If you are unfamiliar, or are not completely sure with what a freight broker actually does, you’re not alone. With the countless number of instances in the world that use the word “broker” it sounds familiar, yet in the transportation world, it means one thing - Expert Connector.
Simply put, a freight brokerage connects willing shippers with available capacity that they may not have known was accessible and ready to do business. The largest freight brokerages have many, sometimes thousands of carriers ready at a moment’s notice to move freight as needed, all over the world. Because of this, companies that produce goods from a variety of industries rely on these brokers to assist with putting their products into their customer’s hands.
So how do you identify a freight broker that is right for your company? This post ascertains some of the pitfalls to look out for while you’re selecting a new freight broker to entrust your cargo with.
Danger 1 - Crowded Market Place, Who Can Help
There are approximately, 110,000 freight brokerages and forwarders in the United States. This makes dealing with just anyone, dangerous for any business. Today, freight brokerage organizations handle nearly $160 billion in freight spend every year. This number represents a large share of transportation overall, and in most cases, the only strategy that some companies have. Interestingly enough, there isn’t any one single company, or independent agent, that has a lock on the marketplace.
So what does this actually mean? It means that it is important to have a relationship with an experienced freight broker, who has established contact lists of premium carriers. Why? Because, experienced freight brokers are the ones most likely to provide capacity the fastest, based on the number of already vetted common carriers as well as having available assets when you need them.
Danger 2 - Lack of Additional Service
Single dimensional freight brokerage firms can be extremely dangerous. This is because the single solution set of being a traditional brokerage model is not one size fits all, as you might see with a pair of socks or a baseball hat that you buy at a store. Many times sadly, this is the case.
In order to properly serve a client, multiple options for moving freight are not only expected, it is desperately needed. In today’s logistics departments across North America, there is a need for additional help by way of shipment planning, bill pay & audit, and most importantly control tower assistance. These departments are frequently understaffed, and need a helping hand to execute their freight. Make sure that the brokerage you are dealing with has the power to meet your needs, whether that is moving your entire supply chain or just one pallet.
Danger 3 - Spot Market Monitoring
As spot rates return to pre-2017 levels, you might be surprised to see that you are not saving a significant amount of money. Why is this?
Transparency is the key. Much like anything else, change is constant and shipping rates are not any different. Make sure that you are fully informed of any price movements that could potentially save you money. Most likely if you are speaking with us it is because you are trying to lower your costs, while also looking for a better customer experience. If your brokered freight primarily moves with the spot market, a value added partner with the ability to obtain the absolute lowest costs on any given day will be a helpful tool in stretching your budget.
When given the opportunity, always work with the very best firm that can provide the solutions to meet your company’s needs. There are many excellent organizations in the marketplace, and with the proper research you will gain a valued business partner.
Jeff Harrison is the Executive Sales Leader for Ryder System, Inc.’s Freight Management Group (FMG), where he advises as a logistics subject matter expert, as well as oversees Business Development, Sales, and Marketing for the company. The Ryder FMG division is comprised of a Full Service Freight Brokerage, Emerging Products, which also includes Managed Transportation and 3PL Outsourcing models for the logistics marketplace across North America. Jeff can be reached at 855-378-6797, and is on Twitter @jeffatryder.