What is a Freight Broker?

The actual language on a freight broker’s license issued by the U.S. Department of Transportation / Federal Motor Carrier Safety Administration (USDOT/FMCSA) to describe the authorized activity of a freight broker reads like this, “This License is evidence of the applicant’s authority to engage in operations, in interstate or foreign commerce, as a broker, arranging for transportation of freight (except household goods) by motor vehicle.”

A Freight Broker is a logistics specialist that serves as a liaison between a manufacturer that needs shipping services and an authorized motor carrier.  Logistics is the science of optimizing the distribution of freight and freight-flow from manufacturer to consumer to reduce inventories, cut transportation costs, speed delivery, and improve customer service.  It is the process of planning, implementing, and controlling the efficient flow of goods. 

Freight brokers play an important role in the movement of cargo; the broker doesn’t function as a manufacturer, buyer, seller, or a carrier.  Instead, a freight broker works to determine the needs of a manufacturer (or shipper) and connects that manufacturer (or shipper) with a carrier willing to transport the items at an acceptable price.  Freight broker services are valuable to both manufacturers (or shippers) and motor carriers. 

Freight brokers help shippers find and book reliable carriers that might otherwise be difficult to locate and dispatch.  They assist motor carriers in filling their trucks and earning money for transporting a wide variety of items.  Freight brokers use their knowledge of the shipping industry and technological resources to help shippers and carriers accomplish their goals.  Many companies find the services provided by freight brokers to be indispensable.  In fact, some companies hire brokers to coordinate all of their shipping needs. 

During the middle and later 1990s, private companies discovered the benefits of hiring or outsourcing outside logistics experts (freight brokers) to manage the total flow of products from raw materials to finished goods.  Recognizing the value of the freight broker’s strategic business counsel, companies utilizing third-party logistics providers (freight brokers) have become more efficient, competitive and focused on their core competencies.  It is like having a full or part time virtual assistant traffic manager.

Often, freight brokers are confused with freight forwarders.  Though a freight forwarder performs some of the same tasks as a freight broker, the two are not the same.  A forwarder takes possession of the items being shipped, consolidates smaller shipments, and arranges for the transportation of the consolidated shipments.  By contrast, a freight broker never takes possession of items being shipped.

Some freight brokers are “alter egos” or sub-divisions, of either a shipper or a carrier, bringing their particular bias into its operating philosophy and rate setting (pricing). 

Other freight brokers are stand alone businesses known as “pure” freight brokers.   

Duregger Logistics is a completely independent “pure” cost plus freight brokerage which moves freight efficiently, at or below, the current, lane specific, average market rates.

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