Freight Forwarder Vs. Broker: What Are The Differences?

Freight Forwarder Vs. Broker: What Are The Differences?

It’s a common misconception that freight forwarders and brokers perform the same duties. But here are the differences.

It is a common misconception that freight forwarders and brokers perform the same duties. Some people go as far as using one term in place of the other. 

Although both forwarders and brokers function in shipment management, they have different responsibilities when going into the specifics of their duties.

Between 2017-2018, trucks moved $66.6 billion of freight, and rail moved $15.7 billion of freight between the U.S. and other North American countries. Freight forwarders and brokers have played a massive role in the successful movement of cargo between the shippers, businesses, and other parties.

Here, we’ll discuss what a freight forwarder and a broker are and the difference between them.

Definitions

What is a freight broker?

Freight brokers are bodies that serve as middlemen or intermediaries between shippers and third-party bodies. Often, shippers contact them to organize the movement of freight.


What is a freight forwarder?

Freight forwarders are those who take control of your shipments from start to finish. They come into possession of your shipment and see that it is delivered at its intended location.

The major difference between the two is that a broker never takes possession of your shipment; they only work as a middle man to arrange it. They do this by contacting carriers or forwarders and discussing details such as cargo transportation measures and the timeline for the transfer. They negotiate prices and other components of the move and ensure both the shippers and the carriers are satisfied with the deal.

Freight brokers do not own trucks or any cargo transporting equipment. They also do not involve themselves in creating and signing the papers. 

On the other hand, freight forwarders offer similar services as freight brokers, but their services are broad. They organize the transportation of the cargo then contract cargo carriers. 

They do not own a vehicle to transport goods, so involving a third party body, the carrier, is their next course of action.

However, forwarders do not leave it at that; they involve themselves fully in the shipping procedure. Freight forwarders can even store the client's goods. They help with the paperwork that contains every detail of the goods and shipping procedure, as well as other logistics.

Specific Responsibilities of Freight Forwarders & Brokers

Sometimes their responsibilities overlap because a forwarder may also perform the duties of a broker. However, there are still distinct differences in their shipping responsibilities:

Freight Forwarders’ Responsibilities

Regardless of the different services they provide, freight forwarders take responsibility for cargo transportation on your behalf. 

Freight forwarders, like Coastal Cartage in Los Angeles, are fully involved in the movement from the stage where they collect the items from the owner, usually the seller, until they get to the specified location or the buyer.


Here are the specific responsibilities of a freight forwarder:

  • They provide a link between sellers, importers, and exporters.
  • They have experience and a great working relationship with these third-party carriers to ensure goods are transported successfully and at reasonable shipping rates.
  • They ship freight under their bills of lading. 
  • Forwarders arrange international shipments and have the legal requirements to clear the international trades.
  • They are in charge of all the logistics and take care of every shipping detail for their clients.
  • They work with carriers to plan the safest route for freight transport.
  • There are different locations and destinations that cargos pass through before reaching the buyers. Some of them include; ports and terminals. Forwarders organize the transfer of freight between the different facilities.
  • They also go further by using tracking software to take account of the move, thus, enabling them to give consistent updates to their clients.
  • Freight forwarders also provide consolidation services. 
  • Forwarders are in charge of transactions. They make payments to the carriers on behalf of their clients. They also create and sign contacts and other custom paperwork.

They provide other maintenance services such as warehousing and packaging.

Freight Brokers’ Responsibilities

Brokers function primarily by creating a network of people or parties that drives the success of the shipping procedure. 

An LTL freight broker acts as an intermediate or liaison between shippers, carriers, and any other individual or group to enable the smooth transportation of cargo. They have a wide range of responsibilities such as:

  • Brokers source for clients in need of shipping services; they do this by implementing marketing strategies.
  • Once they secure new clients, they contact the carrier or a forwarder and connect them with the client to load.
  • Brokers are responsible for identifying efficient and reputable carriers for freight services.
  • They are also in charge of booking orders with carriers on behalf of their clients.
  • Freight brokers negotiate with carriers on loading and shipping prices. They bargain on good prices for you while achieving a reasonable freight broker commission for themselves.
  • After a successful negotiation, they facilitate the transfer of information between carriers and clients to ensure both parties are on the same page.
  • They ship goods under the bill of lading provided by the cargo owner. 
  • Freight brokers also track load status. 
  • They give you updates on the status of shipments.
  • They also keep records of the loading and shipping activities, assist their clients with their requests, and provide answers and solutions to other inquiries.

Freight Forwarder Vs. Broker Key Differences

Freight forwarders provide a more comprehensive range of services compared to brokers. The significant difference is that brokers' responsibilities mostly end at arranging the shipping. 

They are also concerned with the transport of freight within their country. Also, freight brokers usually have a reduced level of legal liability compared to forwarders. 

Freight forwarders provide further services and take full possession of cargo shipping, making them the clear winner when it comes to freight forwarders vs. brokers. They have greater liability and may provide insurance coverage, and are involved in the international freight movement. Goods commonly transported by these forwarders include natural gas, food and beverage, and asphalt. 

The Federal Motor Carrier Safety Administration (FMCSA) is the federal authority that grants authority to freight forwarders to operate internationally. 

They also protect and limit carrier accidents during transportation and ensure that only legal goods are transported, imported, or exported.

Conclusion

Regardless of whether a freight forwarder vs. broker is more suitable for your needs, and despite the regulation policies of the FMCSA, not all freight service providers provide smooth cargo movement. 

Coastal Cartage provides shipping services throughout Southern California and will meet all your freight shipping needs. They provide professional shipping services to other shipping companies that need expert assistance or businesses looking for freight movement.


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