Freight Brokers, Freight Agents, & Freight Forwarders: How Are They Different?
One of the very first things to find out about a career in transportation is distinguishing between the various players in the logistics and transportation industry. Some of the big players include freight brokers, freight agents and freight forwarders, and it's something you learn right off the bat in freight broker training school.
Initially, all of them may look and sound the same. After all , they do mostly the same duties, have the same freight training, know all there is to know about brokering, and have been trained by folks who've got the same experience and knowledge in the industry. But when they hunker down to work, there are notable variations in what they do.
Freight Brokers
Teachers in freight broker training firms worth their salt will make it plain that there is a definite distinction between the freight broker and the freight agent.
The freight broker runs the firm. To start, they must have a property broker's authority from the Federal Motor Carrier Safety Administration (FMCSA), carry a $10,000 surety bond, and have designated agents in the states they'll be operating in for legal claims purposes.
Freight brokers can be self employed full time and work from home. Having the profits from brokering arrangements between shippers and truckers all to oneself does not hurt either.
But freight brokers must divide their time between running a complete business and the crucial, enterprise-boosting activity of finding new shippers and carriers. They have to think about cash flow, billing and collection, sales, networking, and all of the backroom grunt work that goes into managing a business. At the end of the day, they may not have the time to do the crucial things that have to be done to generate earnings.
And here's where freight agents come in to the picture..
Freight Agents
Many fresh graduates from freight broker training sometimes start their brokering career as freight agents. Being a freight agent allows them to hit the ground running, regain their training investments quick and at the very same time, get the knowledge that only real world exposure to freight brokering can give.
Why start as a freight agent directly out of the freight broker training school? For the main reason that freight agents (or freight broker agents) do not want the authority, surety bonds and insurances that come with a full freight brokerage business.
As a freight agent, you work under a freight broker so there is no heavy financial pressure to add stress to your new career path. You can jump-start your earning potential swiftly with just a PC, fax and telephone line, and Internet access right from a small home office. That's a extraordinarily low-cost start-up indeed!
Your main responsibility is getting new customers and drivers. You may spend most of your time marketing your freight brokerage services, networking to find shippers and carriers, doing reference or background checks on them, ensuring that your loads get to where they need to go on time, and resolving load problems, to name just a few. In brief, you are more into the operational side of freight brokering instead of on the strategic management side.
The upside to this arrangement is that you won't need to worry about invoicing, billing, collections, cash flow, payroll and all those things that go into managing a brokerage company. Your freight broker takes care of all of that. Your business is getting more business, period.
The drawback to this arrangement is that you are going to have to share your revenue from commissions with your freight broker.
Freight Forwarders
To the new person right out of freight broker training school, the freight forwarder and the freight broker are often interchangeable. That is straightforward enough since to the untrained eye there is a bit of a similar role in what these brokers do. But to old hands in the freight industry, there is a considerable distinction between the two.
While freight brokers generally move loads from shippers to carriers without even seeing the freight they are moving, freight forwarders handle the goods that have to be taken to different destinations. Most importantly, they transport cargoes and shipments internationally.
To ship loads overseas, freight forwarders have to get smaller cargoes and integrate these into one big shipment. That means they must possess the shipments physically, consolidate them (regularly according to a single destination), and then decide on what technique of shipping they'll use - whether they'll move the cargo by land, air or water.
For a freight forwarder, moving cargo and cargo worldwide means they need additional knowledge and experience beyond being a domestic freight broker. You'll need to have a solid grounding in customs laws, procedures and practices, and have relevant experience in vessel requirements and loading. Ability in 1 or 2 foreign languages will not do any harm either.
There are several more players in the freight brokering industry, but for the moment, it's often best to know the most important difference between freight forwarders, freight agents and freight brokers so you will have a firm base and more clear picture about these vital roles in the tranportation industry.
Initially, all of them may look and sound the same. After all , they do mostly the same duties, have the same freight training, know all there is to know about brokering, and have been trained by folks who've got the same experience and knowledge in the industry. But when they hunker down to work, there are notable variations in what they do.
Freight Brokers
Teachers in freight broker training firms worth their salt will make it plain that there is a definite distinction between the freight broker and the freight agent.
The freight broker runs the firm. To start, they must have a property broker's authority from the Federal Motor Carrier Safety Administration (FMCSA), carry a $10,000 surety bond, and have designated agents in the states they'll be operating in for legal claims purposes.
Freight brokers can be self employed full time and work from home. Having the profits from brokering arrangements between shippers and truckers all to oneself does not hurt either.
But freight brokers must divide their time between running a complete business and the crucial, enterprise-boosting activity of finding new shippers and carriers. They have to think about cash flow, billing and collection, sales, networking, and all of the backroom grunt work that goes into managing a business. At the end of the day, they may not have the time to do the crucial things that have to be done to generate earnings.
And here's where freight agents come in to the picture..
Freight Agents
Many fresh graduates from freight broker training sometimes start their brokering career as freight agents. Being a freight agent allows them to hit the ground running, regain their training investments quick and at the very same time, get the knowledge that only real world exposure to freight brokering can give.
Why start as a freight agent directly out of the freight broker training school? For the main reason that freight agents (or freight broker agents) do not want the authority, surety bonds and insurances that come with a full freight brokerage business.
As a freight agent, you work under a freight broker so there is no heavy financial pressure to add stress to your new career path. You can jump-start your earning potential swiftly with just a PC, fax and telephone line, and Internet access right from a small home office. That's a extraordinarily low-cost start-up indeed!
Your main responsibility is getting new customers and drivers. You may spend most of your time marketing your freight brokerage services, networking to find shippers and carriers, doing reference or background checks on them, ensuring that your loads get to where they need to go on time, and resolving load problems, to name just a few. In brief, you are more into the operational side of freight brokering instead of on the strategic management side.
The upside to this arrangement is that you won't need to worry about invoicing, billing, collections, cash flow, payroll and all those things that go into managing a brokerage company. Your freight broker takes care of all of that. Your business is getting more business, period.
The drawback to this arrangement is that you are going to have to share your revenue from commissions with your freight broker.
Freight Forwarders
To the new person right out of freight broker training school, the freight forwarder and the freight broker are often interchangeable. That is straightforward enough since to the untrained eye there is a bit of a similar role in what these brokers do. But to old hands in the freight industry, there is a considerable distinction between the two.
While freight brokers generally move loads from shippers to carriers without even seeing the freight they are moving, freight forwarders handle the goods that have to be taken to different destinations. Most importantly, they transport cargoes and shipments internationally.
To ship loads overseas, freight forwarders have to get smaller cargoes and integrate these into one big shipment. That means they must possess the shipments physically, consolidate them (regularly according to a single destination), and then decide on what technique of shipping they'll use - whether they'll move the cargo by land, air or water.
For a freight forwarder, moving cargo and cargo worldwide means they need additional knowledge and experience beyond being a domestic freight broker. You'll need to have a solid grounding in customs laws, procedures and practices, and have relevant experience in vessel requirements and loading. Ability in 1 or 2 foreign languages will not do any harm either.
There are several more players in the freight brokering industry, but for the moment, it's often best to know the most important difference between freight forwarders, freight agents and freight brokers so you will have a firm base and more clear picture about these vital roles in the tranportation industry.
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