Freight brokerages provide transportation solutions for shippers. They connect shippers with carriers, and can help reduce shippers’ complexity. Shippers can save on operating costs by using brokers to find carriers. Carriers can get new business through brokers. Freight Brokerages have become an integral part of how the shipping industry operates. There are many types, strengths, and weaknesses for shippers to consider when choosing one.
Pros of Freight Brokers
Freight brokers can provide additional capacity when needed. Shippers who don’t have the capacity to meet their shipping needs sometimes turn to freight brokers to secure additional capacity.
In tight markets when the spot rate goes up, shippers often face problems with their contracted carriers, leading to tender rejections. This forces shippers to look for alternatives such as brokers who can supply them with lower-cost transportation alternatives. Shippers and carriers have the opportunity to use their market intelligence to make sure that they’re getting the best load rates in the industry.
It’s critical for freight brokers to develop personal relationships with shippers in order to build their businesses. And, to earn more money from shippers, it’s essential for freight brokers to provide high-quality services.
Cons of Freight Brokers
An experienced broker knows to spend little time making calls and sending emails. If a truck is available to cover a load, the broker matches the load to the truck immediately. This results in a decrease in load turnaround time and increases customer satisfaction.
High brokerage fees are a problem for shippers. They can often result in much higher shipping costs and a less competitive pricing structure.
Load brokers are limited in their ability to find the right truck for the right job. In their search for the best deal, they often settle for the ideal truck for the broker instead of the ideal truck for the shipper.
The most reliable RFP is the one that provides the best value to the shipper. If your broker does not provide the highest quality or most reliable freight, your best option is to consult your own internal RFP resources or find a new broker on the spot market.
Conclusion: Freight Brokers Worth It?
Norbert Smith, a logistics consultant at the University of Michigan, has researched the industry and found that it’s important for shippers to get the best freight brokerage possible. “It’s an important part of the supply chain and a critical link between shippers and carriers,” he says. Smith also recommends that shippers look for brokers with strong customer service. He says, “It’s important to know that your broker will be there to help you when you need them.” Smith says that brokers are a good option for shippers who have a complex transportation problem. Key Takeaways: Freight Brokers Freight brokers can provide additional capacity when needed. Shippers who don’t have the capacity to meet their shipping needs sometimes turn to freight brokers to secure additional capacity. In tight markets when the spot rate goes up, shippers often face problems with their contracted carriers, leading to tender rejections. This forces shippers to look for alternatives such as brokers who can supply them with lower-cost transportation alternatives.
