Locating an exceptional freight broker can often prove to be a daunting task. Yet, these brokers play a pivotal role in facilitating the smooth functioning of the supply chain and trucking industry.
Their core function revolves around effectively connecting shippers with reliable carriers, thereby ensuring the seamless transportation of goods. While the core function of a freight broker sounds simple, it is far more complex because the trucking marketplace is highly fragmented with FMCSA listing roughly 365,000 carriers which over 95% have less than 20 trucks.
The linchpin to achieving a mutually beneficial outcome between the carrier and shipper rests in the careful selection of the appropriate broker, thereby averting potential frustrations and forging successful partnerships.
More technically speaking a freight broker stands as the crucial bridge between those in need of freight transportation services and the providers of such services. Over time, the freight brokerage industry has evolved significantly, propelled by technological advancements and capital influxes, transforming it from its modest origins into a thriving marketplace.
The freight broker operates in a dynamic landscape and it is imperative for businesses to discern and select the right freight broker to meet their specific needs, which can be difficult with roughly 20,000 in operation. The largest freight broker is roughly $16 billion in topline revenue, but that number quickly drops to $150 million for the 100th largest broker, which means there are another 19,900 freight brokerages to choose from in the industry.
The question then becomes how does a company select a freight broker that best meets their business requirements.
How to Find a Good Freight Broker
To start the conversation, let’s take a brief look into the ten key areas to assess when choosing a freight broker, then go through them each in detail.
Top 10 Points to Assess in Identifying a Good Freight Broker
- Proper Licensing
- Financial Stability
- Insurance
- Carrier Compliance
- Years in Service
- Multiple Modes & Services Offered
- Operational Model
- TMS Used in the Operation
- Reputation
- Digital Footprint
Licensing Compliance
Ensure the freight broker holds the necessary licensing, as mandated by federal law, issued by the Federal Motor Carrier Safety Administration (FMCSA). Verify the broker's licensing status through the FMCSA Licensing and Insurance Verification portal.
The following link is the site to use to evaluate whether the broker is properly licensed: FMCSA Licensing and Insurance Verification.
Financial Stability
Assess the financial health of the freight broker, recognizing that financial instability can pose risks to your business. Conduct thorough credit checks to gauge the broker's financial standing and mitigate potential liabilities.
Insurance Coverage
Scrutinize the broker's insurance policies, particularly contingent cargo or shipper's interest policies, to safeguard against unforeseen losses or damages during transit. Also, connect with your legal department to gather the other policies and coverages they want to see from a freight provider on commercial liability, automobile liability, errors & omissions, cyber, workers compensation and employment liability.
Carrier Compliance
Inquire about the broker's carrier qualification process to ensure alignment with your standards. Evaluate criteria such as insurance, safety records, financial strength, and operating authority.
Years of Experience
While not definitive, longevity in the industry often signifies reliability and resilience. Consider the tenure of the freight broker as a factor in assessing their track record.
Diverse Services Offered
Opt for a broker offering a range of freight modes and services, providing flexibility and scalability to meet your evolving logistics needs.
Operational Model
Understand how the broker operates, whether through a distributed task-based system or dedicated customer managers. The latter fosters stronger relationships and personalized service.
Technology Infrastructure
Assess the broker's Transportation Management System (TMS) capabilities, ensuring they leverage modern, cloud-based systems for optimal efficiency and transparency.
Reputation and References
Seek references from the broker and explore their reputation within the industry. Membership in reputable trade associations can serve as an indicator of credibility and professionalism. The following associations are a good place to start.
- Transportation Intermediaries Association (TIA)
- Intermodal Association of North America (IANA)
- SmartWay Carrier
Digital Presence
Evaluate the broker's online presence through their website, social media profiles, and professional networks. A robust online presence reflects a commitment to transparency, communication and knowledge in the industry.
By meticulously evaluating these aspects, businesses can make informed decisions when selecting a freight broker, thereby optimizing their supply chain operations and mitigating potential risks. For further insights on freight logistics and managed transportation services, subscribe to our weekly blogs and explore the InTek Freight and Logistics website. Unlock the potential of your logistics network with the right freight broker by your side.
In the end, the right freight provider partner should be able to leverage multiple modes when possible - truckload, intermodal, LTL or a combo - to get the job done in the most efficient manner. And it should incorporate the latest technology to plug in to market conditions, capacity availability, license and safety information, and shipment track and trace (shared with the shipper as well).
All of these components may sound like a big ask, but at InTek, we fit the bill. Just reach out to us, and make our Request a Quote form the last one you'll need to fill out for a long time. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.
