Tag Archives: freight broker

3PL vs Freight Broker: What Is the Difference?

In the logistics and transportation industry, many terms are confused, especially if you don’t have years of industry experience. One example of terms that might be confused is ‘3PL (third-party logistics provider)’ and ‘freight broker.’ Many shippers consider these the same things, however, there is a significant difference between a 3PL and a freight broker.

What is a freight broker?

A freight broker is a middle man between the shippers (or the companies who need to ship freight) and transportation carriers or drivers. Both shippers and carriers have their own requirements and schedules, and a freight broker acts as a person who matches them together and arranges freight shipments.

Usually, freight brokers are non-asset based. This means they don’t own any physical equipment. This allows brokers have the flexibility to find whatever equipment you need to ship your freight with. They work with numerous freight carriers and partners so that you don’t have to search for reliable carriers on your own. Freight brokers handle most of the communication and paperwork for you.

What is a 3PL?

A 3PL, or third-party logistics provider, is a company that provides a wide range of outsourced logistics and transportation services to businesses. The extensive service coverage of a 3PL includes everything from shipment tracking and dispatch to long-term supply chain management. 3PL’s work with thousands of freight carriers, suppliers, vendors, brokers, companies, and partners, so they have the buying power and a large network of industry connections. This lets them perform complex operations and manage the entire logistics branch of huge companies.

3PL vs Freight Broker: What is the difference?

Both a 3PL and a freight broker act as a connection between the shipper and the carrier. However, they have different roles. A 3PL provides a much more extensive variety of services that just managing a particular shipment. Third-party logistics providers focus on building trusted, long-term relationships rather than simply executing one or two operations. A 3PL can help manage any volume of freight shipments, your supply chain, and any other logistics function.

3PL vs Freight Broker: Which option to choose?

If you need to send a few shipments occasionally, a freight broker can be a cost-effective and helpful solution. For companies with complex supply chains, a 3PL will be a better fit in terms of partnership, equipment, freight rates, and services.

How Do Freight Brokerage Services Work?

One of the main reasons why businesses start working with third-party logistics providers (3PL’s) is for freight brokerage services. A freight broker is a person who contacts carriers and handles the load moving process. Ultimately, a good freight broker is one point of contact for all of your transportation needs. These professionals provide you with high-level customer service, letting you access their carrier network, and negotiate freight rates for you.

How can freight brokers help you?

Many shippers underestimate the role of freight brokers or have a skeptical attitude towards them. This misunderstanding is a result of not knowing how exactly brokerage services function, and how to work with them. Working with freight brokers can significantly reduce the time you spend on load arrangements and carrier search. You can eliminate transportation costs because of the reduced rates and more sufficient logistics process.

To fully understand the potential of freight brokerage services for your company, it is better to learn how freight brokers work and what piece of responsibility they handle.

Here are some key points of how freight brokerage functions:

Order tender

This is the primary stage of the transportation process. A freight broker either calls or gets a call from a company with a request to schedule a load. At this point, you have to provide the 3PL with all the necessary information. Apart from address and contact information, the broker will ask you to mention handling conditions, commodity type, and other important data.

Load scheduling

Once you’ve stated accurate information, freight brokers put it into their transportation management system (TMS). Working through a TMS lets them find reputable and experienced carriers who can move your shipment. Essentially, you can be sure that all the carriers are licensed, and have appropriate equipment. Once your load is booked, the broker schedules pick-up and delivery.

Loading

Loading is a crucial step in transportation. Brokers stay in touch with the carrier from the very start and make sure the driver is loaded with the right freight. At this point, the carrier signs a Bill of Lading, which means the driver is now liable for your freight.

Transit

During the entire transit, a 3PL stays in touch with you and your carrier. A good logistics provider has advanced tracking systems that give you complete visibility into your shipment’s location and truck condition.

Unloading

After unloading, carrier notes the delivery time and the consignee signs the bill of lading. Normally, once the delivery is documented, the broker waits for the paperwork to invoice the shipper.

Billing

Finally, the broker gets all the documents and prepares everything for the payment.

Bottom Line

Ultimately, freight brokers can help take a lot of burden and responsibilities off your shoulders. They handle the entire transportation process from A to Z, including payments. With a reliable 3PL, you are assured that all the information is correct and that transportation runs smooth.

