Business development and globalization are the key sources of America’s economic growth. The volume of trade grows steadily every year, increasing the need to move goods, materials, and equipment.
The US trucking market is the largest one in the world, and the arrangement of cargo delivery consists of multiple successive steps. It is quite obvious that only professionals in the field can ensure that adequate work is done. Therefore, businesses and their managers have to turn to specialists for help in order to facilitate these tasks.
HMD Transport offers the full range of services for delivery of any cargo, both regional and OTR, i.e. across the United States. We have a fleet of over 500 trucks and 800 trailers, and use an extensive network of carrier partners. HMD Transport has a personal touch, offering premium service and flexible discounts for its customers.
- What Is a Freight Brokerage?
- What Does a Freight Broker Do?
- Difference Between a Freight Broker and a Freight Forwarder
- Why Do Businesses Use Freight Brokers?
- Freight Broker vs Dispatcher
- How to Choose the Right Freight Brokerage Company?
What Is a Freight Brokerage?
How or by whom do you think most cargo transportation is planned and organized?
Freight brokerage companies organize most freight transportation. According to the US Bureau of Labor Statistics (BLS), there are currently more than 80,000 freight brokers registered in the US.
The definition of a freight broker for truckers is a business that acts as an intermediary between shippers and carriers. A good freight brokerage business has a broad network of carriers and creates reliable partnerships between customers and contractors. The main task of a freight broker company is to make the process of cargo transportation convenient and reliable. A shipper does not have to spend time searching for a carrier, calculating a route, and preparing all required documents. All goods to be transported are controlled by freight brokers.
What Does a Freight Broker Do?
The short answer is that they connect those who have cargo with those who can transport it. That is, a freight brokerage finds a transportation provider for the shipper and fully controls the delivery process from the place of loading to the destination point.
Below is a list of tasks that a freight brokerage performs and controls:
- Taking orders from a customer. A company that needs to deliver cargo, contacts a freight broker by phone, email, or through TMS software. This customer provides the freight broker with all the details and requirements for the shipment, including the place of delivery, the cargo recipient's contacts, and all the other needed information.
- Transport planning. Once the freight broker has all the shipping details, he enters the data into the shipping management software. A professional freight broker has a database of reliable freight carriers who accept orders and deliver loads throughout a specific area.
- Sending instructions to a truck driver. The freight broker contacts the driver assigned to pick up the cargo. The broker informs the driver about additional requirements for the transportation of goods to the destination.
- Truck loading. The freight broker keeps in touch with the driver during the entire loading process. Loading is considered completed when all cargo is loaded, secured and the carrier has signed the paperwork (BOL).
- Cargo transportation. The freight broker stays in touch with the driver while the cargo is being transported to its destination, tracking the driver's path via GPS tracking software, and calls the driver to exchange information about weather conditions and traffic jams, which might potentially cause a delay.
- Goods delivery. The truck driver must inform the freight broker about the time of arrival at the destination. The consignee signs the bill of lading, which indicates the condition of the delivered cargo and the time of its arrival.
- Billing. After delivering and signing the necessary documents, the carrier must hand over these documents to the freight broker, so that an invoice can be issued for the services provided. Documents contain work receipts and pay rate, which are included in the invoice.
Difference Between a Freight Broker and a Freight Forwarder
The difference between a freight broker and a freight forwarder consists in the following:
- A freight broker acts solely as an intermediary: attracts third-party carriers, uses third-party resources for storage, packaging and other actions necessary for the delivery of goods. Freight forwarder, as a rule, also engages third-party carriers, but unlike a freight broker, it uses its own resources for storage and all other required cargo handling.
- Many freight forwarders are licensed to ship internationally, while freight brokers usually only ship within the United States.
- A freight broker sends cargo against a bill of lading issued by the carrier to the cargo owner. As opposed to that, freight forwarder sends goods based on its own (internal) bills of lading.
It is important for the shipper to choose an intermediary officially registered with the state authorities, be it a freight broker or a freight forwarder. Only these intermediaries can provide financial and legal guarantees for the performed work.
Why Do Businesses Use Freight Brokers?
