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What Does a Shipping Broker Do?

Shipping brokers play a crucial role in the freight industry. These professionals offer experienced help transporting goods and managing the complicated process of moving those goods. From marine vessels to trucking, a shipping broker can aid in getting goods from one location to another. Learn more about how a freight shipping broker could reduce your workload and improve your logistics.

What Is a Shipping Broker?

Shipping brokers work as intermediaries between shippers and carriers. The broker does not own the goods in need of transportation nor do they have a transportation company to move the goods. They simply work with the two parties to reach favorable terms and contracts between the two. 

The freight industry is complex and growing rapidly thanks to e-commerce and technology. From recurring cargo needs to one-off transportation requirements, freight brokers aid in negotiating rates, timelines, and other aspects of shipping. 

For carriers, brokers help keep the business at full capacity by finding new load opportunities. And everyone wins with the broker’s knowledge of the supply chain and logistics in helping ensure smooth delivery of goods. 

How Does a Shipping Broker Operate?

Shipping brokers earn a rate known as “the spread”. The spread is the difference between what a shipper will pay to transport the goods and the amount the carrier agrees to accept as payment for completing the transportation. Once the broker pays their operating expenses, all proceeds from the spread become the broker’s salary.

Brokers can either work for a large freight brokerage or be in business for themselves as an independent contractor. Generally, brokers don’t begin working for themselves until they’ve worked for a brokerage for several years to learn the business and understand the logistics.

So how good is the life of a shipping broker? Get insights into their regular activities, the skills required for the job, and why shippers choose to work with brokers instead of doing the work themselves.

What Are the Daily Activities of a Freight Broker?

Brokers spend most of their days communicating with shippers and carriers. But there is a lot that goes into that. Here’s a look at some of the daily activities brokers engage in.

  • Negotiating the best shipping rates available for their clients
  • Reviewing load boards for opportunities
  • Checking their network of contacts to find the right carrier to fulfill a shipper’s needs
  •  Matching cargo requirements, such as refrigeration, to carriers with the necessary equipment for the job
  • Shipment tracking for loads they’ve negotiated to ensure agreed upon terms are met
  • Paperwork and compliance based on cargo type
  • Monitoring to ensure shippers pay carriers the agreed upon rate
  • Ensuring carrier trucks are full for the most efficient operations

Why Do Businesses Use Freight Brokers?

The transportation industry includes many tiny details. But if even one small detail is overlooked or doesn’t go to plan, it could mean strained relationships with customers or lost income. Businesses use freight brokers to aid in managing all those details when they don’t have the skills in house.

Shippers that use freight brokers often experience the following major benefits.

  • Assistance in finding reliable, quality carriers with adequate experience in the type of transportation the carrier requires
  • Offers communication between shippers and carriers to aid in real-time updates and load status
  • Have access to expensive systems and software – such as transportation management systems (TMS) 
  • Provide fast services for when a shipper needs to scale quickly

What Skills Does a Freight Broker Need?

Brokering freight deals requires many important skills, interests, and qualities. People who exhibit the following might be right for broker trucking jobs.

  • In-depth understanding of intermodal freight shipping regulations, standards, and practices
  • Extensive logistics network with contacts for shippers and carriers with an ability to build new relationships as needed
  • Ability to spot and evaluate the legitimacy and reliability of freight carriers
  • Detail-oriented individual to prevent small aspects of the business from falling through the cracks
  • Understanding of freight billing based on type and characteristics as well as industry factors
  • Problem solving skills
  • Customer service oriented
  •  Interpersonal skills to work with both shippers and carriers
  • Familiarity with freight laws and regulations

Without these skills and characteristics, freight brokers will struggle to succeed. And carriers and shippers might refuse to continue working with brokers who lack these in-depth industry understandings.

What Credentials Should a Freight Broker Have?

Ensure that the freight broker you are considering working with has the proper credentials. These credentials legitimize the work brokers do.

  •  In the broker’s home state, they have registered with the Unified Carrier Registration (UCR)
  • They are a registered freight broker with the FMCSA
  • The broker holds a broker surety bond with coverage of no less than $75,000
  • They carry insurance, such as contingent cargo insurance and errors and omissions insurance to mitigate possible risks for shippers and carriers

Benefits Freight Brokers Provide To Shippers

Freight brokers offer many great benefits to shippers. Here’s a look at some of those benefits to help you in considering if it’s time to begin working with a broker.

Lower Freight Costs

Because brokers work with a large network of carriers, they know the most cost-efficient options for transporting the goods while meeting all required timelines and requirements. Brokers can get rates from a variety of carriers quickly to offer the best price comparison to move forward efficiently.

Provides Multiple Modes of Transportation

Shippers that require various modes of transportation, such as dry van, reefer, and LTL, have to manage various carrier relationships to get the job done. However, working with a freight broker gives them a single point of contact regardless of the mode of transportation required for the job.

Moving Freight Quickly

Brokers have incredible flexibility to get a shipment where it needs to go when it needs to get there. By communicating vital information to carriers and ensuring the carrier understands requirements, they can get the goods where they need to go in the provided timeline without disruptions.

Remove Demands of Traffic Management

When shippers book loads directly with carriers, they must devote internal resources to tracking the shipment. But a freight broker can handle managing load tracking on behalf of the shipper. It removes the requirement to have someone on staff who understands how to monitor and manage a load.

Maintains Carrier Information

Maintaining carrier relationships requires added paperwork and oversight. You have to collect information about licensing, insurance, and compliance, which can be a full-time job requiring a team dedicated to these activities. But a freight broker handles all this for shippers to reduce the administrative work required.

Freight Brokers vs Freight Forwarders

Freight brokers and freight forwarders serve different roles in the transportation industry. A freight forwarder offers most of the same services as a freight broker but can also take possession of a shipper’s cargo to ensure its safe arrival at the final destination.

The forwarder can take the cargo and reorganize or consolidate it to prepare it for shipment. Since these professionals take possession of goods, their liability is greater and they might ship the goods under a bill of lading. 

Forwarders are more involved in international shipments, providing end-to-end services, including customs. Freight forwarders are equipped to handle importing and exporting goods throughout the world.

To become a freight forwarder, you’ll need more training and be prepared for greater risk. You’ll also need to have a warehouse for housing the goods you take possession of, which generally means additional employees to handle operating the warehouse.

Improving Shipping Efficiency with Freight Brokerage

Businesses that have shipping requirements face many challenges in managing the process of getting goods to consumers. Allowing a freight broker to handle the carrier relationship can improve logistics efficiency while providing greater transparency into where goods are at throughout the supply chain process. The time savings and vetted carrier relationships are worth it when considering whether to hire a freight broker.

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