Transportation & Logistics Industry

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Transportation & Logistics Industry

I will start by breaking down the industry. First you have freight that needs to be hauled somewhere by someone. Whether it is a load of onions or a pallet of magazines, it all needs to go somewhere. Freight is not just defined as goods that are delivered on a semi. It also entails air freight, container freight, rail, and more. Freight is manufactured either in the USA or overseas. It is then shipped in to the USA (or is already here) and needs to be delivered. At the ports or loading dock of a factory, it is loaded on to a piece of equipment. This again could be a semi, rail car, or boat. All of this freight is handled through 2 or more parties. When this load of freight is manufactured, it is destined for a certain customer. This could be a line of clothes heading to a retailer or a load of refrigerated food headed for a cold storage warehouse. Either way, there is always a shipper and a receiver or consignee. Now, sometimes, the freight will go through a third party being a freight forwarder or freight broker.

A freight broker will act as a middle man that will handle the booking of the trucking company or other mode of transport for the shipper. The broker will approach a shipper asking to help handle their freight. This takes some of the workload off of a manufacturers shipping department. The shipper and broker will negotiate a rate for each load, and the broker in turn hires a trucking company at a lower rate to deliver the shipment.

A freight forwarder is a similar agent but handles shipments that are more international. They will handle freight such as, container ship freight, boats going overseas, and the likes. An example of this would be a yacht broker selling a boat to someone overseas. The yacht broker will contact a freight forwarder to quote a rate to ship the boat overseas.

There are also 3PL companies. They handle all aspects of transportation. They will handle everything a broker and freight forwarder will, and more. Warehousing, intermodal, rail, container, cold storage, and airfreight are all aspects a 3PL will handle. They are usually very large companies with many divisions.

In some circumstances, a broker and freight forwarder will work together. A broker can handle a load that needs to go overseas and will seek the service of a freight forwarder. Now, the same cannot be said for a broker working with a broker. That is called double brokering. It is frowned upon in the industry, but it still happens. Double brokering can cause serious liability issues that are not needed with the liability already on the shoulders of a broker.

Trucking companies are not likely to befriend a broker for the simple reason they feel a broker takes money out of their pocket. In a sense, they do. Though most trucking companies dislike brokers, they need them. Brokers manage such a large portion of the freight that it is necessary for a broker to be used on occasion. Trucking companies have dispatchers and load planners that are responsible for booking freight for the trucks. They will usually call on their own customers first, and use brokered freight as a last resort. From my experience, trucking companies that haul too much brokered freight are already in or going to be in financial trouble. A trucking company needs to have a strong book of business of their own. I find that smaller trucking companies tend to ignore the sales side and rely on brokers. This can quickly spell trouble. If I could recommend one thing to any trucking company, it would be to employ a good sales agent!

As for brokers, you have your large corporations that own such a large portion of freight that they can bid low on rates to gain more freight. And since they own such a large portion of the market, they can accept lower rates from customers and in turn be confident that they can sell it to a trucking company. The trucking companies have to take this cheap freight on occasion because that brokerage handles so much freight. These brokerages are usually disliked in the industry. They are considered to rip off trucking companies because of their stance in the market and their market share. When I brokered, I decided to make less on a load and make a trucking company happy. This would lead to better broker-carrier relationships. You would be surprised how often you need them to help you out of a tight spot as a broker.

There are also large trucking companies that operate the same way as the large brokers. These large trucking companies can underbid the smaller brokers and smaller trucking companies. They can do this because of the amount of the market they can corner. They usually get great rates from a customer close to their home terminal and can afford to take lesser rates on their backhaul. This creates low rates out in the market that smaller companies cannot afford to accept. The other factors are that these large companies have paid for equipment and less of an operating cost.



Newcomb Transportation& Logistics is more than just a freight broker. We are a full service freight shipping company, specializing in various freight shipping services. We offer the best freight rates quotes whether you are seeking price competitive freight rates or specialized freight quotes.

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