Freight brokers provide the service of matching shipper needs with carrier capacity and services. Freight brokers form relationships with a network of freight carriers and select the best option for each shipment, negotiate the best rates, set up the pickup and delivery, and manage problems.
What are freight brokers?
Freight brokers help shippers find the best solutions for each freight shipment at the best rates. Freight broker models include Cradle-to-Grave, Buy/Sell, Agent-Model, Digital, and Combination. Freight broker rates may be spot rates or contract rates, and double brokering freight may occur.
Who Needs to Hire a Freight Broker?
Benefits of Using Freight Brokers
They also help carriers fill their capacity as much as possible more consistently. Trucking brokerage services also help carriers by finding backhaul loads that prevent trucks from returning empty to the original location.
How Do Freight Brokers Find Carriers?
How Do Freight Brokers Find Shippers?
How do freight brokers find loads? This happens through similar methods any business uses to find new clients. A freight broker may make cold calls, ask for referrals from current clients, research businesses that make products, or use digital freight matching websites. Traditional ways a freight broker recruits shippers is by attracting new clients through conventional marketing methods and a website.
Types of Freight Broker Business Models
- Cradle-to-Grave Model: Individual brokers are each responsible for the process from start to finish, including finding shippers, finding carriers, and managing all aspects of relationships and shipments.
- Buy/Sell Model (Chicago Model): Sales and operations are separated. Sales brings in new shippers, and the operations team manages the logistics of freight shipments, including finding appropriate carriers.
- Agent-Model Freight Brokerages: The cradle-to-grave model with independent contractors who are not employees yet work under a corporate umbrella.
- Digital Model: Websites or mobile apps that use algorithms to match loads to carriers.
- Combination Models: Sales works in tandem with operations and utilizes technology to support the best results.
Pros & Cons of Freight Broker Business Models
- Cradle-to-Grave Model:
- Pros: Professionals focus on specific process aspects, and the freight brokerage can scale.
- Cons: Employees create a high expense. It can be difficult for the teams to rely on one another.
- Buy/Sell Model (Chicago Model):
- Pros: Brokers create trust and strong relationships and provide consistency. Employees are less expensive.
- Cons: There is too much weight on each broker, which is a liability if one leaves. Each broker has unique methods.
- Agent-Model Freight Brokerages:
- Pros: The brokerage avoids the costs of employees. Brokers are motivated by a high percentage per transaction.
- Cons: Weakness during business downtimes and challenges. Brokers do not have trucking assets and cannot guarantee capacity.
- Digital Model:
- Pros: This method is fast and effective. Secure lower rates due to low overhead costs and technology to find the best rates.
- Cons: There is no human relationship or support. Solutions are usually limited.
- Combination Models:
- Pros: This provides the best of humans and technology together, with the ability to adapt to challenges.
- Cons: This method tends to come with a high cost.
How Does a Freight Brokerage Price Freight?
- Spot Rates: A one-time shipment rate to transport freight, dependent on current market conditions that reflect supply and demand. The spot quote is impacted by factors like whether it is a long haul or short haul, whether it is expedited, whether permits are needed, and whether accessorial fees exist.
- Accessorial Charges: Fees carriers charge in addition to pickup and delivery.
- Line Haul: Moving loads across long distances, which may include different methods of transport, such as ocean, rail, and road.
- Contract rates: A fixed price and freight volume commitment for a specific lane during a specified period of time, usually one year. Contract rates are typically determined based on estimated freight volumes and a service provider’s cost per mile. Contract rates reflect the cost agreement made by a motor carrier, a freight broker, or a logistics service provider to move a freight shipment.
How does MercuryGate TMS support Freight Brokers?
What Is Double Brokering Freight?
Double brokering freight is when the original broker tenders a shipment to another broker without communicating the switch to the shipper. Unauthorized double brokering is a violation of FMCSA legislation. This is not necessarily the fault of the original broker, as many secondary freight brokers mislead, acting as if they are carriers.
How Can a TMS Help Freight Brokers?
- Predict demand.
- Match carriers and capacity.
- Automatically check compliance of carriers.
- Search all modes of transport.
How MercuryGate TMS supports Freight Broker Operations
The MercuryGate TMS for freight brokers design provides access to all modes of transportation capacity sources, including private and public bid boards. The technology solution supports blast email quotes and helps identify previous carrier and lane history while comparing market benchmarks.
- Quickly enter loads.
- Locate transportation capacity.
- Validate carriers & rates.
- Tender & track loads.
- Settlement & analytics.
- Simplified data awareness.
- Freight rate index.
MercuryGate TMS provides a single platform for brokerage, managed services, and freight forwarding businesses seeking capacity in all transportation modes. Find out more about how MercuryGate TMS supports freight broker operations.
