Broker Freight
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A freight broker will act as a middle man that will handle the booking of the trucking company or other mode of transport for the shipper. The broker will approach a shipper asking to help handle their freight. This takes some of the workload off of a manufacturers shipping department. The shipper and broker will negotiate a rate for each load, and the broker in turn hires a trucking company at a lower rate to deliver the shipment. A freight forwarder is a
similar agent but handles more international shipments. They will
handle freight such as, container ship freight, boats going
overseas, and the likes. An example of this would be a yacht broker
selling a boat to someone overseas. The yacht broker will contact a
freight forwarder to quote a rate to ship the boat overseas.
There are also 3PL companies. They handle all aspects of
transportation. They will handle everything a broker and freight
forwarder will, and more. Warehousing, intermodal, rail, container,
cold storage, and air freight are all aspects a 3PL will handle.
They are usually very large companies with many divisions.
In some circumstances a broker and freight forwarder will
work together. A broker can handle a load that needs to go overseas
and will seek the service of a freight forwarder. Now, the same
cannot be said for a broker working with a broker. That is called
double brokering. It is frowned upon in the industry, but it still
happens. Double brokering can cause serious liability issues that
are not needed with the liability already on the shoulders of a
broker.
Trucking companies are not likely to befriend a broker for
the simple reason they feel a broker takes money out of their
pocket. In a sense, they do. Though most trucking companies dislike
brokers, they need them. Brokers manage such a large portion of the
freight that it is necessary for a broker to be used on occasion.
Trucking companies have dispatchers and load planners that are
responsible for booking freight for the trucks. They will usually
call on their own customers first, and use brokered freight as a
last resort. From my experience, trucking companies that haul too
much brokered freight are already in or going to be in financial
trouble. A trucking company needs to have a strong book of business
of their own. I find that smaller trucking companies tend to ignore
the sales side and rely on brokers. This can quickly spell trouble.
If I could recommend one thing to any trucking company it would be
to employ a good sales agent!
As for brokers, you have your large corporations that own
such a large portion of freight that they can bid low on rates to
gain more freight. And since they own such a large portion of the
market, they can accept lower rates from customers and in turn be
confident that they can sell it to a trucking company. The trucking
companies have to take this cheap freight on occasion because that
brokerage handles so much freight. These brokerages are usually
disliked in the industry. They are considered to rip off trucking
companies because of their stance in the market and their market
share. When I brokered, I decided to make less on a load and make a
trucking company happy. This would lead to better broker-carrier
relationships. You would be surprised how often you need them to
help you out of a tight spot as a broker.
There are also large trucking companies that operate the same way as the large brokers. These large trucking companies can underbid the smaller brokers and smaller trucking companies. They can do this because of the amount of the market they can corner. They usually get great rates from a customer close to their home terminal and can afford to take lesser rates on their backhaul. This creates low rates out in the market that smaller companies cannot afford to accept. The other factors are that these large companies have paid for equipment and less of an operating cost.
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