Freight brokers and carriers both play a pivotal role in our transportation industry, and both share the same ultimate aim that is: Seamlessly moving your goods across America 🚚🇺🇸. While both entities are integral to supply chains, their functions and responsibilities differ significantly. Let’s have a look into their roles…

What is a Freight Broker? 📞👱‍♂️

Freight brokers act as a bridge that connects shippers with cargo to move, with carriers that have the capacity to transport it. Freight brokers don’t own their own assets, as in any trucks, trailers or tractors. Instead they leverage their expertize to match available shipments with the best and most competitive carrier within their vast network of connections. Ultimately, their role is to arrange, book and see through efficient and cost-effective transportation on behalf of the shipper.

What is a Carrier? 🚚

On the other hand, a freight carrier is a company that is directly involved in the physical transportation of your goods. They possess and maintain their own fleet of vehicles, including trucks, trailers and tractors depending on their specialization. Carriers employ drivers and other members of staff to handle everything from pick up to final delivery of a shippers goods.

Why Use a Freight Broker? 🤔

You might be wondering, well why do I need a middle man? I can book my own shipments directly with a carrier. But the reality is, freight brokers do so much more than just book loads.

Access to a Wide Network of Carriers – Using their vast network of carriers, brokers are able to compare rates and find the best, most efficient and cost-effective solution to your shipments needs. Think about all of the time you could save by not having to quote shop around multiple carriers.

Expertize – This goes hand in hand with finding the best rates. Freight brokers have a huge amount of knowledge of the entire freight industry. So, if you think you need a certain type of truck i.e. a step-deck but actually your freight broker crunches some DIMs and figures you could use a flat bed instead, then you’re going to save a ton of money. They know all of the tips and tricks of the trade, that they can apply to your shipments.

Time & Cost Savings – A freight broker handles every little detail, including all of the administrative work that comes with shipping cargo. Giving you time to put your focus elsewhere, knowing that everything is in safe hands with your broker.

Your Best Interests at Heart – Freight brokers help you to navigate the complex world of logistics. They tackle problems head on like, capacity shortages, service disruptions and cargo damages. Should your freight experience any issues, your broker will fight your corner with the carrier, track down your shipments should they go awry, dispute damages and delays, the list goes on but just know they’ve always got your back.

Why Use a Direct Carrier? 🤔

There are also benefits of going straight to the source, of course.

Cost Savings – If you can build up a good relationship with a carrier, it can sometimes work out cheaper to work directly with them rather than go through a broker. Especially when you ship high volumes, you can usually secure a good rate.

More Control – If you’re confident enough to arrange your own transportation, you get the added benefit of more direct control over certain aspects.

Communication – Now, we’re not saying communication is bad with a broker in fact it’s the opposite, they’re always at the end of the phone. But if you want a super quick answer, then obviously speaking directly to the carrier, instead of calling your broker for them to call your carrier can result in a quicker answer.

Freight Broker vs. Carrier. How do You Choose the Right Partner? 🤝

Cost Considerations – So, this is tricky because a freight broker can shop around amongst their vetted network of carriers to find you the best rates possible. However, if you find a great carrier directly and build a relationship with them then you can sometimes negotiate better rates also.

Volume and Frequency of Shipments – Shippers moving cargo in high volumes and/or frequently could also benefit from both kinds of service. A direct carrier relationship could be beneficial for more control over your shipments. Although you could equally build a fantastic relationship with a broker and they could take all of the stress out of organizing your transportation, which is extremely beneficial when you have a ton of shipments at once.

Regional vs. Nationwide Requirements – Carriers tend to deal with shipments that are regional. Whereas freight brokers have contacts nationwide. So, think about your geographical needs before committing to either or.

One Thing to Watch Out For!

Double Brokering – One thing you must be mindful of is that you don’t use a freight broker that does not vet their carriers and likewise, if you’re working directly with a carrier you must be able to trust them entirely. Because there are scammy double brokers out there.

Now, double brokering is a bit of a taboo topic. And let’s be clear from the get go, there’s a distinct difference between co-brokering and double brokering. But we’ll come to co-brokering later for now let’s focus on double brokering. So, what is it? Double brokering is when a broker that has signed a contract with a shipper, passes on the information to another broker to fulfil that shipment.

Some carriers might double broker a load if they need help with capacity and sometimes no-one would be any the wiser. However, when it becomes a real issue is when a carrier double brokers a load with no intention of ever paying the second carrier that actually moved the freight. Leaving the second carrier, the one that did the work out of pocket and seeking payment from the shipper or the broker. This usually results in the shipper paying out twice for the one shipment and the original carrier walks away with money for, well nothing. Sure they run the risk of losing their authority, but there’s nothing stopping them from shutting that company down and starting a brand new one under a new name.

Another HUGE problem in this type of double brokering is that the second carrier that moved the freight does not actually have a contract with the shipper. So, from an insurance point of view, well there isn’t any insurance on the movemen. If there’s any damages, delays or things go missing the freight is not covered. The form of double brokering that we’ve just described is very illegal and goes against the FMCSA legislation.

How to Spot Double Brokering?

1. Look out for a different carrier or brokers name on your BOL (bill of lading)
2. Make sure the brokers information matches up with the information listed on the FMCSA

There are also softwares available that show if a person or address has been previously linked to another carrier, which can help people to catch these types of scam double brokers. And another way of avoiding them is by using a freight broker that will not work with a carrier that has new authority on the chance that they might have been a scammer and simply started a new carrier business.

Co-Brokering – Now co-brokering, as we alluded to earlier has a stigma attached to it because people see it as double brokering. However, like we said there is a distinct difference, this practice is completely legal as long as the carrier that re-brokers has broker authority. So, in short it’s when a broker knowingly allows a carrier to re-broker a load. The main difference is that all parties involved are aware of the situation and everyone knows their part.

Conclusion

So, what have we learned from this? Both freight brokers and carriers have their own pros and cons. And it really is down to you to decide what’s best for your businesses needs right now. But in short, working direct with a carrier might work out cheaper in the short term but with this comes the headache of arranging each shipment and dealing with all of the back end office work and also you might be restricted to regional movement only. As opposed to working with a freight broker that in the short term might be slightly more expensive, but will find you the best rates, organize everything on your behalf and has connections nationwide to make all of your shipments happen.

It’s kind of a toss up between time, money and needs.

How Are PEI Different? 😊

Just to throw a curveball in the mix, we’re like a hybrid of a freight broker and a carrier. With primary operations centered on expedited truckloads, emergency shipping, and specialized shipping scenarios, we ship freight using our own trucks and also through utilizing a rigorously vetted network of carriers. This means that no matter your requirements, we know and guarantee we can meet them. So when you’re questioning whether to use a freight broker vs. carrier, just remember you can have the best of both worlds with us at PEI! The beauty of us providing both services is that with us you can fulfil all of your freight needs with one singular provider. A one stop shop should we say.

So get in touch today on: Phone: 888-SHIP-911 or use the link below to start your PEI partnership!

 

Do you need help with any of your specialized shipments?

At PEI we’re experts in dealing with specialized freight and can handle yours with any custom requirements.