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How a Freight Forwarder is different than a Freight Broker

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The terms freight forwarder and freight broker are sometimes used interchangeably, but their jobs are actually quite different.

They perform some of the same functions, but a broker acts as an intermediary between the carrier and the shipper, while a forwarder’s job is to facilitate the shipping process.

Who are Freight Forwarders?

A freight forwarder is an individual who facilitates the process of shipping non-perishable or perishable items for a third party. The freight forwarder may handle everything from small shipments of personal goods for individuals to shipping containers for large industrial firms. A freight forwarder may arrange for the shipment of goods internationally, domestically or both.

Some freight forwarders work as independent contractors, while others work for shipping companies. There are several reasons that a company or individual may use the services of a freight forwarder instead of taking care of the shipping process personally. The biggest reason that people hire a forwarder is that they usually have contacts in the shipping industry and may have the ability to negotiate a lower rate for shipping services. They may also be aware of shipping options that aren’t available to the public, such as vessels that have enough room available to ship certain items at a reduced rate.

When they are initially contacted regarding items to be shipped, the freight forwarder starts by gathering information about the shipment. One of the most important things the shipper needs to know is whether the merchandise is perishable and whether the merchandise will have to cross international borders. The weight and size of the shipment are also considered, as well as when the shipper expects the items to reach their destination. After they have gathered the necessary information, the freight forwarder looks at all of the shipping options available for that merchandise.

Shipping options may include truck transportation, water, air or rail. The forwarder tries to keep goods that are going to the same geographical area together because shippers often pay less when their items are shipped on the same vehicle as other items. Exceptional record keeping skills are required to be a successful forwarder. They must track rates, shipping information, damaged goods incidences and other information on many companies. The forwarder must also prepare legal papers and customs documents if the shipments require their use. Being a freight forwarder doesn’t require a college degree, but excellent analytical and negotiating skills are necessary. A freight forwarder’s success is dependent on having repeat customers, so integrity and customer service are a big part of the job.

Who are Freight Brokers?

Either a company or an individual may be a freight broker. The broker is a liaison between a company or individual that has items that need to be shipped and a motor carrier that it authorized by the Federal Motor Carrier Safety Administration to haul freight. The broker’s job is to determine the needs of the shipper and connect them with a carrier that has agreed to ship the items at an agreed upon price. A freight broker must have a license from the Federal Motor Carrier Safety Administration to operate legally. Many states require brokers to carry surety bonds and brokers are also expected to carry adequate insurance to protect their customers and business clients from loss.

Freight Brokers provide a valuable service to both motor carriers and shippers. They connect shippers with reliable carriers that they may not come across on their own. They also assist carriers in finding loads to move so they make money. Brokers are usually paid on commission. Using technological resources and knowledge of the shipping industry, freight brokers help both carriers and shippers meet their business goals. Some companies find the services of a broker so invaluable that they hire a broker to coordinate all of their company’s shipping needs. Many new freight brokers work for a carrier or shipper to gain industry knowledge and experience. They also gain business contacts that help propel them forward in their new career.

Some new brokers take a training course to learn the business, but they often find that the course doesn’t give them the experience they need to be successful. New freight brokers are usually more successful if they begin their career an agent for an established broker and learn the business firsthand. These agents act as representatives of the broker. They are usually assigned to a certain geographical area and generally work from home using their telephone, fax machine and computer.

© 2013, Allen Smith. All rights reserved.

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By: Allen Smith

Allen Smith is a 37 year veteran who started at an early age in a household goods family moving business. He began driving straight trucks in 1977 and moved to the big rigs in 1982. His experience within the industry includes; owner operator, company driver, operations manager, and owner of a long distance HHG moving business, taking many of the long haul moves himself when needed. Allen Smith, a truck driver advocate who is driven by the desire to help others succeed within an industry where injustice, unrewarded sacrifice, and lack of respect and recognition exists. Allen and his wife Donna are hosts of Truth About Trucking ”Live” on Blog Talk Radio. Other websites include AskTheTrucker, TruckingSocialMedia, NorthAmericanTruckingALerts, TruthAboutTrucking, and many Social Media websites. In 2011 Allen and Donna hosted the first Truck Driver Social Media Convention, designed to create unity and solutions for the trucking industry. This is now being extended through the North American Trucking Alerts network as those within the industry join forces for the betterment of the industry. Allen strongly supports other industry advocates who are also stepping up to the plate to help those who share honesty, guidance and direction. He believes that all those involved in trucking need to be accountable for their part within the industry, including drivers, carriers, brokers, shippers, receivers, etc… The list of supporters and likeminded people grow daily, networking together and sharing thoughts and ideas for the betterment of trucking. He has coined the popular phrase "Raising the standards of the trucking industry"

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One Response to How a Freight Forwarder is different than a Freight Broker. - Post a Comment

  1. Dave T.

    Interesting post about the difference between a broker vs forwarders. Many people are under the impression that these two career paths are the same. When in fact, they differ quite a bit.

    Thanks for sharing!

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