The Difference Between Freight Forwarders and Freight Brokers

If you find yourself getting these two seemingly similar titles confused from time to time, don’t worry. You’re not alone. Some people, and even some companies, use them simultaneously without much distinction. But a freight broker and a freight forwarder do very different things. And although you may have seen the names on the sides of their trucks or trailers and assumed one was basically the same as another, they have some striking differences. Let’s take a closer look and examine the role of each to better understand what those actually are.

What is a freight forwarder?

A freight forwarder works directly with its customers, the shipping companies, to move their freight from one point to another. From the outset that may seem largely identical to what a freight broker does. Freight forwarding services, however, do take possession of the freight. When necessary, they can also store that same freight. For many shippers, especially those that need their freight picked up on a certain day, but not delivered until much later, this is invaluable. And freight forwarders are given authority through the FMCSA to conduct both interstate and foreign business. For freight forwarders, handling international consignments sets them apart, and allows for greater reach and a bigger footprint. The shipments that cross from one country to another, or through several different countries, may make up a significant portion of the freight forwarders base of business. With those additional abilities comes added responsibility, including not only the transport, but also the insurance, security, and internal as well as external paperwork. Freight forwarders assume a higher degree of liability than the freight brokers; however, the freight forwarders typically include surcharges and fees accordingly.

The business of freight forwarding dates back more than 180 years, to London, England, and it continues today with companies like DHL, UPS, FedEx, and CEVA. Although those are some of the more recognizable names, as of 2019 there were approximately 21,000 freight forwarding locations in the US. This was made up of both single-location companies and the multiple units of the larger service providers. All in all, the combined annual revenue of these companies was around $60 billion.

What is a freight broker?

A freight broker is a lot like a matchmaker. They bring together two interested parties who both want similar things. In this case, those parties are a shipper and a carrier. The shipper has freight they need to move, and the carrier has trucks and drivers. And in the same way that shippers need a carrier to pick-up and deliver their freight, the carrier needs freight in order to keep their drivers moving. The transportation broker stays in steady contact with everyone involved throughout the course of his or her day and works to match the demands of the shipper with the supply of the carrier. They do not, however, take possession of the shipment, they just act as a middleman throughout the exchange.

A shipping company may have available freight in California, while the carrier has a truck outside Los Angeles that needs a load. Without the broker to connect them, the shipper and the carrier may not even be aware that each other existed. These relationships are formed over and over each day, making up a large percentage of US transport. As of 2018, there were nearly 18,000 registered freight brokers in North America.

Freight forwarders work nationally and internationally to import and export goods, and often store that freight themselves until the shipment is ready for delivery. Unlike the freight broker, the forwarding company handles the bills of lading, the insurance, security, and clearance of the freight. In order to expand their reach and remain competitive, freight forwarders invest heavily in IT infrastructure and strategic locations, at home and abroad, for development.

So, to recap, freight brokers are intermediaries. They work to bridge the gap between shipping companies and carriers. They identify shipping needs within the industry, or among a specific group of customers, they’ve formed relationships with, as well as carrier availability within the same market.

In a world where more and more goods are produced, and consumption does not appear to be slowing down, we can only expect to see continued growth in both freight brokering and freight forwarding. Ground Force Logistics is the reliable freight broker you need to ship your product. We connect shippers to carriers and handle any issue that arises during the course of transportation. Contact us today to get more information or to schedule your shipment.