What is a freight broker?

With millions of shipments being done every year, chances are that freight brokers have made most of these deals possible.

So what is a freight broker and what do they do?

Freight brokers essentially keep shipping companies running by bringing together a shipper who has goods to transport and a trucking company who has the equipment to do that. A freight broker company is an intermediary that despite not being a shipper or a carrier that owns assets still plays an important role in the movement of the cargo. They utilize their experience, technology investments, and networks to act as a conduit between the carrier and the shipper and earn commissions for their efforts.

What are the risks and liabilities of freight brokers?

As important as freight brokers are in helping carriers run their business successfully and enabling shippers to find reliable carriers who they may not have known otherwise, being a freight broker also carries its risks and liabilities. Some of these include:

  • Partial or total loss or damage to the cargo.
  • Rerouting of the cargo.
  • Abandonment of the cargo due to non-payment or order cancellation.
  • Payment default by one or more customers after fulfilling the responsibilities.
  • Delays due to improper documentation or non-presentation of documents.

How can freight brokers manage their risk? 

Our experts have put together some time-tested ways in which, as a freight broker, you can minimize your risks. These include:

  • Sign a freight contract: One of the most basic yet critical things is to sign a contract with both the shipper and the carrier. This is one of the best ways to not just outline the expectations of all the parties, but also lock in the terms and conditions. This also allows you to seek legal recourse if need be.
  • Work with quality carriers: Landing a big shipping client only to say that they are not happy with the driver’s actions is any freight broker’s nightmare. This may result in not getting paid in full and even your contract getting canceled. You can keep this from happening by working with credible and experienced carriers. The best way to find such carriers is to ask for references, offer the best going rates for their services, and be a reliable broker who has an ethical and responsible way of working.
  • Invest in technology: As a Texas freight broker who wants to run a successful business, you can’t afford to spend time doing paperwork. To facilitate quick communication between the carrier and the shipper, timely fulfillment of contractual obligations, and avoid defaults, it is important to automate your business processes. This is a very effective way to mitigate your risk in the long run.
  • Build your capacities: Building your capacity is an ongoing process that not just helps reduce your risks, but also lets you run a profitable business. Be proactive and create business opportunities for yourself by networking with worthy shippers. Sourcing potentially profitable clients is a continuous process that especially helps in times of uncertainty. Another great way to do this is to build a robust online presence. This will show that you are active and give credibility to your authority.

At Texas Trucking Permits, our number one priority is to equip freight brokers to mitigate risks and meet your day-to-day business needs. We can help with setting up your freight broker authority. To know more about our tools and knowledge programs for freight brokers in Texas, get in touch with us at 832-787-2111 to speak to our experienced coaches. You can also email us at info@texastruckpermits.com or drop in for a meeting at our office at 3515, Manitou Dr, Houston, TX 77013.