The key to a positive experience with freight brokers is being direct about your needs, and providing correct information about your freight. The more details you tell your broker, the higher the chance is to find a suitable carrier and successfully move your shipment.

PLS Freight Brokerage

PLS Logistics is one of the US leading freight brokerage and logistics providers. Learn more about our Freight Brokerage Services!

How To Choose a Perfect Freight Broker?

What is a freight broker?

Shippers use freight brokers for managing their transportation needs. A good freight broker offers access to an extensive carrier network and provides quality service you can rely on. Having a go-to freight broker is an easy way to boost up the capacity for your loads without the daunting task of qualifying and managing lots and lots of carrier partners – this is especially beneficial in times of the current load-to-truck ratio.

How difficult is it to find one? It’s easy to choose a freight broker, but will they handle your shipping with the care and integrity you deserve? Giving your business to the wrong freight broker will without a doubt affect your business.

What does a freight broker do?

what is a freight brokerHas expertise and license

Make sure the broker has a license, an active property broker authority, and appropriate insurance coverage. Check for how long they have been in business – it’s hard to underestimate stability, experience, and expertise. Be careful and avoid carriers without the broker authority who broker the loads out to outside carriers.

Executes carrier vetting procedures

Will you give you freight to any carrier? This will probably not end well and your freight will get damaged or even stolen. You should expect your broker to have certain carrier qualification processes in place. Ask your potential broker about the minimum qualifications and the verification process. At the very least, they should be checking carrier authority, insurance, and safety ratings, but taking into consideration additional factors will be a plus.

Offers a wide range of services

Will they give you access to various modes of transportation? Or be able to provide good service and competitive pricing for both, full truckload and LTL? Also, will they be able to suggest a warehouse or help with transloading? Do they do any international shipping? What about expedited overnight options? Even if you use regular flatbeds for 99% of your shipping needs – you never know! Maybe a knowledgeable freight broker will be able to find an amazing intermodal option for you which will fit all your needs and save money.

Communicates efficiently

All of the above has been already discussed and you feel you are almost ready to make a decision. Now it’s time for the finishing touch – how will it actually work day-to-day? What will your daily communication look like if you strike a deal? Will the rates be discussed in advance, or will it be spot quotes only? How do they go about tracking the loads and providing updates? All these things matter and define whether you are satisfied with the services or not so much. Openly having this discussion will give you an opportunity to outline your expectations and find out how your broker is doing business.

How to choose a freight broker?

Finding the right Freight Broker is like winning a lottery. Well, slightly more common, but feels just as great! Your Freight Broker values your business, takes pride in their high-class customer service and reliability while also having the means to handle your shipping needs and make your supply chain management much easier.

Still looking for the right Freight Broker?

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The Benefit of a Freight Broker

Freight brokers are commonly talked about on the internet in a negative light. In reality, a freight broker can be a tremendous asset to an organization to secure carriers quickly and cost-effectively. In this, we’re going to explore the ins and outs of freight brokers – giving you the cold, hard truth.

What Do Freight Brokers Actually Do?

what is a freight brokerHow does a carrier handle an urgent pickup or a problem covering lanes? What does a shipper do if they have no one to pick up their load? What does a carrier do if there are no trucks available and a customer has a last-minute request?

Answer: Call a freight broker!

Freight brokers are great business partners in predicaments, however, they are especially useful as a primary transportation solution.

Freight brokers are essentially personal freight managers for organizations, working hard to find you the best carrier at the best price to move your freight.  This allows you to focus on other critical aspects of your business, optimizing productivity and providing you with a competitive advantage.

A freight broker can help improve client service and minimize the cost it takes to serve those clients. With the continual driver shortage, a relationship with a freight broker is a handy tool to keep in your back pocket.

Why Use A Freight Broker?

Supply chains are changing. The freight industry is changing. Most companies have limited resources and limited time. Their valuable time and money shouldn’t be spent on forming relationships with trucking companies, checking loads, and dealing with claims – that’s where freight brokers come in.

