Truck brokering is a process by which trucking companies are better able to negotiate issues with cargo hauling with other freight companies. This allows all parties involved to maximize their revenue and profitability.
A trucking broker (also referred to as a freight broker), then, is the person or entity in charge of negotiating these agreements.
Here’s an overview of what you should know about trucking brokers and their responsibility in these important negotiations.
The tasks of a freight broker
The freight broker works with a shipper, who has goods to transport, and a carrier, who has the ability to move the load from point A to point B. There are many shippers in Minnesota and across the country that are directly contracted with trucking companies for their transportation needs, but freight brokerage provides shippers with significantly more flexibility in their transportation options.
Working with a trucking broker helps companies save money. Truck brokers do not have their own drivers and trucks, though some owner-operators may also have a truck broker license. Instead, these brokers have connections with reliable freight carriers within their networks and connect the shipper to these carriers.
This is an especially ideal arrangement for companies that simply do not have the resources to have people on staff who manage their carrier contracts, and for carriers that are looking to get their services in front of a larger number and wider variety of customers. Both parties benefit from the use of a freight broker, and the mutually beneficial arrangement results in better service and the potential for some not-insignificant savings.
Who can become a truck broker?
There are a number of logistics companies that operate as truck brokers while also handling shipping or carrier services. There are also truck brokers who go into this niche business by itself and form contacts with both shippers and carriers.
Carriers often become truck brokers because it’s an opportunity to add additional revenue. If all their trucks are already on the load and they get a call for a new load, they can leverage their freight brokerage license to contract that load out to another trucking company and take a commission. In this sense, even when operating at full carrying capacity, there is still opportunity for the trucking company to do additional business and make some connections that could benefit their business down the road.
Anyone wishing to become a broker must obtain proof of insurance and fill out all the application paperwork with the Federal Motor Carrier Safety Administration (which also includes a filing fee requirement). There’s no need to pass an exam or background check. It’s a simple designation to earn, and adds significant value to a business.
For more information about the job of a trucking broker and why it can be beneficial for carriers and shippers alike to work with one, contact our team at K-Way Express, Inc. We will be happy to answer any questions you have about the work we perform, and can show you how our services will benefit your operation.