The main goal of any company is to maximize profits and to achieve optimal savings. Significant savings can be achieved by optimizing the costs via intermodal transportation. That is exactly where the knowledge and skills of a professional freight broker will come in handy. The task of a freight broker is to find the balance between reliable and cost-effective transportation.
Advantages of Freight Brokers
Companies that place value on time and rational use of their resources are the ones that use the services of freight brokers most often.
The key advantages of professional freight brokers are:
- They help companies save time and money. Customers can save on hiring and training in-house personnel to handle their logistics. Establishing an in-house logistics department costs much more than buying the services provided by a broker.
- By using the services of a freight broker, the company can focus solely on its own business development. It can contact the freight broker as needed, for example, as dictated by the seasonal nature of the business.
- Freight brokers' extensive network of proven carriers and knowledge of the intricacies of this business ensure a job well done.
- A freight broker has access to various types of transport and equipment. This provides flexibility in choosing shipping options. If the company's delivery needs change, the freight broker immediately finds a new solution that suits this particular customer.
- Freight brokers have a license to provide services issued by the Federal Motor Carrier Safety Administration (FMCSA).
Freight Broker vs Dispatcher
The work of freight brokers is regulated by US laws. All independent freight brokers and freight brokerage companies must obtain licenses to operate.
However there is some difference between a freight broker and a dispatcher. Dispatchers can only be hired by a carrier company. They do not have permission to run their own business. Therefore, if the dispatcher decides to act as a freight broker, they may have face problems with laws that govern labor relations between the parties entering a business transaction.
How to Choose the Right Freight Brokerage Company?
Size, communication practices, access to capacity, reliability, ability to responsibly follow through
In order to make the right choice, you need to study the market, the cost of services provided, and the reputation of freight brokerage companies. Here are the key points to consider:
- A freight brokerage company should have an FMCSA license. The federal law establishes the obligation to obtain a license for all those involved in the organization of loads transportation. Availability of such a license confirms that the freight brokerage company meets the strict criteria for doing business.
- The range of services and modes of transport provided by the freight brokerage company. Companies can concentrate fully on truck transportation services; however, they can also do intermodal rail and air transportation. Using more than just one option will allow you to deliver faster and cheaper.
- The freight brokerage company should have experience in delivering goods for your industry.
- The financial standing of the company: whether they pay carriers on time, whether there have been claims made by the customer or the carrier to this freight brokerage company.
- Check out the types of insurance that freight brokerage companies provide. Also, find out if they handle all the paperwork in case of damage or loss of cargo.
- Find reviews of other customer companies that have previously worked with the freight brokerage company of your choice.
- Do not hesitate to ask the brokerage company what certifications they have or what technology they use:
- TIA certificate: the company is recognized as a member of the American Association of Transport Intermediaries;
- NASTC certificate: brokers have the opportunity to work with members of small transport companies;
- Truckstop.com program certificate: this is the largest online freight matching service that issues certificates only to companies with a good reputation and recognized high quality of work.
HMD Transport is a fast-growing customer-oriented company. Therefore, we treat all orders, whether large or small, with the same high degree of responsibility. Our advantage is that we own a large fleet of trucks and trailers. This allows us to reduce the number of delays on the route and deliver goods within the shortest possible time.
Having an extensive partner network and access to the resources of our parent company, HMD Trucking, guarantees end-to-end customer service and good work across the US.
We support all customers 24/7/365, and offer the following load types and delivery options:
- TRUCKLOAD: Dry Van, Food Grade, Hazmat, Tanker Endorsed & Expedited.
- FLATBED: Specialized equipment. 48’, 53’ & Conestoga.
- REEFER: Frozen & Refrigerated, Hazmat & Tanker Endorsed.
- INTERMODAL: 20’, 40’, Reefer, Hazmat & ISO Tanks, dryage.
- PARTIAL: Same Day, Next Day Delivery, Sprinters, Box Trucks & Warehousing.
- LTL (Less Than Truckload).
Are you a broker looking to optimize your cash flow and streamline your operations? Discover the immense advantages of freight factoring for brokers. In our comprehensive article, we delve into the nitty-gritty details of this game-changing financial tool that can propel your brokerage business to new heights.