A freight broker is a person or company that connects a shipper of goods to a transportation company. Such individuals and companies are also known as transport agents.
As compensation, they earn a certain percentage of commission from both the Logistics Company as well as a shipper. All freight brokers must be licensed by Freight Forwarders’ Associations in India. The FFFAI license showcases the credibility and legitimacy of a freight broker. This gives peace of mind to both the parties that the intermediary is a trusted entity.
These transportation intermediaries play an important role in the orderly movement of cargo. They leverage their experience and knowledge to assist both the carrier and shipper in the successful shifting of consignments. A transport agent helps the customer find a trusted transportation company that can safely shift their belongings to the location of their choice. On the other hand, the logistics and transportation companies use transport agents as their business coordinator, allowing them to freely manage transportation and shipping jobs.
Only a few transportation companies do business by themselves. Nearly, 80-85% of logistics companies deal with freight brokers to get bookings. A transportation company must ensure a sound relationship not just with their clients but also with transport agents.
Why transporter need a Truck Broker?
We just told that freight brokers are a strong link between the shipper and Transport Company. More than 80 percent of trucking companies get help from freight brokers to fill their booking slots. And, this is not happenstance but a cause-and-effect relationship. It saves a lot of time and energy that simply adds to the bottom line of your company.
Here are the reasons why transporters need a truck broker or agent:
(a) Saves Time, Money, and Resources:
Freight brokers are getting famous because they save time, money, and resources for transporters. You don’t have to spend time and money on hiring individuals to handle audits, invoices, and shipping process. All of these tasks are done by the transport agent with expertise.
(b) More Scalability:
A freight broker allows your business to scale by providing you with bookings consistently. Sometimes more and sometimes less, but they give bookings regularly, maintaining a consistent income inflow.
(c) A profitable Partnership:
This is a great partnership as you don’t have to pay anything upfront from your pocket to your freight broker. As brokers work on the commission model, they put their best efforts to get as many bookings for you as possible so they can also make more commission.
How to Work with freight Broker?
Whether you are a carrier or shipper, you should know how to work with freight brokers so your business doesn’t face any downfall due to any gap between you and your broker. Here are the points to be considered while working freight broker.
(a) Freight brokers must be licensed
The first step is to check the reliability of a freight broker. You should see whether the transport agent is registered and licensed to work in the transportation industry.
All freight brokers working in India must have a licensed and registered at Federation of Freight Forwarders’ Association in India or FFFAI.
The apex body requires that any person or company assisting in the movement of goods in turn of money have a valid license. You can conduct quick membership verification on the official website of FFFAI. To check the membership of a broker on the FFFAI website, you must ask for his credentials. In case he denies to provide you with his credentials, it’s a signal that he is not a registered broker and you must consider another transport agent for your company.
Note: If you are looking to work with a freight broker in the United States of America then make sure they are registered and licensed by the Federal Motor Carrier Safety Administration (FMCSA).
Apart from seeing the freight broker’s license, you should also focus on his training and industry certifications.
There are many freight brokerage training programs available in institutions that offer holistic information, knowledge, and skill to handle transportation activities.
You can openly ask a freight broker for certifications and training to support his expertise. If a freight broker happily provides you with a license and certifications then you can undoubtedly join hands with him for the transportation of goods to and from any place.
(b) Freight Business experienced
The second most important fact that needs to be checked before dealing with a freight broker is his/her industry experience.
Although training is not a pre-requisite for acquiring a freight broker license, the potential transport agent should have some years of experience in the industry. He/she should know the standard trading conditions for freight forwarders and brokers laid by the apex body of Custom Brokers’ Association.
A broker must be freight business experienced because only then he/she can successfully work for both shipper and transporter otherwise both parties will incur losses. Apart from proper handling of freight transportation, an experienced broker can take care of legal work ideally. He/she not just properly take care of legal work but also save your time, money, and energy. They make sure that each of your transportation is successful.
An experienced freight broker is capable to resolve other issues in the process independently. They know how to handle most problems faster and efficiently so none of the parties suffer.
They make hard efforts because their growth is directly linked to your growth.
An important point to be noted is that an experienced and legitimate freight broker always agrees to give business references. This means that he/she will never deny providing you with the contact numbers of their satisfied clients. If they deny it, probably they lack a proven track record in the industry.
(c.) Dispatch carriers carefully
Up next, you should see whether a potential freight broker dispatches carriers carefully or not. Although, there are rare chances that freight brokers are careless in selecting and dispatching the carriers because it will directly impact their earnings.
A transport agent earns from both shipper and carrier so he/she is obliged to take care of shipment as well as a carrier to get his/her share of the commission. However, you must question them about their way to select the carriers and guarantee your shipment’s safety. Open communication will help you understand their work procedure and have peace of mind throughout the shipping process.
In some cases, transport agents even assure you of cargo insurance like contingent cargo insurance. This is done to shed all of your worries while your shipment is picked from the origin and delivered to the destination point.
You need to know whether a broker loads a carrier optimally, has a proper plan for transportation of shipment if weather changes and optimizes route or not. At last, you should read the contract carefully. A reliable and experienced freight broker may use an automated dispatch management system like TPT software to dispatch & manage carriers and easily monitor the shipments.
(d) Freight brokers must be financially Strong
Last but not least, freight brokers must be financially stable and strong. We are sure that you don’t want to work with an individual or company that doesn’t have enough funds to manage expenses ideally. Both shipper and carrier may have to incur a loss if they work with a financially weak and unstable freight broker.
Let us explain they incur losses if they work such a transport agent.
Suppose a freight broker doesn’t have enough funds and he turned out to be an unethical agent. Suddenly, he moves out of the business. Now, this leaves the shipper rushing for his shipment, but it can also lead to carriers making efforts to claim money from the shipper for the truckload- irrespective of whether or not the shipper already made payment to the broker.
A carrier has a legal right to claim payment from the shipper if a broker runs out of business. In this case, a shipper has to pay the carrier, incurring a loss in the form of double payment – to both broker and carrier. Therefore, if you want to be safe throughout the business, you have to work with a financially strong transport agent. Thus, it is advisable to conduct a credit check before you sign the contract. A small amount of upfront cost is always better than a huge amount of loss in the end.
Working with Transport Agent (Freight Brokers) Gets You the Best Shipping Options
Once you have found a freight broker in India who is licensed by FFFAI, has a strong track record, and financially stable, you probably do not want to do this evaluation again should your business model or needs change.
As a rule of thumb, it is always great to work with freight brokers not just because they are affordable but also because they offer you the best shipping options. We, at TPT Software Solutions, suggest you work with a multi-modal transport agent, even if you don’t need those services right now. This enables you to expand your company into a new location over time, knowing that your freight broker is there for you for the safe and affordable movement of goods.
Additionally, you don’t have to find a different broker again and again for distinct transportation needs. This saves your time and energy that could be otherwise used in other crucial tasks.
A freight broker that offers multiple shipping options knows about the rules and regulations of different modes of shipping. His/her experience will help them transport shipments to the destination location safely that would otherwise be a tedious task for a shipper.
Do you know that all those freight brokers who use TPT software offer 90% more satisfactory services to the shipper and carrier? The reason behind this amazing statistic is the competency of this automated software. It assists freight brokers to record details of shippers and carriers, and track the shipments in real-time.
If your freight broker uses advanced freight brokerage management software like TPT software then you must consider him/her. Nevertheless, if they don’t use any such system then you can suggest them to help them in easy management of freight brokerage and dispatch process. It is a technical system that helps all brokers stay organized and efficient.