Long Haul Truck Driver

The Freight Brokerage Business - Basic Information and Negotiating Rates

Freight brokers are basically middle-man between the shipper, buyer or owner of the product and the trucking company that moves the freight. Freight brokers will accept an order for a load to be moved from the customer and arrange for the transportation of the goods by locating a carrier to move the load. Freight broker's revenues are generated by the freight broker simple paying the carrier less than what they are being paid by their customer, which then becomes the freight brokers Margin or profit.

This freight broker business model, for all intents and purposes, sounds simple but in actual fact, it is not. Freight brokers, that have a customer or a group of customers, have to find trucks in order to move the freight and in turn make their margins. In order for freight brokers to make margins and cover their expenses, freight brokers need to know how to provide proper rates to their customers.

Customers and Rating

First of all, there is no magic science to rating for either freight broker or carriers. Rates are dictated by supply and demand. The greater the demand for trucks, the higher the rates that a freight broker needs to pay. In other words, if the market that you are looking for trucks in is flooded with loads then it will be much more difficult to find trucks. And when the freight broker actually finds a truck, the cost that the freight broker will have to pay to have that truck commit to their load, will be much higher. Conversely, when the freight broker has a load out of a market that has a shortage of freight, the rates will be much lower as carriers will literally have to fight over the few broker loads that there are.

To identify where your freight broker freight fits into this, you need to know your market from a freight broker's standpoint. Use load boards and search for trucks to see how many are looking for freight broker freight. Look at various other markets as well to see how your broker freight fits in. Also look at where your freight is going. Not only is it important to know what the demand is for trucks but it's also important to know what the demand is like going to the destinations that you have broker freight shipping to.

When the freight broker has an understanding of what the volumes are, the freight broker should call some carriers and talk to them about the freight that you have. Discuss what their availability is and what rates they would need to take your broker freight. Once you have an idea of these rates, which will end up being the freight broker cost, add on a percentage for your margin and this is what you will quote your customer. Freight broker margins will vary anywhere from 30% on shorter loads (Lower cost) to 5% on longer loads (Higher cost). Don't get greedy with your rates as customers are willing to pay for freight broker services and are usually aware of what the carrier costs are.

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