Freight forwarding and freight brokering, both are one of the very important terms in the world of shipping and logistics. As the business of logistics is thriving in this era, we are seeing exponential growth in the number of agencies that deal with the shipments and the government to make things a lot easier for individuals and companies making those shipments.
Although many people use the word ‘freight forwarder’ and ‘freight broker’ interchangeably, these two terms are quite different and someone who is planning to get associated with the domain of logistics and shipping should get acquainted with the basic difference between these two terms.
What is ‘Freight’?
Freight is a bulk of goods transported by a big truck, trains, aircraft, or ships. Goods being transported from the point of origin (manufacture) to the destination (the point where consumption of goodwill takes place) are called freight in terms of logistics.
What is a Freight Forwarder?
A freight forwarder is a person or a company/agency that arranges freight for individuals or companies to get the goods from the point of origin to a market or to the consumer. In simple words, the process, paperwork, and regulations required by international trade is carried out by a freight forwarder.
Freight forwarders usually provide the following services-
- Preparation of shipping and export documents
- Warehousing services
- Reserving a cargo space
- Keeping track of inland transportation
- Handling the insurance of the cargo
- Negotiating freight charges
- Consolidating the freights
Freight forwarders make the shipping process a lot easier for you. Their expertise and extensive knowledge of documentation, transportation charges, banking, rules, and regulations can help the customers to transport their goods in the most efficient way possible.
Freight forwarders are also known as Non-Vessel Operating Common Carrier (NVOCC).
What is a Freight broker?
To understand what exactly is Freight broker, it is just like a freight forwarder, where the freight broker falls in the category of transportation intermediary. A freight broker is an individual or corporation/agency that connects a shipper to a carrier. A shipper is one who has the goods and needs to transport them and a carrier is someone who can provide transportation facilities to the shipper.
To put it simply, a freight broker helps the shipper finding a dependable motor carrier and helps a motor carrier to find customers.
Advantages of a freight broker
- Huge capacity: If you need to transport a huge stream of freight in a short amount of time, freight brokers can effortlessly manage that.
- Cost reduction: Freight broker’s expertise and connections in the field of logistics help you slash prices at every corner possible without compromising the quality of service.
- Time reduction: Freight brokers know how to optimize the routes and avoid any obstruction or delay.
Freight brokers ensure that there is no blunder in communication, no delay, and damage to your shipment.
So how do freight forwarder and freight brokers compare against each other?
- Freight forwarders are more involved in the shipping process than freight brokers. While freight brokers just act as a medium between the shipper and the carrier, the forwarders take the responsibility for its transportation, paper works, storage, distribution, and arrangements in accordance with the shipper’s desires.
- Freight forwarders make the shipment under their own bills of lading while brokers do not typically own their own bills of lading. As discussed above (see What is Freight Forwarder? section), the freight forwarders typically provide an array of services that are not provided by freight brokers.
- A freight broker can be situated remotely regardless of the location of the shipper or carrier. Unlike freight forwarders, freight brokers don’t necessarily need to own carriers like trucks or warehouses/depots.
The industry of logistics and trade is very complicated and each stage of freight transport is very important for the overall customer/manufacturer experience. Hence, it is essential to have the correct knowledge of important terms like forwarders and brokers. I hope this short guide was informative and helpful.