If you’re planning to outsource your freight shipments, it’s important to know the different players in the logistics industry, including freight brokers and freight forwarders.

 

Pick the right partner, and you’ll introduce a new level of ease into your business. Pick one that doesn’t offer the services you need, and you may find yourself scrambling to coordinate more of your logistics than you bargained for. In other words, while outsourcing freight operations can free up internal resources and offer you access to logistics expertise, picking the right partner is crucial.

 

In this article, we’ll show you the difference between freight brokers and freight forwarders. These terms are sometimes used interchangeably—and some companies may act in the capacity of both a freight forwarder and a freight broker. However, we’ll show you the distinctions between the two roles, so you can 1) choose the right partner to meet your needs and 2) leverage their capacities effectively.

What’s the Difference Between a Freight Broker and a Freight Forwarder?

Freight brokers act as an intermediary to connect shippers and carriers. They don’t take possession of cargo or transport it. Freight forwarders, in contrast, will take possession of freight—for example, by storing it in their warehouse—and they may also transport cargo.

 

To offer some additional clarity, we turned to the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA regulates the trucking industry in the United States, and both freight brokers and freight forwarders are required to register with the agency.

 

As the FMCSA defines these roles:

Freight Broker
A broker is the “middle person” between a shipper and a motor carrier.
Brokers arrange for transportation of goods. They don’t transport the property, operate motor vehicles or have drivers. They also don’t assume responsibility for the cargo being transported. Hence, they don’t directly engage with it.
Freight Forwarder
A freight forwarder organizes shipments for individuals or corporations.

Freight forwarders assemble and consolidate shipments plus break-bulk and distribute shipments. Freight forwarders assume responsibility for the transportation and may transport the freight itself. Therefore, they are involved directly or indirectly with the cargo.

(Source)

With those basic definitions out of the way, let’s take a deeper dive into the different roles a freight broker and a freight forwarder might play in a business scenario.

Outsourcing Freight Operations: Who’s the Right Choice?

Companies choose to work with freight forwarders and freight brokers for a number of different reasons. Outsourcing offers access to logistics experts on an on-demand basis without having to hire in-house talent. It can also save money on expenses like warehousing space and packing materials.

 

Partnering with a freight broker or freight forwarder can also create additional advantages for businesses. Let’s take a look at the capabilities that each one offers.

 

Why Work with a Freight Broker?

Companies who engage with a freight broker to move their cargo can benefit from their broker’s:

  • Network of relationships – Freight brokers pride themselves on their access to different carriers. This can save you a ton of time. Rather than calling around to find a carrier with capacity to move your freight, you can make a single call to a broker. That broker, in turn, will reach out to their network to find space for your shipment.
  • Ability to negotiate – With access to multiple carriers, a freight broker may be able to find you a better price than you’d find on your own. This is especially true for brokers who do a large volume of business with particular carriers.
  • Facilitating communication – As the intermediary between the shipper and the carrier, a freight broker help keep you in the loop when it comes to the movement of your freight.

Ultimately, working with a freight broker can save time, effort, and money—all making a freight broker a worthy partner. That brings us to the next question.

 

Why Work with a Freight Forwarder?

Freight forwarders offer similar capabilities to those of freight brokers. They, too, have a network of relationships they can access, as well as an ability to negotiate on volume. They can also assist with tracking and tracing your shipment and informing you of any changes or updates.

 

In addition to those capacities, freight forwarders can also:

  • Assemble freight consolidations. Forwarders gather shipments from different shippers, all headed to the same destination. They store them in their warehouse until they have a full load, at which point they pack all the shipments up and send them on their way. Consolidations may travel over the ocean (less-than-container-load shipments/LCL), over the road (less than truckload shipments/LTL), or via air freight (air freight consols).
  • Package freight shipments. Not all forwarders offer packaging services. However, to offer you an example of what might be possible, a forwarder might be willing to receive floor-loaded materials from a supplier, palletize these items for easier handling, and then send them onward to their final destinations.
  • Handle international shipments, including negotiating with foreign carriers and assembling customs paperwork. Some freight brokers do handle international shipments, but most work with domestic freight. On the flip side, it’s common for freight forwarders to move freight internationally.

