What is Freight Brokering?
Logistics is complicated by nature. There are a lot of moving parts and various types of services to learn about. Freight brokering is just one of the many services offered by third-party logistics providers. What is freight brokering? Read on to find out.
A Simple Explanation of what Freight Brokerages Do
The most basic explanation for what freight brokers do is that they find carriers to haul loads for shippers. Brokers mostly follow a basic process, though the proprietary technologies used by different companies may change how these steps are carried out. Today’s technology means that freight brokering is becoming more automated; in fact, Convoy recently announced they’ve achieved fully automated freight brokering, a first in the industry.
Freight Brokering: The Process
The freight brokering process starts with an order from a shipper. The broker ‘tenders’ the order, gathering all the information they need including load details, the freight’s start and end point, compliance issues, special handling instructions, and delivery instructions.
Next, the broker finds a carrier that can haul the load. They leverage their network of reliable carriers and their drivers, negotiating a rate that works for the shipper and ‘selling’ the load to a carrier. The load is scheduled and pick up and delivery times are established. The broker must also ensure that the driver scheduled on the load and their equipment meets certain requirements.
The broker then dispatches the driver when it’s time for the load to be picked up, providing them with the pertinent details and gathering details to confirm everything is in order. When the load is picked up, the broker continues to communicate with the driver to ensure all goes as planned, confirming the right freight is being picked up.
During deliver of the freight, brokers often track the loads using GPS. Upon delivery, arrival time is documented and the bill of lading is signed by the consignee, indicating that they have taken possession of the freight. The carrier turns over the appropriate paperwork so the shipper can be billed.
Freight brokers make their money by collecting a commission on the loads they ‘sell’ to carriers or by shipping loads for less than shippers pay, resulting in a profit.
What Kind of Licensure is Necessary for Freight Brokering?
The Federal Motor Carrier Safety Administration requires that freight brokers be licensed and they must also complete the Unified Carrier Registration and pay an annual fee. States may also have their own laws regarding freight brokerages.
If you’re interested in becoming a freight broker, a franchise opportunity might be an ideal way to break into the industry. Check out this article for more details on starting a Blue Grace franchise.