What is the Role of a Logistics Broker?

Within the intricate transportation and logistics sector, logistics brokers play a pivotal role in ensuring the smooth operation of freight transportation, akin to keeping a fleet of trucks running punctually. But what exactly do they do? Continue reading to discover their key responsibilities.

Connecting Shippers and Carriers

Logistics brokers function as intermediaries, bridging the gap between shippers and carriers. Leveraging their network of carrier connections, they assist shippers in securing transportation services at more favorable rates than most shippers can secure independently. They also aid carriers and individual drivers in maintaining a consistently filled schedule by matching them with suitable loads, thus minimizing the occurrence of empty or unproductive miles.

Key Tasks Managed by Freight Brokers

A logistic broker negotiates rates and coordinates loads

How Do Freight Brokers Generate Income?

Freight brokers employ a couple of different models to generate revenue:

  • They earn a commission for every load they broker, from the initial sale to overseeing the successful delivery.

  • Their income is derived from brokering loads to carriers at rates lower than what shippers are willing to pay, ideally covering expenses and yielding a profit.

What is the Role of a Logistics Broker?

Individuals interested in becoming freight brokers have various avenues to explore, including operating as independent entities, partnering with franchises, or working for established freight brokering companies. Independent freight brokers may retain a higher share of their earnings, but they also shoulder greater legal responsibilities and liabilities, akin to many independent business ventures.

Freight brokers must adhere to specific requirements, including obtaining licensing from the Federal Motor Carrier Safety Administration (FMCSA), also known as obtaining MC authority. They must also secure appropriate insurance, designate processing agents in each state where the brokerage operates, and obtain a bond or trust to fulfill their obligations.