A freight broker is your one-stop-shop for all your transportation expertise. These professionals know how to secure loads with pre-qualified carriers through their company. This industry knowledge and pre-existing relationship allow them to lock in lower rates than you would get as a one-off shipper.

Do freight brokers help with resource productivity?

Freight brokers help carriers optimize their resource productivity. In other words, by doing things like scheduling back-hauls and more effective routes, each truck is doing more work for less money. This improves your bottom line. What’s more, freight brokers may be the future of trucking. Shift Freight, an LTL carrier based in California, has developed a business model that relies solely on freight brokers.

Contrary to popular belief, freight brokers are here to help you! Their main role is to make sure the customer (you) has everything they need to get their shipment from point A to point B hassle-free! They optimize the freight business by saving time, money, and resources.

8 Things to Know if You’ve Never Worked with a Freight Broker

A substantial amount of over-the-road freight transportation is handled by freight brokers.  A freight broker is a person or company that brings together a shipper (with freight to move) and a qualified carrier (who has the capacity to move the freight).

  1. Nothing New! Freight brokers have been around the transportation industry since the 1900s. But before the ’70s, regulations governing brokers were so restrictive that few firms employed the intermediary.
  2. The Bond. All freight brokers are required to have a $75,000 surety bond or trust fund. If a freight broker does not live up to the contract with a shipper or carrier, the bond assures that the broker has the cash or assets to cover the amount.
  3. Reliable Capacity with Qualified Carriers. A freight broker assists you, the shipper, in finding a dependable motor carrier that you might have otherwise overlooked.
  4. The Truth about Rates. Shippers pay a fee to use a freight broker’s services, but the end price is almost always lower than if you had arranged the transportation yourself. Brokers can find the best price because of their access to a broad carrier network.
  5. Communication is Key. What are your needs? Be direct with the broker about when freight can be loaded, your price range and how to notify you with any disruption.
  6. Not A Forwarder. A freight forwarder takes possession of goods and consolidates smaller shipments into a larger shipment, then arranges for transportation.
  7. Becoming a Regular. As a shipper, you can utilize a freight broker for regular lanes or specialized freight. A broker can find private carriers covering the lane to make your delivery faster and safer. A broker can obtain specific equipment needed to ship your freight.
  8. Non-Asset Brokers Advantage. Non-asset brokers have immediate access to many carriers and trucks. Non-asset brokers are more cost-effective since their focus is to find you the best rate and judgment isn’t clouded by specific ownership of the truck.

Continue Reading: A Comprehensive Guide to Completing a BOLTips for Shippers New to LTL FreightCauses and Effects of Demurrage

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Everything You Need to Know: Spot Market Freight

Have you ever wondered about how the product you buy from a store ended up there? The complexities of a supply chain and the steps for moving freight to its end location are often overlooked. But, for manufacturers, suppliers, and retailers, logistics is a top priority to business operations. Accurately planning for efficient transportation routes and potential delays comes with many challenges, which is why many shippers turn to a freight broker to ship goods.

What is a freight broker? 

Shippers should focus on one thing: the product. A freight broker is needed to move goods while the shipper focuses on their core competency. A freight broker matches shippers with transportation services in order to move freight from its origin to its destination. You can think of a freight broker as the middle man – connecting the shipper to a carrier and executing the freight move at the best rate. Freight brokers are well-versed in the latest trends and prices, plus have access to technology and a large network of carriers to make moving freight as efficient as possible.

What is a spot shipment?

Shippers will broadcast a load to a freight broker in order to find capacity at a low rate. Sourcing your loads to a single freight broker shows carriers your freight demand, enabling them to properly bid and commit to moving your freight. One advantage to using the spot market is to contain costs and reduce backlogs of shipping.

What are spot rates?

Spot rates refer to the price quoted for immediate settlement on a commodity and is based on the value of the product. Spot rates change frequently, so shippers have little control of their budgeting process for transactional transportation movement.

What is Managed Transportation?

Managed transportation services include a wider scope of service offerings from a 3PL. Managed transportation includes integration and access to a transportation management system and the option to have a logistics expert to help operate and monitor the data the technology provides. With managed transportation, shippers gain customized reports, effective operations and time savings.

Read More: Capabilities and Benefits of Shipment Tracking

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