When you choose a Freight Broker, you are immediately able to access more:
Service Choices – we have no fleet to feed: but we can access the entire fleet, especially the trucks that are close to where you need them.
Equipment Options – not all carriers have the specific equipment that your shipment needs: we can access the carrier that does have what you need.
Geographic Coverage – most carriers specialize in lanes: we specialize in the entire continent.
Pricing Flexibility – carriers have to set pricing regimes that ensure their entire fleet will be profitable: we only have to find a truck that will improve its financial position by taking your shipment.
Reason #1: A broker doesn’t have any trucks.
But you want a truck, so why call someone who has no trucks?
The Broker, who has no trucks, can use any truck.
The Broker might check out the closest truck, then the second closest truck, and so on, until he finds the best truck.
The Broker can also negotiate price between trucks, which helps the customer.
The carrier, who has trucks, needs to fill his own trucks:
The carrier prefers freight that is near where his trucks are at, which is not necessarily near where your freight is at.
The carrier needs to put a profitable amount of round-trip revenue on each truck on each trip: if he is a little short on his current trip, he will be looking for someone to help bolster his revenue. That desire may not result in the fairest price.
Even if he is the largest carrier on the continent, he has less than 1% of the trucks on the road. In fact, most carriers have less than 1/100 of 1% of the trucks on the road. Why limit your choices by picking a capacity-limited carrier?
Reason #2: A broker doesn’t need to make payments on the trucks he doesn’t own / lease, or maintain the trucks he doesn’t operate, or keep the drivers happily working that he doesn’t employ.
But do those pressures mean that a carrier with a fleet of trucks and employees to keep active will price competitively in order to produce cash flow to pay his bills? Maybe. But maybe not.
The Broker sources trucks in a B-to-B marketplace, where carriers compete against each other for shipments they would like to carry.
The Broker can locate and select from among carriers that are well-suited to the shipment. The carrier, with a fleet of trucks, has a lot of mouths to feed every week and every month.
As a result, Carrier pricing must be set to produce the required yield and cash flow, which may or may not align with current market pricing in every lane.
Acting on the customer’s behalf, a Broker will select the most appropriate carrier for the shipment, and producing a tailored price/service package.
More choice, superior result.
The carrier will typically be very price-competitive on shipments that are close to his trucks (in which case the Broker will find him anyway), but not as well suited for more distant shipments.
Distance and travel time both generate cost, and cost generates the need for more revenue. The carrier will have difficulty being competitive on distant shipments.
Reason #3: Sometimes there is a shortage of available trucks.
So isn’t it wise for a shipper to establish a strong relationship and work directly with a carrier, so that when the truck supply is tight, the carrier will respect and respond to loyalty?
At times of low availability, a Broker can locate the closest available truck, even though it may not be nearby.
A Broker can also identify the best available price, which is especially important when low availability pushes up rates.
Even when there is a good supply of available capacity across the industry, there will be some carriers with fleet-specific availability issues. A Broker can by-pass these carriers, and move to the carriers with open availability.
And there may be times, e.g., when the harvest is offering very high rates to trucks, when it may be in a carrier’s short-term interest to feign no availability, in order to divert trucks to more financially attractive produce shipments.
Best available service, best available price.
When a carrier’s closest available truck is some distance away from your freight, it will cost the carrier hard cash to move its truck to your freight, in order to respect to your loyalty.
You will pay for that extra cost, either now or in the future. Alternatively, to remain loyal, you can delay your shipment until your carrier, the one who wanted to charge you extra for his loyalty, has a closer empty truck.
And if you insist on not paying more and not delaying your shipment, the carrier may accept your shipment, and then broker it anyway, just as a broker would.
But if your freight is being brokered, wouldn’t it be better to have it brokered by a full-time broker, rather than by a carrier who brokers on the side?