Companies work with freight brokerage firms for a variety of reasons. Some lack the resources to create the shipping and carrier infrastructure to match their growth and revenue goals. Others want to focus on what they do best and not worry about the day-to-day business of moving products. Many companies find the cost savings a brokerage offers attractive.
Brokers often secure cheaper shipping rates for commonly used shipment types through industry relationships and pooled purchasing power. A broker can also guide a company through the ins and outs of its transportation network, identifying inefficiencies and helping shape effective, practical process improvements.
The success of your business rests on your ability to deliver on time, every time, for customers. Here are some important factors to consider when hiring a freight transportation brokerage firm:
Customer service: Look for a brokerage firm that provides excellent customer service, with knowledgeable and responsive staff available to answer questions, quickly secure a carrier, update shipments and anticipate challenges. Creativity in problem solving is critical. The firm should be results driven. Ask about its ratio of timely to delayed deliveries.
A freight broker is meant to troubleshoot when problems in shipments or logistics arise. Its role is to manage all issues. With their training and connections, freight brokers navigate through most issues faster and with more efficient outcomes than asset owner carriers.
Brokering freight is all about relationships, so you need a broker that communicates clearly and often with shippers and carriers. Your broker should be an extension of your business, overseeing every shipment from start to finish.
Experience: Look for a brokerage firm with extensive transportation industry experience. It should understand the industry well and know the regulations and requirements for transporting goods. Freight brokers must meet several requirements to operate legally. This includes an initial license, registration with the FMCSA, and a freight broker bond or trust. If you want the best outcome working with a freight broker, check that it meets these requirements and is in good standing. Ensure the brokerage firm has proper insurance coverage to protect your goods in the event of loss or damage. Ask about its carrier procurement and vetting process.
Carrier network: The brokerage firm should have a large and diverse network of dedicated or vetted owner-operators it works with to ensure it can find the best carrier for your specific needs – essentially providing unlimited shipping capacity. The brokerage firm takes on all risks of managing carriers and gives you access to greater bargaining power. Businesses that work with a broker often see consistent reductions in rates for transportation and logistics services. Brokers are skilled at finding areas for cost savings such as more efficient routing or carrier selection.
Technology: A good brokerage firm should have a robust technology infrastructure that allows for real-time tracking of shipments, as well as communication with carriers and shippers. Ask about its transportation management system (TMS), specifically its EDI functionality, carrier bid and tender, carrier invoicing, and order capture and management capabilities.
Value: Though price is always a consideration, it should not be the only factor. Look for a brokerage firm that provides good value for the price rather than simply choosing the cheapest option. Outsourcing can significantly reduce the costs of running your business and improve cash flow. By placing your shipping in the hands of experts, you no longer have to focus on day-to-day oversight of your transportation supply chain. This in itself is a considerable cost saving. You’ll no longer have to invest in the people, facilities and equipment to operate your supply chain in-house.
Another benefit of working with a licensed and trained freight broker is its ability to get the best possible shipping rates. Brokers have in-depth knowledge of the industry and relationships with other parties in the shipping process. Let your broker work its magic through business connections to get you the best possible rates.
Scalability: Work with a brokerage firm that will give you access to a scalable pool of resources to meet business objectives as they arise. If you anticipate a busy or seasonal period or experience rapid growth, you can expand your shipping and distribution capabilities without investing in costly labor, equipment or facilities. This scalability allows you to operate more flexibly, expanding and contracting your shipping needs alongside your operational objectives. Because of this, the shipper relies on the brokerage’s network of carriers to move its shipment. This process provides convenience for each shipper, saving you the time you would spend coordinating with and selecting a carrier directly.
Business needs: Licensed freight brokerages come in many shapes and sizes, from large corporate-like operations to small, locally owned businesses. Each has its merits. Big freight businesses have access to more resources, can take on new partnerships with shippers and carriers daily and can let them go just as fast. Smaller companies may not be able to handle as much business day to day, but may have more of a focus on the relationship aspect of each load. Ask the broker about its expertise in your industry. Be sure to think about your business needs and select your broker based on the fit.
Are you considering partnering with a freight brokerage firm? Our knowledge and expertise working with all types of shippers and freight allow us to create smart, customized solutions for any shipping challenge. If you’re ready to learn how we can help your company achieve its goals, call us at 1-877-205-9707.