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February 23, 2023
Freight Brokers: All You Need to Know
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 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 a successful freight broker to guarantee efficient, cost-effective freight delivery.

What is a freight broker?
In short, the job of the freight broker is to pair shippers with carriers who can transport their cargo, ensuring the pickup is secure and cost-effective for the former. When connecting vendors with drivers, they help navigate and coordinate the many moving parts of the supply chain to guarantee safe and on-time delivery.

Carrier vs broker
Typically, a freight broker will not own the freight nor the vehicles used to transport it. 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 broker’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 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 brokers who can routinely utilize 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?
Brokers rely on load boards, which are often accessed via a subscription service. The boards let them view available loads that they could cover, i.e. 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 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 the broker 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 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:
1.An expert in the world of freight shipping, understanding standard practices, regulations and the industry.

2.Well-connected, possessing a wide network of contacts in supply chain logistics, along with having a talent for frequently building new relationships.

3.An insider who can quickly find and assess suitable carriers according to their customer’s freight shipments.

4.Detail-oriented with a strong memory for crucial information.

5.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 6,500+ owned trailers and 13,000+ 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
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