What Freight Brokers Do: Reducing Costs & Improving Service

What freight brokers do is connect shippers to carriers, negotiate rates, handle logistics and paperwork, and track shipments. All while reducing your shipping costs, improving service to your customers, providing industry knowledge and connections, and mitigating your risks.

Efficient freight management is essential for any shipper who wants to optimize their supply chain. And for there to be efficient freight management, a freight broker is often involved. But what exactly is a freight broker, and how do they help shippers? 

Learn more about the role of freight brokers, what their responsibilities in the supply chain are and the benefits you can get from working with one. From connecting shippers with reliable carriers to negotiating rates and handling logistics, freight brokers help simplify the shipping process, saving shippers time and money while ensuring that the quality of transportation of goods remains.

What is a Freight Broker?

A freight broker is an intermediary in the logistics industry who connects shippers and carriers. Unlike freight forwarders, who take possession of the cargo and often provide a range of logistical services, freight brokers primarily focus on facilitating and coordinating shipments. Their main focus is to find the best carriers to transport shippers’ goods. To do this, they leverage their vast networks and industry knowledge.

Freight brokers are distinct from carriers. Carriers own and operate transportation assets, but freight brokers don’t. Instead, they use their expertise and relationships to negotiate rates, arrange shipments, and ensure smooth delivery processes. This specialization allows them to provide valuable services that enhance efficiency and cost-effectiveness in the supply chain.

What Does a Freight Broker Do?

1. Connect Shippers with Carriers

Freight brokers have large networks of reliable carriers. By understanding the specific needs of each shipper—whether it’s the type of cargo, destination, or delivery timeframe—they match these requirements with the most suitable carriers. This matching process ensures that shippers’ goods are transported the most efficiently and safely possible.

The National Cargo Security Council (NCSC) estimated that the global financial impact of cargo loss exceeded $50 billion annually. Being connected with top-quality carriers who know how to adapt and react to changes in the global shipping landscape can help you avoid costly losses or delays in delivery.

2. Negotiate Freight Rates

One of the major advantages of working with a freight broker is their ability to land you competitive freight rates. By leaning on their knowledge of the industry and their network of connections, freight brokers can negotiate favorable terms with carriers. This not only helps in reducing your transport costs but also ensures that you receive the best value for your money.

3. Handle Logistics and Paperwork

Freight brokers manage the complex logistics and administrative tasks associated with shipping. They handle the necessary documentation, coordinate pick-ups and deliveries, and ensure compliance with regulatory requirements. This complete management of the shipment means you have fewer administrative burdens and can focus on your core business operations.

4. Track Shipments

Providing real-time updates and tracking capabilities is another critical function of freight brokers. They monitor the shipment process, ensuring timely deliveries and quickly addressing any issues that arise. This proactive approach minimizes delays and enhances the reliability of the shipping process.

4 Advantages of Using a Freight Broker

1. Expertise and Industry Knowledge

Freight brokers have a wealth of knowledge about the logistics industry, which enables them to navigate the complexities of things like changing market rates and detention charges effectively. They stay updated on the latest industry regulations, trends, and best practices, ensuring that their customers benefit from their expertise. This insight is invaluable in optimizing shipping strategies and overcoming logistical challenges.

2. Cost Savings

By negotiating bulk rates and leveraging their networks, freight brokers can secure some major cost savings. These savings are often passed on to the shippers, reducing their overall transportation costs. In addition, freight brokers help minimize overhead costs associated with managing logistics internally.

3. Time Efficiency

Freight brokers streamline the shipping process, handling everything from carrier selection to shipment tracking. This efficiency saves you a considerable amount of time, allowing you to concentrate more of your time on primary business activities. 

In October 2022 the average delay for container ships in Savannah Georgia was 12.5 days. In New York, it was 11.7 days. These delays can have huge knock-on impacts on the rest of the supply chain as well as lead to disappointed customers and lost business. A freight broker will help you avoid these types of delays because they will know which ports to ship to and who to connect with at those ports for maximum efficiency. 

4. Risk Management

Freight brokers help shippers mitigate the risks involved with shipping. They thoroughly vet carriers, ensuring they have the necessary credentials and insurance. By doing so, they protect shippers from potential liabilities and ensure that their goods are transported by reputable carriers.

How Freight Brokers Can Improve Your Supply Chain

Enhanced Service Quality

Freight brokers are committed to maintaining high standards of carrier performance as their business is built on their reputation. They monitor carriers’ performance metrics and address any issues that arise, ensuring that shippers receive consistent, high-quality service. This means shippers can rest easy knowing there will be fewer disruptions in the supply chain and when they arise they will be dealt with promptly. 

Flexibility and Scalability

Freight brokers offer services that can be adapted and scaled to meet the needs of different shipment volumes and changing business priorities. Whether you require additional capacity during peak seasons or specialized services for unique cargo, freight brokers can scale their offerings to match changes in your business. This flexibility is crucial for businesses looking to grow and respond to market demands.

Technology

Modern freight brokers use advanced tracking and management systems to provide transparency and visibility into shipments. These technologies enable you to monitor their goods in real time, access detailed reports, and make informed decisions. The integration of technology enhances the overall efficiency and reliability of the shipping process.