What is a Freight Brokerage and What Do Freight Brokers DoPosted On 15th June 2023
Perhaps you have questions about freight broker requirements, or maybe you’re unfamiliar with how to discuss what a freight agent is or how to explain a freight broker’s meaning to potential clients or partners.
There’s a lot of uncertainty about the proper freight brokerage definition and how freight brokerage works. In this article, we’ll break down the freight broker process in detail while helping you better understand what a freight brokerage is and how to be a broker for truck drivers.
By the time you finish reading, you’ll be able to answer a wide range of questions, including “How does freight brokerage work” and “What is a freight brokerage firm.”
What is a Freight Brokerage
You’re probably wondering, “What is freight brokerage?” The simplest way to explain freight broker meaning is to understand how they connect shippers and carriers. In the freight industry, brokers don’t own or possess the goods themselves. Instead, they bridge the gap between shippers and carriers by handling communication and making sure deliveries arrive safely and in a timely manner.
It’s also important to understand how the freight brokerage meaning differs from truckload brokerage, what a shipping broker is, and what a logistics broker is.
Truckload brokerage is a specific category of freight brokerage that optimizes space inside full truckload shipments by properly arranging items within a shipment.
Shipping brokers are able to work within both freight brokerage and truckload brokerage. Their primary goal is to ensure shipments happen as efficiently and cost-effectively as possible.
Finally, logistics brokers handle various administrative duties within the overall shipping process. They may play a role in freight brokerage, but their responsibilities expand far beyond the scope of what a freight broker does.
What is a Freight Broker
Now that we’ve covered freight brokerage, the next question to address is about the freight broker definition. In other words, what is a truck broker?
A broker for trucking is someone who optimizes delivery routes and minimizes purposeless miles to save time and money. They look for opportunities to improve existing processes while overseeing the entire operation to ensure things are running as smoothly as possible.
What Does a Freight Broker Do
“What’s a freight broker” is probably the most common question about the freight broker process. “What is freight brokering” is also asked pretty frequently, and so is the question of “What are freight brokers doing?”.
Let’s discuss how freight brokerage works by identifying a few of the most important tasks a freight broker does:
- Choosing a reliable carrier. Since safe and reliable transportation is essential for your business’s survival and profitability, this is a paramount concern when choosing a freight broker.
- Handling shipping logistics. Planning the journey of a shipment from start to finish is no easy task. A freight broker will help you take care of each detail so that you have complete peace of mind about the success of your delivery.
- Communicating between carriers and shipments. Your freight broker will serve as the primary point of contact for anyone who has questions about your shipping.
- Ensuring the safety and accuracy of delivery. A freight broker will stay involved with the shipment and oversee the delivery until completion to ensure the goods reach their final destination.
Freight brokers should be effective time managers who are capable of multitasking. They should have the ability to negotiate when working with different suppliers and service providers.
If they are well-organized and have prior management experience, these attributes can also be assets. Most importantly, freight brokers should have strong communication and people skills, since they will be interacting with clients, vendors, and customers on a regular basis.
When Do You Need a Freight Broker
Some people may not need a freight broker because their shipping processes are currently running well. However, if you’re interested in reducing shipping costs or expanding shipping capacity, working with a freight broker might benefit you.
As you look for a freight broker, make sure you choose a freight broker with plenty of industry experience, and be sure to ask each candidate about their operating authority and broker license before you agree to work together.
Typically agents will need a license from the Federal Motor Carrier Safety Administration in order to be considered reputable and trustworthy.
To keep up with freight broker requirements, you’ll want to have a good understanding of freight brokerage classes. Loads typically fall into one of eighteen different classes numbered between 50 and 500 depending on their density and the overall difficulty of shipment.
This information is especially helpful to have when you have to answer questions about what a broker in trucking is or why it’s important to work with one.
How Big Is the Freight Brokerage Industry
In 2021, the global freight brokerage market was worth over $48 billion. By 2030, the industry could grow to nearly $90 billion at a CAGR (Compound Annual Growth Rate) of 6.3% from year to year. Factors such as a low barrier to entry and a positive trade value are influencing the growth of the business as a whole.
In the future, the demand for freight brokers should continue to grow as the US-Mexico-Canada Agreement (USMCA) further streamlines shipments across international borders and creates supply chain uniformity throughout the continent.
Developments in technology will also push the market forward as pricing, load-matching, and improved brokerage integration become more accessible in real-time.
How Many Freight Brokers Are in the US
By now, you have a deeper understanding of what freight brokering is, and you know what freight brokers are. You may also be curious about how many freight brokers are currently working in the US.
As of January 2023, there were almost 92,000 freight forwarding brokerages and agencies in the United States. This represents a 1.4% growth from the year prior and a 2.4% growth over the previous five years. In total, nearly 442,000 people work in the industry, and the number is growing by almost three percent per year.