What is a Freight Broker?

A freight broker, sometimes referred to as a third-party logistics provider (3PL), is a person or a company that offers outsourced logistics services. In its most simple terms, a freight broker arranges and manages the transportation of goods on behalf of a shipper from an origin to a destination using licensed and insured carriers. A freight broker is a transportation intermediary and an integral link in the supply chain. By law, a freight broker must be licensed, insured, and bonded.

Why do Companies use Freight Brokers?

Almost 86% of Fortune 500 companies and 96% of Fortune 100 companies utilize freight brokers or 3PLs to manage all or a portion of their distribution and fulfillment. Why? Freight brokers take a large load off of the shipper’s shoulders…pun intended. While shippers concentrate on the sale of goods and order management, freight brokers manage fulfillment. By leveraging their experience and network of carriers, it is the freight brokers responsibility to determine the most cost effective and efficient mode of transportation for the shipper’s commodity. In addition, the freight broker must understand the commodity and its specific transport requirements. The freight broker will find a trusted, insured, and safe carrier for the commodity, will schedule the pick-up and delivery, and will monitor shipment progress until it is safely delivered at its destination. Sometimes challenges arise such as road closures, weather delays, broken trucks, or accidents and it is the freight brokers job to handle this on behalf of the shipper. An experienced and successful freight broker will save the shipper money and frustration.

How do Freight Brokers Benefit Truckers?

Freight brokers work hand in hand with both shippers and motor carriers. Many carriers use freight brokers as a sales arm of their business. In this situation, brokers maintain the sales relationship with the shipper while carriers concentrate on the efficient transportation of goods and asset management.