A shipper has goods to transport, and it’s a carrier who picks up and delivers those loads. It’s a lot of work to arrange the right size of truck and the driver needed for a load as some shipments are specialized and require FEMA-approved drivers or drivers with hazmat endorsements. This is where a freight broker comes in to help.
Freight brokers are the go-between who make sure a shipper and carrier are the right match. Shippers have someone managing the balance of loading trucks properly without having anything be overweight, and they ensure drivers are properly endorsed, licensed, and certified. They ensure loads are delivered on time and keep shippers updated. Freight brokers manage the route planning and tracking aspects, which frees up a shipper’s and trucking company owner’s time.
As an independent trucker, a freight broker helps you optimize your routes and avoid any deadhead miles. You focus on driving and safely transporting loads and not having to stop and keep communicating issues or answering the shipper’s questions. Freight brokers can:
- Handle your marketing by bringing new leads to your business
- Quote estimates to shippers and negotiate prices and contracts
- Schedule loads for you
- Inform shippers where a load is
- Collaborate collections and drop-offs
While a freight broker is incredibly useful to an independent trucker, it’s a choice you must carefully make. You need the right broker for your business. It’s important to ask these questions when narrowing down your choices.
Does the Freight Broker Have Specialized Expertise?
Ask if the freight broker has specialized expertise. If a freight broker specializes in hazmat shipments and that’s also your niche, it’s better for your business. You might need someone with experience with refrigerated trucks or flatbeds, make sure you find the right match.
How Extensive Is Their Network?
If a freight broker only works with one or two shippers, the amount of work you’d get may not be enough. Choose a freight broker with an extensive network to ensure you’re getting enough work to support your business.
Do you handle local shipments only? A freight broker working on a national level may not be as good a match as one who specializes in your state or region. These are things to consider when choosing a freight broker to work with your business.
What Technology Do They Use?
Technology or a lack thereof can make or break a business. If you talk to a freight broker who doesn’t believe in technology, it’s going to slow things down. Even with technology, precautions need to be taken to ensure privacy and security.
Find out where the freight broker checks for work and how often they scour the load boards. What software do they use for invoicing? Are the financial transactions sent using the latest encryption methods? Do they have their company protected by firewalls and a security protection suite? Do they follow all applicable data protection laws?
Some freight brokers spend a lot of time on the phone while others are easier to reach via live chat or emails. What is your preference? If you hate being on the phone, make sure the company you choose is available using your preferred method of communication. If you don’t, you might find communication to be frustrating.
Are They Insured and Financially Stable?
It’s impossible to be 100% certain of the financial stability of a company, but you should do your research. Use free business credit checks to ensure they’re not behind on bills and that they have a solid history of paying invoices on time. See if you can find anyone who uses them and ask their opinion. Look for existing complaints or any past issues that have since been resolved on sites like the Better Business Bureau.
Find out if they’re insured or not. As an independent trucker, you need to be insured. However, it also helps to ensure that the companies you partner with carry proper insurance.
Do They Have a Good Reputation?
What is the freight broker’s reputation? A quick online search often gives you an abundance of information in forums and online review sites. If you see negative reviews, take a closer look at them. Some reviews are posted unfairly or even to the wrong company. Make sure the complaint is legitimate and applies to your situation. If the complaint involves a trucking company that delivers around the country and you only specialize in local deliveries, the issue may not impact you.
What Are Their Rates and Payment Terms?
Find out what the freight broker charges for commission. In 2022, FreightWaves found commission rates ranged from 10% to 17%. You need to check that the rates you’re quoted are competitive and that you agree with them. If not, keep looking and see if they’re overpriced or if your area is just more expensive.
Are there any hidden fees you should know about? Transparency is important, so you shouldn’t have to dig through pages of fine print to learn there’s a fee you weren’t expecting.
You also want to look at the payment terms. Do they pay invoices in 10 days, 30 days, or even 60 days? If you’re not okay with waiting a full month or longer to get paid, you need to look for a different freight broker or look into a freight factoring arraignment to get paid quickly.
Evaluate Your Needs
As you get answers to those questions, make sure the answers match your company’s needs. Do they lock you into a contract or can you try things out for a few months and see how it goes? Once you do realize you’re a good fit, are they set up for long-time partnerships or do they focus on short-term relationships?
If your specialty is refrigerated trailers and shipments, a freight broker who specializes in dry vans isn’t a good match. If you haul nationally, a freight broker specializing in local deliveries isn’t right. You’d want a freight broker with a strong national network.
Even highly rated freight brokers can be bankrupt and shut down. It’s a smart move to have protections in place for these unexpected situations.
Protect yourself by having a freight factoring arrangement in place. Work with a factoring company and let them invoice brokers for you. You get paid within a couple of days of delivering a load and no longer have to worry about when you might get paid. Ask Saint John Capital about our non-recourse freight factoring arrangements that protect you from risks like a freight broker shutting down unexpectedly.
