The transportation and logistics industry offers several employment opportunities, from procurement to warehouse inventory to management to shipping to delivery. More often than not, the terms freight broker and freight agent are often confused in the supply chain industry. In fact, freight broker vs freight agent is quite a popular topic. And, it is pretty simple to know why.
Undeniably, the freight brokers and agents significantly contribute to optimizing and streamlining the shipping process. They accurately match client requirements and carrier capabilities. Most trucking companies use a freight broker TMS to run their business smoothly.
While the job of the freight broker is quite different from a freight agent, their concerns and responsibilities may overlap in some situations.
So what are the major differences between a freight broker and a freight agent? How are they similar? Is the freight broker better than the freight agent or vice versa? In this blog post, we will walk you through what a freight broker is, what a freight agent is, how different they are from each other, and why they work great together. Let us know more about freight broker vs freight agent.
The primary role of the freight agent is to help arrange the movement of freight between their customers and carriers. A freight agent can be one or a group of individuals working as an independent contractor under a freight broker’s operating license.
Typically, a freight agent is the business owner, has their own customers, and works on a commission basis from their home or office under the authority of the license of the freight broker to help coordinate cargo shipments.
Unlike a freight broker, a freight agent does not have their own operating authority and legally can’t arrange the movement of freight on their own. Therefore, they can only do business by working with a freight broker.
A freight agent oversees three fields: sales, customer service, and logistics. As a sales agent, the freight agent is responsible for engaging with potential customers, negotiating freight rates, sourcing carriers, and negotiating with carriers and shippers.
As a customer service agent, the freight agent has to ensure pickups and deliveries are scheduled and completed. They also ensure their customers are kept informed regarding the shipment progress.
Last but not least, the freight agent has to coordinate the logistics and ensure trucks are dispatched. They also oversee the problems and issues affecting a shipment’s pickup or delivery.
What is A Freight Broker?
A freight broker is a middleman that arranges the transport of goods by matching available trucks with shipper loads. He is required to be licensed by the Federal Motor Carrier Safety Administration (FMCSA) and secure a surety bond worth $75,000.
A freight broker can comprise one individual to a large multinational company with several employees. Freight brokers oversee the company's financial aspects, including invoicing shippers, paying carriers, working with freight factoring companies, extending credit, paying agents, and assisting with claims.
Freight brokers must also maintain their records for three years and carry the proper insurance.
Though freight agents and brokers have different responsibilities, they are still similar in many ways. Let us dig into the freight broker vs freight agent discussion.
First, freight agents and brokers are considered freight service providers.
Secondly, both provide a high freight capacity and service level, thus becoming problem solvers and logistics consultants for their customer base.
Both freight agents and brokers work to match available cargo shipments from their customers with their carriers/shippers to optimize shipping service and price. Last but not least, both negotiate with their customers and carriers on pricing to earn a significant profit.
While there are a few similarities between a freight agent and a freight broker, they are highly distinct from each other. Let’s discuss the major differences between a freight agent and a freight broker.
The basic difference between freight broker and agent is that a freight agent has less liability compared to a freight broker. A freight agent needs a freight broker to operate, whereas a freight broker can operate without a freight agent.
A freight broker has a more consistent and professional look across its office(s) compared to a freight agent who operates under the freight broker.
Regarding size, freight agents comprise smaller businesses, whereas freight brokers are usually a much bigger entity.
When we speak of daily tasks, freight agents are only responsible for looking for their own customers and carriers and coordinating their own freight. On the other hand, freight brokers also take care of the same job and take responsibility for invoicing, claims, compliance, credit checks, and much more.
Freight brokers are also known for offering services such as transportation management solutions such as LoadStop, which is one the leading cloud-based transportation management systems. In fact, A freight broker TMS makes your business more organized, profitable, and relevant to your customers.
Freight agents have the opportunity to do the same, but they can only rely on the technological sources of the freight broker they are working with.
Another major difference between freight broker and agent is that when it comes to earning money, freight brokers earn money through the margin spread between the sale price mentioned to the customer and the freight cost of the carrier. On the other hand, freight agents earn money on a commission of the spread it negotiates with their customer and the carrier.
The freight broker vs freight agent may be a controversial topic but they can make work great together. When working together, a freight agent and freight broker can make a great team. When freight agents work with freight brokers, they can focus on what they do best—develop a strong client base and service them with robust logistics and transportation management solutions.
In addition to that, small freight agents can instantly grow by seeking support from a well-known freight broker. The good reputation of a freight broker can also help freight agents make a good name for themselves in the supply chain industry.
On the other hand, freight brokers can also benefit by teaming up with freight agents. Freight brokers can grow nationally or globally without opening or obtaining separate office space. Furthermore, freight brokers can witness significant growth in revenue by collaborating with freight agents who are well-known for building new customer relationships.
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