Freight brokering is the process of functioning as the liaison between a company that needs goods to be shipped from one location to another, and a shipper who can provide those services. The goal of any type of freight brokerage activity is to match the needs of the two parties so each achieve the maximum benefit from the relationship, while also allowing the freight broker to earn a reasonable profit from brokering the deal. In many nations around the world, freight brokering requires at least some licensing and compliance with any shipping regulations that apply to both the country where the shipment originates and the location where the goods are ultimately delivered.
It is important to note that freight brokering does not involve actual participation in the preparation of goods for shipment, or the actual conveyance of the goods to their intended destination. Instead, the broker will assess the type of goods that must be shipped, consider the destination for those goods, then identify shipping firms that can handle the shipment in a way that satisfies the needs of the recipient. This often involves considering the mode or modes of shipping involved, as well as the costs associated with the overall plan created to deliver the goods to the proper location.
In many situations, freight brokering involves establishing working agreements with several different types of transportation firms. For example, a broker may have access to over the road haulers such as trucking firms, while also working with companies that move freight by water and by air. Typically, the broker secures special pricing that can be extended to potential customers, making it possible for the broker to be competitive in the marketplace. At the same time, the broker also arranges a strategy for compensation, with that compensation based on either a fee schedule or some type of flat rate pricing.
Most nations around the world require that freight brokering efforts comply with the same regulations that must be observed by shippers. This means that a truck freight broker usually must qualify for and obtain a freight broker license in order to do business within that country. Often, the broker must also be bondable, making it possible to issue a freight broker bond for each project that is arranged through the brokerage. This need for compliance helps to protect the interests of everyone involved, leading to the opportunity for an ongoing working relationship to emerge after the initial shipment is successfully executed.