In the interwoven landscape of the shipping industry, identifying the best freight solution for your company can prove immensely difficult. In an industry where a plethora of different entities all work together to support the machine, it’s easy to lose yourself in the jargon and dynamic of the shipping world. But shipping can make or break a company. From overhead costs, reductions in profit margin, to sheer reliability, the freight option a company chooses becomes an extension of their operation, one that both takes from the money well and directly reflects the brand to customers.
Any e-commerce platform knows how important finding the perfect shipping option is for the livelihood of their business. Since the 60s, however, the relationship between freighter and shipper separated, making room for a host of middlemen to operate the space between. Most would agree this was productive for the industry as a whole; as shipping scaled, so too did the density of the industry.
One such middleman is a freight broker, commonly thought of us as a personal guide through the freighting terrain. Most experienced shippers and freighters will tell you that a great freight broker can dramatically improve your business, maximize profits, and shift an enormous weight off the shoulders of the shipper. If you’ve heard such an opinion, or are familiar with freight brokers, you might be wondering what to look for in a freight broker. If that’s the boat you’re in, read on.
What exactly does a freight broker do?
Before moving further, it’s important to discuss the job requirements of a freight broker. Without this knowledge, you may find yourself settling on a broker that doesn’t check all the boxes or one that offers less than he or she claims.
At a fundamental level, a freight brokers job is to arrange an agreement and foster a relationship between a shipper and freighter(s). The agreement should be mutually exclusive to both parties. They’re a liaison between two entities in need of each other’s business, and they operate in that space with a vested interest in both parties. A freight broker will want to ensure that both the shipper and the freighter sign off on a deal that is both lucrative and longstanding.
However, along with being a guru for the freighter-shipper relationship, but they should also provide a host of other services within the process.
A dexterous freight broker will speak the shipping language like it’s their native tongue; they should know both the frontend and backend of the industry. In which, not only will they foster a relationship between you and a freighter, but they should also be able to provide analytics on your specific shipping needs, considering every facet, and then advise the option they view most suitable to your business. In short: a freight broker is not only someone that’s going to help you build out a deal, they should also identify what shipping makes the most sense (taking into account the desired outcome and budget).
While this may be as simple as a broker integrating a 3PL (third-party logistics) company into the equation, they should be responsible for overseeing freight logistics. This means ensuring the best rates, optimizing routes, and shifting pieces to cut down transit time and maximize profit.
Legal | Regulatory
A freight broker should also know the legality and regulations of the industry. They should be responsible for the technical aspect of contract generation and ensuring that the deal you’re signing off on complies with shipping regulations, both domestic and international. Often, they’ll have contacts at road government agencies that provide accurate, up-to-date information. Within this category, they should also monitor your BOL (bill of lading) to ensure there’s no miscommunication within the shipment itself.
Excellent Customer Service
A freight broker is not responsible for the shipment itself, as that falls on the shoulders of the freighter. With that being said, they should be the representative that handles communication if things are to go awry. If a shipment is damaged and the shipper wants to complain, these claims should be respectively handled by the freight broker, as typically they have a stronger relationship with the freighter. All said and done, a freight broker’s primary aim is to nurture a longstanding relationship between freighter and shipper, in which they work together for years and years. Handling sensitive communication is part of it.
As you can deduce from the above, a freight broker is in many ways a mentor, attorney, and administrator. Not only do they seal the deal, they guide everything that orbits said deal along. Thus, when choosing one, it’s imperative that you put a sufficient amount of time and effort into the decision making process.
As comes with the territory of most industries, a freight broker requires a license to operate. To shelf that for a moment, there’s also a TIA certification (transportation intermediaries association) that can signify the ethics and dexterity of a broker. Only about 10% of brokers are TIA certified (this isn’t an end-all, as the TIA was founded in the late 1970s) but if they are, usually they’ve come by the certification deservedly.
As for the license, freight brokers do indeed have bonding requirements. Recently the bond increased from $10,000 to $75,000 (Federal Law MAP-21) which incidentally caused a litter of brokers to jump ship. But did they really? Unfortunately, being that the fine for license evasion is only 10k, unscrupulous brokers continue to operate without one. It’s safe to say that you wouldn’t want to hire someone to handle your shipping, only to discover that they’re not legally qualified to do so.
In which case do your due diligence. Have your broker provide their license and certifications, then ensure that they’re in good standing.
It’s important to distinguish how the broker treats their clients and just how many clients they work with. If they’re constantly trying to find the cheapest deal, bringing in a last-minute freighter to transport a shipment knowing they’re starved for business… would you expect said carrier to take pride in said shipment and carry out the job in a thorough fashion? Maybe. Maybe not.
In which case try to identify the core network for a broker. Does the freight broker use more companies than you could ever imagine, constantly migrating from one to another? Or does he have a solid core network of freighters that he frequents and has worked with for years? We’re not taking a jab at hustling here, but this information can be indicative of a broker’s ethical fiber.
Reach out to the network
Word of mouth is always going to be a fantastic way to find a great recommendation. It’s an obvious principle that you’ve certainly experienced before; your trust Person A and Person A recommends Person B. Therefore, you trust Person B too.
There’s no harm in reaching out to other shippers—a tip here is to find companies that are similar to yours but not akin, as they might want to keep their secret weapon out of the competition’s hand—and ask them about their experience with their broker. This is amplified if you have a preexisting relationship with another shipper and you trust them, as the entire process should be easier if it’s recommendation-based.
How does a broker vet their carriers?
This is a huge one. If you’re beginning negotiations with a freight broker, dive deep into their freighter policy, as this is usually indicative of they operate. What sort of consequences do they impose if the shipment is lost or damaged? How do they initially vet the carrier before deciding to do business with them?
We’ve already spoken on identifying what types of carriers a broker is working with, but their policy for onboarding is just as important, as they might pair you with a novice to their network. Ask them for a history of their BOLs and see if they can provide technical information quickly, as this will also go to demonstrate their organization and attention to detail.
After all, they’re not just a liaison. They’re the one who should be handling the oversight of your shipment, and they need to be diligent in doing so.
Are they keen to all business sizes?
The freighting industry is massive, and thus, brokers are in a constant quest to fill the most trucks, sign on clients for multimillion-dollar deals, and ultimately hit that behemoth of a goldmine. Yet, there are still companies in the small to medium sizes that require a broker to help them with their shipments. Does the freight broker you’re researching see the value in working with smaller companies? Or do they push the smaller companies aside because they’d prefer chase after the bigger fish?
A freight broker that understands the movement of the industry and the way in which business progresses will also recognize that companies scale. They’ll stand to work with a smaller or medium sized business knowing that they can assist with the development of the business and hopefully find a reward in the company’s growth. A freight broker that encourages growth is both ethical and intelligent, showcasing their aspiration to become more.
Finding a freight broker shouldn’t be a difficult process. However, it shouldn’t be a quick one either. This person is going to be responsible for the intelligence behind your shipping operation, and a lot of trust is going to have to be shared between them and the business. Making the wrong choice can threaten your profit margin. But with the resources out there and the research you’re doing now, there’s no reason you shouldn’t be able to find one that’s a perfect fit for your company. Be wary. Be smart. Most of all, be diligent.