Freight broker

A freight broker sits between a shipper that has freight and a carrier that has trucks. The shipper gets one phone number that covers any lane with any equipment; the carrier gets loads it did not have to sell. The broker gets the spread, typically 10 to 20 percent of the shipper’s rate, and the work: quoting, covering, tracking, handling exceptions, paperwork, and payment.

What the broker actually does on a load, in order: quotes the shipper, receives the tender, posts or offers the load to carriers, negotiates and confirms a carrier with a rate confirmation, tracks the truck from pickup to delivery, updates the shipper, collects the proof of delivery, audits and pays the carrier’s invoice, and bills the shipper. The two activities that scale worst are covering (sales and negotiation, one call at a time) and tracking (check calls, one driver at a time).

A brokerage is licensed by the FMCSA, bonded for $75,000, and, unlike a 3PL that operates warehouses, owns no trucks. Its assets are relationships and process: the shipper accounts it has won by phone and the carrier base it has built by paying on time. Its risks are a carrier that fails, a shipper that does not pay, and a rate market that moves against contracts it signed.

Most brokerages are small. A few hundred people is large; five to fifty is common, and the industry’s software is often built for the few hundred.