The world of freight shipping is complex, with multiple moving parts. Shippers looking to move large cargo often start the process, only to then be confronted by a sea of 3PLs (third-party logistics) professionals and freight brokers across the domestic and international freight landscape. The different roles of each can leave some scratching their heads. They know they need a carrier to deliver their shipment, but do they need a broker to find one? What does a freight forwarding company do that is different from a freight broker? How would they know to choose the right one? In this article, we break down all there is to know about what brokerage is, why shippers use it, and how to find successful freight brokers to help you achieve efficient, cost-effective freight delivery.
What is a freight broker and how do they work?
In short, the job of freight brokers is to pair shippers with carriers who can transport their cargo, acting as a shipping broker who helps ensure the pickup is secure and cost effective for the shipper. When connecting vendors with drivers, they help navigate and coordinate the many moving parts of the supply chain to help keep delivery safe and on time.
Carrier vs broker
Typically, a freight broker or shipping broker will not own the freight nor the vehicles used to transport it, and most freight brokers instead focus on coordinating shipments across trusted carriers. Rather, they leverage their supply chain expertise in matching the needs of those who want to ship large cargo with carriers who have the right capacity at the right rates. The freight broker negotiates with the carrier to find the best rate for their customer, and once this is completed the carrier will be the driver who collects and delivers the goods to their destination.
Forwarder vs broker
Both brokers and freight forwarders work between the shipper, who needs to move cargo, and the carrier, who has the equipment and facilities to transport it. The main difference between freight brokers and forwarding companies comes down to control of the shipments. Brokers are usually described as middlemen between shippers and carriers, and unlike forwarders, they do not take ownership over moving goods.
The concerns of freight brokers have traditionally been smaller scale — they are known to focus mainly on lowering logistics costs and looking for the best deal for domestic shippers. Forwarders, on the other hand, are typically used for shipping to multiple international destinations. Any shipments they move are also managed underneath their own Bill of Lading, which serves as the contract of the carriage of goods.
How does freight brokerage work?
A freight brokerage’s business depends on taking the difference between the amount the shipper is willing to pay to ship their freight and the final rate which the broker goes on to negotiate for the shipper. This difference is otherwise known as the ‘spread’, which yields a net profit to the broker after their operating costs are taken into account. A freight broker might do this independently, or freight brokers may work as part of a brokerage agency.
How do brokers find carriers?
Every day, shippers around the world need to find drivers for a range of cargo types, sizes and destinations. They do this by using freight brokers who can routinely utilise their network of supply chain contacts and access to load boards (online freight matching marketplaces) to connect the shippers with carriers who have the capacity to move their cargo. These connections are usually cultivated over time, or acquired through cold calls.
Where do brokers bid on freight?
Freight brokers rely on load boards, which are often accessed via a subscription service. The boards let them view available loads that they could cover, that are within their remit and have lanes available. At this point, they start the bidding process and negotiating carrier rates to get the best deal for shippers. One example of this is Relay Load Board, which allows carriers a wide selection of transportation work.
Why do I need a freight broker?
Freight brokerage is a solution for shippers who need reliable carriers but may not be equipped with enough time or knowledge to find one. The role of freight brokers is to provide the point of contact between vendors and those carrying their freight. They provide greater visibility and transparency at every step of the freight journey through a transport management system (TMS) and the exchange of electronic data, providing updates in real time and tracking the status of loads. Since these tools are an expensive upfront investment, a broker helps businesses rapidly scale their operations when they are experiencing fast growth.
What should I consider when choosing a freight broker?
The person who is responsible for finding you the best deal at the best time — with the most competent carrier — is providing a great deal of value for your business. Unlike the US, in the UK freight brokers are not legally required to possess a broker’s license or other certification, although they should possess a thorough knowledge of cargo rules and regulations. There are, however, a few important traits and abilities that separate the simply adequate from the best brokers.
The right freight broker will be:
- An expert in the world of freight shipping, understanding standard practices, regulations and the industry.
- Well-connected, possessing a wide network of contacts in supply chain logistics, along with having a talent for frequently building new relationships.
- An insider who can quickly find and assess suitable carriers according to their customer’s freight shipments.
- Detail-oriented with a strong memory for crucial information.
- In tune with the market, understanding how currency changes, prices, inflation and other factors affect rates, carrier capacity and deliveries.
Partner with Amazon Freight
Although the demand for freight brokers has risen in line with increasing supply chain costs, the role of middleman between the shipper and carrier is not always the role of an independent logistics partner. Amazon Freight taps into a network of 9,200+ owned trailers and 10,000+ carrier partners to move freight fast and on-time. To learn more about becoming a partnered carrier and how we can find you more stable pricing for recurring lanes, contact us today: freight-uk-interest@amazon.com
For more blog posts, visit the Amazon Freight Newsroom
Frequently asked questions
A freight broker matches shippers with suitable carriers, negotiates rates and coordinates load movements so that freight is picked up and delivered without the shipper needing to manage every carrier relationship themselves, which is why many businesses use freight brokers to simplify complex carrier networks.
Freight brokerage is the service of arranging transport for cargo on behalf of shippers, where a broker earns a margin between the rate the shipper pays and the rate agreed with the carrier, and freight brokers use this margin based model to run their businesses.
Shippers should consider working with freight brokers when they move irregular or complex loads, need access to a wider carrier network or lack the time and internal expertise to source and manage every carrier relationship directly.
Freight brokers help manage capacity during peak seasons by using their network of carriers and load boards to find alternative options when lanes are tight, which supports more consistent access to trucks across changing market conditions.
When comparing different freight brokers you should look at their experience with your type of freight, the strength of their carrier relationships, the quality of their communication and how transparent they are about pricing and responsibilities.
Many freight brokers focus on domestic shipments, while others work with international freight and may collaborate with freight forwarders or customs specialists so that cargo can move across borders in a compliant way.
Freight brokers use transport management systems, load boards and real time tracking tools to manage bookings, communicate with carriers and provide shippers with visibility on the status of their loads.
Freight brokers are not regulated in the same way in every country, and in the UK for example brokers are not required to hold a specific licence, so it is important to work with brokers who understand cargo rules and regulations in your lanes.
For growing businesses, freight brokers can help unlock additional carrier capacity, reduce the time spent sourcing rates and provide a single point of contact for managing multiple carriers as shipping volumes increase.
Amazon Freight connects shippers with carriers by using Amazon trailers and a network of carrier partners, similar to how freight brokers match loads with capacity, and this article explains how brokerage models fit within the wider freight landscape.
