A basic understanding of a freight broker vs carrier (trucking company) can quickly put the logistics game into perspective.
Freight brokers provide services such as finding carriers to transport freight, negotiating rates, and procurement services, while freight carriers are usually trucking companies that own their own fleet of trucks and take on freight directly from customers or freight brokers.
Depending on your company’s needs, you may require one, the other, or both services in order to make your freight ship easy and efficient.
Clarity on the key differences between a freight broker vs carrier will help you better understand which option is the best for your business.
3 Differences Between Freight Brokers Vs Carriers
Responsibility of a Trucking Company (Carrier)
When comparing freight brokers vs carriers, it is important to understand the distinct roles of each. Freight carriers, such as UPS, XPO, FedEx, JB Hunt, and Knight-Swift, are typically giant players in the industry that handle the physical movement of your freight from origin to destination.
Carriers typically offer various freight services like LTL (less-than-truckload), dedicated FTL (full truckload) freight, and specialized services for refrigerated or oversized freight equipment. Each party must work together efficiently for a successful experience.
Responsibility of a Freight Brokerage
A freight brokerage business helps ensure a seamless flow of freight by working cooperatively with trucking companies and carriers to secure the best freight rates and services available. These companies are intermediaries who seek out freight carriers that meet certain criteria, ensuring that freight is delivered cost-effectively, safely, efficiently, and in a timely manner.
They work with everything from large trucking companies down to independent carriers, so they can provide options tailored to any client’s budget or shipping needs. By taking care of these arrangements themselves, freight brokers significantly reduce the amount of coordination and searching businesses have to do in order to move freight successfully.
In addition, because freight broker services have larger buying power overall, you can shop quotes from multiple carriers and get the best rates. Using a brokerage substantially reduces freight costs and maximizes efficiencies.
2. Geographical Restrictions
Geographical Restrictions of Trucking Carriers
The freight industry relies heavily on common carriers or big-name national trucking companies. To maximize their capabilities, they typically set up terminals or hubs in areas with high freight demand and competitive pricing.
However, this can leave out the rest of the country that is outside of these freight zones and has limited access. In these cases, freight carriers may need to contract a regional trucking company that is limited to a specific area.
Geographical Restrictions of Freight Brokerages
This is a major difference between a freight broker vs carrier. A freight brokerage business has carved out a unique niche in the logistics industry. Instead of managing assets and trucks, they provide an array of transportation management services. They specialize in different freight types and are able to connect companies with freight carriers in areas nationwide.
Many freight brokers establish offices in key logistics locations, allowing them to provide their specialized services even more efficiently. In addition, freight brokers often develop relationships with local businesses as well as large national carriers, offering shippers greater flexibility for their freight requests.
Most freight brokers are well-equipped to process international shipments as well. With the guidance and expertise of a highly-specialized broker, shippers can ensure their freight moves swiftly and safely across borders.
Trucking Company’s Liability & Ownership of Cargo
One of the major differences between a freight broker vs carrier is the ownership of freight while in transit. When a freight carrier agrees to move a load, a contract is formed according to the shipper’s load and count noted on the bill of lading. In doing so, they accept liability and financial responsibility for any damages or losses incurred during transit, and any resulting claims should be with the carrier instead of its respective freight broker.
This ensures goods remain secure in transit, protecting both parties interests as well as those of goods owners!
Freight Brokerage Liability & Ownership of Cargo
Ultimately, freight carriers hold legal responsibility for damaged freight, but brokers can provide valuable assistance when complications arise. A freight broker is typically not liable for freight damages due to these existing legal expectations.
However, reputable freight brokers still take an active role in the industry and factor in their own ethical obligations. Quality freight brokers will maintain knowledgeable claims experts who are responsible for educating shippers about their rights and responsibilities in addition to understanding liability restrictions and filing any pertinent claims.
These brokers realize that beyond the legal requirements, there is an ethical obligation for a brokerage company to help shippers out whenever a shipment encounters issues such as damage or loss.
3 Advantages Of Using Freight Brokerage Services
When working with a reputable freight brokerage vs directly with carriers, there are three big advantages:
- You gain expertise – A brokerage works for you, not the carriers
- Increase operational flexibility – They are not pigeonholed to one specific location geographically
- Best pricing – Add a cost-saving alternative that you may not have when working directly with a single carrier
Working with a freight broker is an invaluable resource for companies in today’s market. A freight broker stands as an advocate for their customer, leveraging relationships with multiple freight carriers to ensure the most competitive rates, best transit routes, and most reliable services.
Ultimately this means that you will not only have confidence in navigating even the most complex of logistics needs, but also that you’ll be prepared for swings in the market – ensuring your freight remains on time and cost-effective no matter what the conditions. Partnering with a freight brokerage can help unlock valuable resources and increase your freight’s efficiency!
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Frequently Asked Questions
What does freight brokerage mean in trucking?
A freight brokerage helps connect businesses who need freight shipped with carriers, such as trucking companies, that have the capacity to move freight.
A freight brokerage serves as an intermediary between both parties to ensure goods are moved quickly and safely while securing competitive rates. They specialize in shipping freight domestically and/or internationally, depending on their customer’s needs; this includes providing all of the necessary transportation documents as well as tracking services so shippers can monitor their freight until delivery.
Plus, freight brokers leverage their buying power and provide their customers with multiple quotes from different carriers, ensuring optimal pricing for their goods’ shipment. All in all, freight brokers are instrumental in helping businesses transport goods without having to take on the additional management challenges associated with logistics.
Why do you need a freight broker in trucking?
Working with freight brokers vs carriers can give your business a great advantage. They bring shippers and carriers together and manage all the logistics of transporting goods. From finding reliable carriers to resolving inevitable issues, freight brokers make sure that cargo gets to its intended destination.
Having a freight broker onboard means that you have access to resources and expertise which can help ensure on-time delivery and provide added protection should you need legal support along the way.
How does a freight brokerage work?
A freight brokerage works to coordinate the transportation of freight via a network of carriers and shippers. They negotiate contracts between freight carriers and clients, and are accustomed to current pricing levels and freight regulations.
Brokers have expertise in varying types of freight and specialize in specific commodities or geographic areas. Working with a freight broker vs a direct carrier can help manage the daily logistics for any company that depends upon shipments of goods, freeing them to focus on other matters within their business.
Can a broker also be a carrier?
Many trucking carriers are able to double their revenue by taking on a trucking brokerage license and act as both carrier and broker. While freight carriers own trucks, they generally will not use those vehicles to transport freight that they are brokering.
This allows freight carriers who choose to broker freight an additional revenue stream and more freedom in the type of cargo they are able to help move. It’s important to understand your relationship with your carrier and clearly dictate whether you will allow the use of their brokerage services for your shipments or not.
Is double brokering illegal in the USA?
Double brokering is an illegal practice in the United States. It involves a freight broker or carrier accepting a load and then re-brokering it to another broker or carrier without authorization or compliance with the Federal Motor Carrier Safety Administration (FMCSA).
Double brokering is illegal and carries many risks, such as sacrificing quality service, shirking responsibility, and throwing safety regulations out of balance.