Insights & News

What to Look for in a Freight Broker—and 5 Red Flags to Avoid

Posted On March 6, 2023

In the cargo world, partnering with a freight broker (also called a truckload broker or OTR broker) is a game-changer. And choosing the right freight brokerage can make all the difference in successfully transporting your goods.

Brokers connect shippers and carriers, arranging transportation for goods and products for both one-time (spot) and repeat freight. They work to find the best service options for shippers’ based on their specific needs and budget.

By using a freight broker instead of arranging freight yourself, you’ll be able to focus on other aspects of your business. But due to the number of brokers available on the market, it can be challenging to determine which one is the right partner for your business. And partnering with the wrong broker can lead to unnecessary spend and major supply chain inefficiencies. That’s why knowing what to look for in a freight broker and what red flags to watch out for is essential.

So what questions should you ask when selecting a broker, and what warning signs could mean a bad fit for your operations? Keep reading to find out.

What makes a successful freight broker?

The primary purpose of freight broker companies is to act as an intermediary between shippers and carriers. They help shippers find transportation to move their goods and products and negotiate the best rates for their clients. By leveraging their network of carriers, negotiation skills and brokerage experience, freight brokers can ensure that shippers receive the most cost-effective and efficient solutions. They also handle transportation logistics, from booking and scheduling shipments to tracking and monitoring delivery progress.

When selecting a freight broker, several key factors must be considered to ensure that you work with a reputable and reliable provider. During the selection process, ask prospective brokers these key questions:

What’s your experience and reputation?

You want to make sure the freight brokers you work with are reputable and reliable. Ask for references and reviews about how they operate from previous customers, and do your research to make sure they have good standing in the industry. It’s important to find a broker with an extensive understanding of all the logistical complexities of your industry as well as the latest trends and regulations.

Level up your logistics in 2 Minutes Flat. Sign up to get biweekly updates sent to your inbox.

How are your relationships?

When it comes to choosing a freight broker, it’s important to find one that has built up a network of trusted carrier relationships. A reliable broker should have connections with not just the big players in the industry, but also with small, regional and local carriers too. Why? These smaller companies can sometimes offer the best price for your shipping needs.

A great freight broker also understands the importance of treating their carrier partners with the respect they deserve. After all, the better the relationship, the more likely the carrier is to deliver better customer service. This means you, the shipper, can enjoy the benefits of a smooth and hassle-free shipping experience with competitive pricing and dependable service.

Do you have the ability to handle various freight types?

Can the trucks your broker partners with handle everything like dry vans, intermodal, refrigerated and more?

Look for freight brokers that can manage a wide range of freight types and sizes, from small parcel packages to full truckloads. If your company ships specialty cargo, they should also have experience coordinating the movement of various goods, including hazardous materials, oversized or overweight items, and perishable cargo. These different types of goods come with very different transportation needs and aren’t one-size-fits-all.

Do you have all the necessary licenses or accreditations?

Ensure that your freight broker has the necessary licenses and accreditations. Brokers must be licensed by the Federal Motor Carrier Safety Administration (FMCSA) and have a freight broker bond. This helps prevent fraud in the trucking industry and guarantees carriers are getting their money.

What’s your communication style?

Good communication between the shipper and broker is essential for a successful partnership. Make sure the freight brokerage you’re going to work with can meet your communication style and needs. You want responsive and transparent brokers that provide regular updates on the status of your shipment loads.

Can I expect competitive pricing?

A freight brokerage’s cost structure and contracts should be simple to understand, with the service clearly defined and communicated. All additional fees or service charges associated with the load should be disclosed upfront, such as fuel surcharges, demurrage and detention fees, warehouse fees, etc.

Stay in the loop in 2 Minutes Flat. Get biweekly logistics news delivered to your inbox.

 Man looking for freight broker on his phone.

Five red flags to watch out for with freight brokers

Unfortunately, not all brokers are created equal, and it’s crucial to recognize the red flags that could signify a problematic partnership. Working with an unreliable broker can lead to delayed delivery times, lost or damaged cargo, and financial losses. The warning signs can be subtle, but here are five of the most significant red flags to watch for when choosing a freight broker:

Inaccessible or unresponsive

It’s a major red flag if a broker is difficult to reach or unresponsive to your calls or emails. This could be a sign that they’re unreliable or don’t have the capacity to take on new work. Proper communication is essential for a successful shipping experience, so be sure to choose a freight broker that is responsive and accessible.

Lack of transparency about fees

If freight brokers are vague about their service fees or charges, you might get hit with hidden costs on your invoice. Make sure you understand all the costs involved with moving your goods and are comfortable with the pricing structure before you book your shipments.

Limited carrier options

The options for shipping could be limited if a freight broker only works with a few carriers. You might not be able to get services like expedited shipping, international shipping or less-than-truckload shipping if there are fewer carriers. 

Only partnering with a limited number of carriers can affect your ability to get the best rates. For instance, if a freight broker only has 100 carriers to choose from, their rates might be higher than if they had a thousand carriers. With a smaller pool, there is less competition, making negotiating better rates harder.

Financial instability or lack of insurance

If your freight broker is financially unstable or does not have adequate insurance coverage, this could be a significant risk to your load. Make sure to verify their financial stability by checking their D&B D-U-N-S Number to get an overall financial health check. To ensure that they have proper insurance coverage, request to see a Certificate of Insurance (COI), which will provide you with details about the broker’s policy.

Non-compliance with regulations or industry standards

The government requires freight brokers and carriers to meet specific standards and regulations.

A conditional safety rating means that the carrier or their truck driver has had multiple violations with the government, such as not securing their freight, not following the proper regulations, or not adhering to the laws in their jurisdiction.

Verify that your freight broker complies with all relevant regulations and standards and that the carriers they use have an excellent rating before booking your shipment.

By being mindful of these common warning signs, you’ll be better positioned to make the right choice for your business.

The benefits of using a freight broker

Working with a freight broker can make any shipping task simpler. This can be especially helpful for businesses that ship large or complex loads. You get the best of both worlds when you partner with a third-party logistics (3PL) company because you receive a freight broker’s expertise plus a logistics company’s knowledge of supply chain efficiency.

Their extensive network allows access to a single point of freight options, including LTL (less than truckload), full truckload, intermodal, air, ocean and specialized services like temperature-controlled transport. 

With the help of a 3PL and a transportation management system (TMS), you can save time and find the right price and shipping solution for your needs without spending hours contacting multiple companies.

A freight brokerage can also help improve the efficiency of your supply chain by coordinating with carriers to ensure that your goods are shipped on-time and with minimal delays. Even better, they can quickly identify any potential problems and take steps to prevent them.

Too many shippers waste time manually searching for the truck with the most cost-effective rate or best delivery time. Ultimately, having a reliable freight broker on your side means you can trust that your shipping operations will run smoothly and efficiently. Contact us to leverage our long-term relationships with carriers for better shipping prices.