What Does a Logistics Broker Do?
In the complicated transportation logistics industry, the logistics broker is an integral part of keeping the trains (or trucks, rather) running on time. What do they actually do? Read on to find out.
They Connect Shippers and Carriers
Brokers act as an intermediary between shippers and carriers. They use their connections with carriers to help shippers get their loads covered at better prices that most shippers have the power to negotiate. They help carriers and individual drivers stay well-booked by ‘selling’ them loads that work into their schedule, ideally minimizing empty or deadhead miles.
Tasks Freight Brokers Handle
- Finding/vetting a carrier for a load
- Negotiating shipping costs and other terms
- Dispatching load
- Communication with carrier and driver before, during, and after pick-up through delivery
- Load tracking
- Necessary transportation documents
- Invoice generation
How Do Freight Brokers Make Money?
There are a couple different models to explain how freight brokers make their money:
- They earn a commission on each load they ‘sell’, schedule, and see through to delivery.
- Their earnings come from ‘selling’ loads to carriers for less than shippers are willing to pay, ideally covering expenses and netting them a profit.
How Does One Become a Freight Broker?
Freight brokers may operate as independent businesses, franchises, or they may work for a larger freight brokering company. Independent freight brokers may take home more of the money they earn, but they also have a lot more legal responsibility and liability, as is the case with many independent businesses.
Brokers must be licensed by the FMCSA, also known as gaining MC authority, insured, must have processing agents (a person assigned as being able to be served legal papers in the state) in each state where the brokerage will operate, and they must obtain a bond or trust.