Freight brokers and freight forwarders are both a part of the logistics industry, and the titles sound like they could possibly refer to the same position, but that is not the case. Even though they both involve managing freight logistics, freight brokers and freight forwarders are distinctly different positions. So, what are the key differences between a freight broker vs. freight forwarder? In this guide, we explain both positions, discuss the differences, describe when to use each professional, and offer our professional assistance.
What is a freight broker?
A freight broker is a licensed logistics professional who serves as a middleman between carriers and shippers. They use a vast network to find the right shipper for each carrier and the suitable carrier for each shipment. With many clients and high shipping volumes, freight brokers are well-positioned to negotiate favorable rates and provide carriers with a steady supply of shippers. But the work of a freight broker is still ongoing once the load is secured. They also manage all the shipment logistics, short of taking possession of the freight. They monitor and track shipments, provide status updates, and address any potential logistics challenges. To conduct business, freight brokers only need a phone, laptop, and internet connection.
What is a freight forwarder?
A freight forwarder is a licensed logistics professional who arranges freight transportation on behalf of a shipper. Freight forwarders provide many services that include:
- Oversee the transportation of freight
- Handle freight storage
- Assemble and prepare cargo for shipment
- Consolidate shipments for maximum efficiency
Freight forwarders need a phone, laptop, internet connection, and more. Because these services involve taking possession of the freight, freight forwarders also need warehouses, trucks, packing supplies, and staff. Additionally, they must hold insurance, and they sometimes hold their own bill of lading. It is important to note that a significant part of the freight forwarding license is the authority to operate interstate or foreign commerce. They are typically experts in international shipping, regulatory standards, and related laws.
Key Differences Between a Freight Broker vs. Freight Forwarder
Freight brokers and freight forwarders oversee the transportation of goods and are licensed logistics professionals. So, what sets them apart? There are several key ways in which freight brokers and freight forwarders differ, including:
- Possession of Freight – Freight forwarders take possession of the cargo, and freight brokers do not.
- Liability – Freight forwarders are liable for the actual freight, and freight brokers are not.
- Assets – Freight forwarders typically have warehouses, trucks, and personnel; freight brokers do not.
- Responsibility – Freight brokers pay carriers, and the carriers are responsible to the shippers. Freight forwarders are accountable to the shippers, and carriers are responsible to the forwarders.
- Zones – Freight forwarders commonly handle internal shipping, and freight brokers are less likely to do so.
When To Use a Freight Broker vs. Forwarder
How do you know when to use a freight broker or when to use a freight forwarder? Why do companies choose one professional over the other?
If you are struggling to manage the logistics of your shipments and find the best rates, you can likely benefit from partnering with a freight broker. Freight brokers specialize in cultivating relationships and can leverage their vast networks to your benefit. When you use a freight broker, you benefit from the services of an expert in negotiation, problem-solving, and communication who will oversee the logistics of your shipment from start to finish. Furthermore, a freight broker may be all you need in a logistics partner if you are satisfied with how your company stores and prepares cargo for shipment.
If you are looking to literally hand over all your cargo and logistics processes to a professional to manage completely, you can likely benefit from partnering with a freight forwarder. A freight forwarder will collect your cargo, store it if necessary, prepare it for shipment, reorganize shipments, and ensure proper delivery. When using a freight forwarder, you benefit from their experience, accountability, and extensive knowledge, particularly regarding international shipments.
First Star Logistics Freight Brokerage
Whether you are looking for a freight broker or freight forwarder, First Star Logistics is here to help!
We are a global logistics provider with a unique asset-based approach. Our core business is arranging and securing space for your freight’s transport between states and countries using common carriers such as trucks, railroads, and ocean liners. Our clients benefit from a comprehensive North American network and global reach, along with time and cost-saving technology that delivers quality results. Our team of logistics account executives, brokerage agents, trucking agents, and experienced drivers are here to ensure you achieve success.
To learn more, contact First Star Logistics today!