Kenneth Carter founder of Ameriton Freight looks into the benefits and risks associated with using a freight broker for your transportation needs.
Throughout this post, I will name a few pros and cons that I’ve noticed using freight brokers and being a company driver. I enlist a few ideas that may be able to assist you with deciding on which option is best for you as a shipper.
Understandably, there are many distribution channels in the supply chain of logistics; ranging from manufacturers, distributors, and retailers. Keep that in mind as I approach this topic broadly. Everything mentioned comes from personal experience as a driver and manager, not as a shipping expert.
Consider the size of your firm when weighing out the options to make the switch.
First, to describe a freight broker, according to FMCSA Federal Motor Carrier Safety Administration:
A broker is a person or an entity which arranges for the transportation of property by a motor carrier for compensation. A broker does not transport the property and does not assume responsibility for the property.
Secondly, a motor carrier is described as:
A motor carrier transports passengers or property for compensation.
Now, that we understand the definition, we will delve into the pros and cons of utilizing freight brokers.
From experience, driving for brokers and motor carriers, the level of communication and responsibility differs drastically.
Here are my pros and cons, in no particular order.
- Utilizing a freight broker cost less and requires no long-term contracts.
- Offers flexibility during demanding times, seasonal spikes or dropped loads.
- Expansive carrier network relationships and access to capacity.
- Brokers are salesmen who are selling a load, not your brand or core values.
- Communication barriers, difficulty with load visibility, especially with incidents.
- Lack of ownership of goods while in transit.
- Building long-term relationships, understanding your goals and values.
- Assumes responsibility of the property, ownership of the goods while in transit
- Communication and load visibility, real-time gps.
- Long-term contracts (normally 2-3 years)[1-yr with Ameriton Freight]
- Limited capacity within the means of the fleet. Locked in price with the contract if cost per mile (CPM) drops.
Now, for the good stuff, ideas to help with your decision.
For starters if you’re a small to medium size shipper, you should evaluate your needs and capacity for the next year or two. This may be a guesstimate for the most part but if you have your key performance indicators (KPI) documented you should have a fairly decent idea of what to expect. That will determine if your budget will allow for the contracted service or just the ”here and there” of a freight broker.
For the second tip, you must examine your core values, the brokers are hiring drivers based on price and availability, they’re not aligned with what you want to represent. Remember, every touch point in your business is vital to your success.
Finally, if you’re like me, inquisitive (touch your nose) and likes to be in the loop, then choosing a freight broker wouldn’t be your best option unless they guarantee visibility and can prove it. Although technology has made communication and life itself easier, not every driver wants to be annoyed with constant updates and calls.
Keep everything in mind when you’re contemplating on your next strategic move. This is your future.
Please share your thoughts and comment. I would love to hear from you.
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