If you need any of these services—or anticipate needing them in the future—consider partnering with a freight forwarder. With one phone call, you’ll give yourself access to a much wider range of services. That said, not all forwarders offer all services, so make sure you choose your forwarder with care.

 

As you make your final decision, there are just a few more areas worthy of your consideration.

 

Freight Brokers vs. Freight Forwarders: A Deeper Dive on the Differences

By now, it’s clear that both freight brokers and freight forwarders can be effective partners. When you outsource your freight to these companies:

  • You won’t need to invest your internal resources in arranging freight shipments.
  • You’ll be able to access a significant amount of logistics experience without hiring someone in house.
  • You’ll also get to take advantage of their existing relationships, as well as any bargaining power they’ve accumulated due to the volume of business they do.

However, there are still several distinctions that separate freight brokers and freight forwarders—ones that go beyond their services. They’re also ones you need to understand so you can choose the right partner for your business goals.

 

Taking Possession of Freight

Freight brokers are simply a go-between for shippers and carriers. As a result, this means that they never actually touch or take possession of freight. They’re generally not held responsible if cargo gets damaged in transit.

 

In contrast, freight forwarders can actually take possession of freight, either by storing it in their warehouse or transporting it using their own fleet. As a result, a forwarder may be responsible for cargo loss or damage. This can be true even if the cargo isn’t under their direct control at the time. Let’s take a look at how that might work.

Ultimate Responsibility

If something happens to your cargo in transit, you’ll want to understand who will be held responsible for loss or damage.

 

When you’re using a freight broker, the carrier they connect you with is ultimately responsible to you for safe transport of your items.

 

However, when you’re using a freight forwarder, that relationship is a little more complicated. If your cargo is lost or damaged while working with a freight forwarder, in some circumstances, that forwarder may be held responsible. Depending on the circumstances, that may be true even if that cargo is damaged while under the control of another party, like an ocean carrier.

 

Ultimately, it pays to have cargo insurance on your end, no matter who you’re working with. This will ensure that your financial losses are covered in case something happens to your cargo. Your broker or forwarder can explain your options to you.

Owning Assets

When handling freight for their customers, freight forwarders may use their own assets, including warehouses and fleet vehicles.

 

In contrast, freight brokers will not handle freight and don’t own their own assets.

 

Note: Some companies may act in multiple capacities. They may act as a carrier on certain shipments, while acting as a broker on others. As a result, they may use their own vehicles move freight when acting as a motor carrier, but they will not use those vehicles when simply brokering freight for a client.

Shipping Internationally

Finally, as we mentioned earlier, freight brokers don’t commonly handle international shipments. However, you will find a few international freight brokers in the marketplace.

 

In contrast, freight forwarders often deal with international shipments. Along those lines, they can also assist in preparing paperwork for customs clearance. If a problem arises when clearing a shipment in or out of a foreign country, forwarders can connect shippers to customs agents who can find solutions to get the cargo in question released.

Freight Forwarder vs. Freight Broker: Which Is Right for You?

Now that you understand the differences between a freight forwarder and a freight broker, which one feels right for your business? Both can save you time, money, and resources when it comes to moving your freight. By deciding exactly how to leverage these professionals within your operation, you’ll be that much closer to finding a trusted partner who adds significant value to your relationship—and your business.

 

Searching for an experienced forwarder? Approved has been assisting businesses with their freight forwarding needs since 1992. If you’re looking for a long-term logistics partner, reach out for a complimentary consultation. One of our experts would be happy to sit down with you and take a holistic look at your logistics flow.

Get a Free Quote

  • This field is for validation purposes and should be left unchanged.