier?

A common carrier in common law countries (corresponding to a public carrier in some civil law systems, usually called simply a carrier) is a person or company that transports goods or people for any person or company and is responsible for any possible loss of the goods during transport.

Can trucking carriers work with shippers?

Yes and no. In theory, they can, and many are doing so, but if a warehouse needs to send hundreds of loads in a week or a month, they will need more capacity and more trucks and trailers at any given time of the day or even hour. Most trucking companies cannot fulfill those needs, and that's where freight brokers come in handy.

Also, factoring companies, which most truck carriers use, will only occasionally work with some shippers, and if a trucking company needs working capital fast, well they are in bad luck. They will have to wait for weeks and sometimes months to get paid from brokers or shippers, and factoring will only work with freight brokers. So, you are kind of forced to work with a freight broker if you need money fast.

If you are a carrier, here are some downloads you might find useful.

Is there any value a freight broker can provide to carriers?

Don't get me wrong. I have my own trucking authority and a dispatching company and sometimes I get mad at brokers, but brokers can come in handy in various situations. They can give you constant freight from multiple shippers, therefore having access to shipping companies across the US. They can solve problems easier and quicker than a warehouse whose primary focus is warehousing and not transportation. Brokers (I mean most of them) are professionals who specialize in freight and are much quicker to respond and address any issues with appointments, overages, or shortages.

Whether you think positively or negatively about brokers, they are here to stay and they play an important role in this multi-billion industry of ours.

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