Are you a carrier interested in generating more revenue and growing your business? Perhaps you are a shipper who has outgrown your ability to manage your own outbound shipments. Maybe you’re looking for a way to streamline the process of arranging pickups and deliveries.
If any of this sounds familiar, then it may be time to team up with experienced freight brokers. Below, we examine what freight brokers are, what they do, and how they can help both carriers and shippers.
What Are Freight Brokers?
Put simply; freight brokers serve as the go-between that connects carriers and shippers. Traditionally, shippers must communicate directly with carriers to arrange for the pickup and delivery of shipments.
This setup is tedious because shippers already have a boatload of other responsibilities that they should be focusing on. Additionally, most shippers do not have industry connections with multiple carriers, which means that they might not be getting the best rates on freight.
Freight brokers are deal makers. They will help their shipper clients find timely and competitively-priced carrier services. On the other hand, freight brokers also assist carriers in finding loads so that they can generate a steady stream of revenue.
The broker’s role is to negotiate rates, coordinate pickup and delivery times, and handle any issues that may arise during transportation. They may work with a variety of carriers, including trucking companies, railroads, and shipping lines, to find the most efficient and cost-effective solution for each shipment.
Who Needs to Hire a Freight Broker?
Both carriers and shippers can benefit from working with freight brokers.
From a shipper’s perspective, working with a freight broker is advantageous because the broker will be their sole point of contact. This setup means that the shipper will no longer have to call or email multiple carriers when scheduling shipments.
Instead, they can simply contact their freight broker, provide them the shipment details, and that’s it. When the broker has arranged a carrier, they will update the shipper to get the order ready for pickup.
Carriers use freight brokers to reduce the amount of deadheading that they do. Deadheading involves driving directly to a delivery destination with a load and then returning to the carrier’s headquarters without a load.
All of that return mileage costs the carrier money because they are covering fuel and other expenses but not hauling a load.
Freight brokers alleviate this issue by helping carriers find backhaul loads. These loads are located near a trucker’s drop-off location and have a delivery destination close to the company’s main hub. By picking up backhauls, carriers can significantly increase profitability for themselves and their drivers.
Benefits of Using Freight Brokers
There are plenty of benefits to using freight brokers. By partnering with a freight brokerage, shippers and carriers can:
The most obvious benefit for both carriers and shippers is that freight brokers save them time. From a shippers’ perspective, freight brokers eliminate the hassle of finding carriers to deliver shipments. A great freight broker can save a shipper hours of time each month.
When working with carriers, freight brokers ensure that their clients always have another load scheduled. This setup prevents drivers or dispatchers from having to search for loads either during rest periods or after making deliveries. As soon as a driver drops off a load, they will know exactly where they are heading next.
Here are some other ways freight brokers can save time:
Coordination: Freight brokers handle the coordination of pickup and delivery times, as well as any necessary paperwork, which can be a time-consuming process for companies.
Carrier Selection: Freight brokers have access to a wide range of carriers and can match companies with the most suitable carrier for their specific needs, saving time and effort in the carrier selection process.
Rate Negotiation: Freight brokers have the expertise and relationships to negotiate the best rates with carriers on behalf of their clients, saving time and effort in the rate negotiation process.
Problem Solving: Freight brokers can also handle any issues that may arise during transportation, such as delays or damage to goods, saving companies time and effort in resolving these issues.
The average shipper does not have the time to shop around for the best shipping rates. As a result, they often settle for the first reasonable offer that they receive.
Conversely, freight brokers have an abundance of industry knowledge. They can leverage this knowledge to help shippers find the best available rates. This approach will result in long-term cost savings for the shipper, which they can use to pursue growth opportunities.
Freight brokers can also provide indirect cost-cutting benefits to carriers. The primary means by which they accomplish this is by reducing the need for deadheading. Freight brokers can help carriers consistently find good backhaul loads so that they can minimize dead mileage and generate more revenue.
Meet Delivery Deadlines
When shippers cannot quickly find carriers to haul their loads, they risk missing important delivery deadlines. If this occurs frequently enough, the shipper will experience lasting damage to their reputation. Over time, this can lead to lost customers and declining profits.
Freight brokers cannot guarantee that shipments will be delivered on time. However, they can significantly improve the timeliness of deliveries and reduce the risk of missed deadlines.
Keep Customers Happy
On-time deliveries will lead to higher customer satisfaction. Keeping clients happy is critical if shippers hope to maximize the average lifetime value of customers, develop a loyal following, and optimize profitability.
Freight brokers can also help carriers better serve their customer base of shippers. Brokers can facilitate better communication between all parties and ensure that everyone is on the same page regarding pickup times, estimated delivery dates, and shipping rates.
3PLs vs. Freight Brokers
The terms “freight brokers” and “third party logistics provider” (3PL) are sometimes treated as synonyms of one another. However, they are not the same.
A freight broker acts as the intermediary between shippers and carriers. They communicate details of the shipping agreement and take a small fee for their services — they do not provide any other supply-chain-related services.
Conversely, 3PLs provide comprehensive logistics and distribution management services. They can oversee functions such as inventory, warehouse management, order distribution, and of course, freight brokerage. For a more comprehensive glimpse into what 3PLs do, take a look at What Is a 3PL and Why Do Companies Use One?
Should I Use a 3PL or Freight Broker?
Freight brokers can be a valuable asset to both shippers and carriers. However, if you want to derive maximum value from your new partnership, we suggest that you partner with a 3PL company that offers freight brokerage services.
If you are interested in leveraging the services of such a company, make sure you choose a recognized industry leader like R2 Logistics. We serve a broad range of industries and can assist with all of your supply chain management needs. Contact us today for a free quote or to learn more about our suite of services.