What a Freight Broker Can (and Can't) Do for Your Supply Chain

Every shipper comes to the decision point: manage transportation in-house or outsource to a freight broker? The right choice depends on how much volume you move, the complexity of your supply chain, and how much risk you can tolerate. A freight broker facilitates connections between shippers and carriers, negotiates rates, and orchestrates pickups and deliveries. The value of a freight broker lies in its ability to manage these relationships effectively. Here is a guide to significant areas of excellence that a quality freight broker should deliver for U.S. shippers, including the questions that shippers should ask.

Cold Chain Integrity: Ask for Specifics, Not Promises

Since a freight broker does not own or operate any vehicles under its own authority, cold chain integrity is determined by the carriers it works with, so a shipper cannot rely on generic promises; it needs specific information. Ask the broker about the carriers’ equipment, maintenance records, and temperature management capabilities; a reputable broker will avoid carriers with questionable practices. Find out the procedures for temperature excursions, documentation, and record-keeping to minimize the chance of a dispute over shipment conditions. Written temperatures on the bill of lading prevent disagreements about warehouse or other storage conditions.

Delivery Delays: How Brokers Absorb Volatility

The number one advantage of hiring a freight broker is a wider carrier base, which allows the broker to move freight even when its preferred carriers are unavailable. Shippers need to ask how the broker plans to solve capacity issues, including open tenders, and how much extra capacity it has on their lanes. Brokers with an established carrier base and solid relationships can often find a carrier willing to haul even when there is no capacity for months. Ask the broker how it informs shippers of impending problems; brokers that inform the shippers of pending issues ahead of time allow them to communicate with their customers ahead of time rather than waiting for a shipment to be delayed or canceled.

Cross-Border Shipping Support

Shippers dealing with shipments to and from Canada or Mexico often face additional complexities and paperwork on both ends of a delivery. Not every freight broker offers cross-border shipping service, and those that do have varying degrees of expertise, so shippers need to ask the broker how it navigates the nuances of foreign trade regulations and special requirements associated with crossing borders. Brokers should have a clear understanding of customs documentation, C-TPAT considerations, and drayage or transfer options at ports of entry in their territory. Ask about customs brokers and how a broker handles delays in busy ports of entry such as Laredo or Detroit.

Freight Theft and Fraud Protections

Between double brokering and impersonation fraud, brokers occupy a precarious position in the supply chain ecosystem fraught with dishonest practitioners. Reputable brokers implement procedures such as confirming pickups directly with shippers, monitoring for double brokering, or verifying carrier documents for discrepancies. As a shipper, protect yourself against double brokering by finding out how the broker prevents such situations and reviewing your contingent cargo insurance policy. Your contract should also stipulate that the broker is responsible for loss of freight in cases of fraud.

Pricing Transparency: Margin, Accessorials, and Fine Print

Most contracts involve a profit margin for the broker based on either spot rates or contract rates; in either case, shippers need to understand what comprises the rates to avoid unpleasant surprises. Ask for line-by-line itemization of charges, including carriers’ charges for auxiliary services (detention, liftgate, reweigh). Ask if rates are spot or contract, how long rate quotes are valid for, and what additional charges may apply. Understand the fine print of your contract and what constitutes a rate change and its effective date.

Communication and Shipment Visibility

A good freight broker provides a reliable point of contact, proactive communication, and shipment visibility tools to help shippers keep their customers informed. Determine how the company communicates with shippers, including electronic data interchange options, and the tools it offers to its customers to track shipments and view proof of delivery. Ask the broker what it considers appropriate communication with shippers of delivery issues, including how frequently status updates should be provided. A competent broker will use tools such as electronic logs or GPS tracking to provide shippers with real-time data on their freight.

Business Growth and Scalability

Shippers that anticipate increased volumes have to ensure that a selected broker can scale carrier capacity and provide ongoing support as the business grows. In addition to a broader carrier base, a quality broker offers contract support, improved visibility, and enhanced supply chain analytics. Ask the broker how it has helped other shippers scale their operations, add new markets, or utilize other services (warehousing, distribution). Schedule periodic business reviews to address your changing needs and ensure that the broker continues to deliver value.

What a Freight Broker Cannot Do

A freight broker has no control over carrier performance, weather, or other environmental factors, so shippers need to understand this limitation and ensure that contracts have appropriate liability limitations. A broker cannot guarantee delivery times or prevent damage or theft of property, and shippers should not expect brokers to provide significantly lower rates than market rates.

Choosing the Right Partner

Hiring a freight broker provides shippers with increased flexibility and access to a wider carrier base. It is an excellent option for most shippers that prefer to outsource at least some transportation management functions. Select a freight broker that has a proven track record of working with carriers in your target market and is skilled at managing your specific freight types and lane needs. For shippers that seek a strategic partner in managing their freight management needs, Cleveland Bay Logistics Inc offers extensive experience in brokering freight across the United States and can assist shippers in getting the most out of their freight transportation.