Freight brokers play an important role in helping companies move goods. But what exactly do they do? In this Supply Chain 101, we’ll break it down: how freight brokers work, how they differ from other players in transportation, and when it makes sense to use one.
What Is a Freight Broker?
A freight broker acts as a middleman between companies that need to ship goods (shippers) and transportation providers (carriers). Brokers don’t move freight themselves. Instead, they help shippers find reliable carriers to haul their loads.
How Do Freight Brokers Work?
Freight brokers maintain a large network of trusted carriers. When a shipper needs to move a load, the broker quickly matches that shipment with an available truck, negotiates the rate, and manages the paperwork.
In return, brokers earn a fee or commission, typically by charging the shipper a rate and paying the carrier a portion of that rate, keeping the difference as their margin.
Freight Broker vs. 3PL: What’s the Difference?
Some 3PLs (third-party logistics providers) offer brokerage services, but their scope is broader. A pure freight broker focuses only on connecting loads with carriers. A 3PL may also handle warehousing, fulfillment, and supply chain management.
When Should a Company Use a Freight Broker?
Companies often turn to freight brokers for:
- Last-minute or spot market shipments
- Seasonal surges in volume
- Accessing capacity in unfamiliar markets
- Moving specialized or oversized freight
How Are Freight Brokers Paid?
Brokers typically operate on a margin, charging the shipper a rate and paying the carrier a negotiated amount. The difference is the broker’s profit. Some also offer flat-rate fees.
Choosing a Freight Broker
Look for brokers who are properly licensed and bonded. Many companies also value brokers who offer digital tools that provide visibility and tracking.
Well-known freight brokers include C.H. Robinson, Echo Global Logistics, and Uber Freight. Digital-only brokers are also growing, offering small businesses an easy online experience.
Real-World Examples of Freight Brokers in Action
- Retailers during peak season: A major retailer facing a holiday rush may turn to freight brokers to quickly secure extra trucking capacity when their usual contract carriers are fully booked.
- Manufacturers of heavy equipment: A manufacturer shipping heavy machinery may work with a freight broker specializing in securing flatbed trucks and managing permits for oversized loads.
- Small businesses using digital brokers: Many small e-commerce businesses use digital freight broker platforms to easily book and track truckload shipments without needing a dedicated logistics team.
- Pandemic disruption: During the early COVID-19 pandemic, some shippers turned to freight brokers to find alternative carriers when regular transportation channels were disrupted.
Conclusion
Freight brokers help companies of all sizes move freight more efficiently, especially when they need flexibility or quick access to capacity. Understanding how they work can help shippers make smarter transportation decisions.