As a shipper, you’ve likely heard about freight brokers and freight agents—and perhaps you’ve wondered if there is a difference. Today, we’ll discuss the difference between a freight agent and a freight broker to help you make better-informed decisions for your business.
What is a Freight Agent?
Freight agents typically work with freight brokers to help manage freight movement between carriers and customers. As agents, they act as contractors and leverage the freight broker’s license, as they do not have independent operating authority. As such, all liability for the freight falls on the broker.
Freight agents are paid through commissions from sales they make on behalf of the freight broker. In general, the agent/broker relationship is very close as their brands and reputation are very much intertwined. In other words, freight agents like to work with brokers whose values align with theirs.
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What is a Freight Broker?
A freight broker arranges the transportation of freight between carriers and their customers. Brokers must carry a valid license issued by the Federal Motor Carrier Safety Administration (FMCSA), establish a surety bond, and maintain adequate insurance coverage. Additionally, freight brokers must comply with FMCSA standards, which run annual audits to ensure everything is up to snuff. Records must be kept for three years to meet compliance mandates.
Freight brokers are responsible for the following:
- Customer invoicing
- Ensuring freight agents are paid
- Overseeing payments to carriers
- Liaising with freight factoring organizations
Freight Agent vs. Broker: Main Differences
Probably the most significant difference between a freight agent and a freight broker is the level of liability. Also, a freight agent can’t operate without a freight broker, but a broker does not need an agent to do business.
Freight brokers are often a much larger operation and will have a more prominent brand presence. In contrast, agents are often quite small or are under a logistics company’s umbrella.
Agents manage and maintain their own customer base and arrange their freight needs. Brokers do this too, but they also have a more extensive range of tasks and obligations, as agents do not have to worry about licensing, compliance issues, claims, etc.
Why Choose a Freight Agent Over a Broker
While there is a lot of crossover between freight agents and freight brokers, most shippers do well by choosing to work with a freight agent. In doing so, they achieve a competitive advantage, have greater flexibility in terms of pricing and schedules, and enjoy greater attention to detail and customer service.
DTS is a freight agent working with top brokers worldwide. We leverage strong relationships in the shipping industry to provide our customers with what they need to succeed. Our team goes the extra mile to ensure you get the freight service your customers demand at the best possible prices. In today’s challenging and competitive economic landscape, your company needs a strong ally who will work with you to provide value and support your commitment to excellence.