A freight broker is an intermediary in the shipping process. These professionals help companies who have items to ship find carriers who are willing to provide the service. Working with a freight broker can improve your shipping processes, but if you want to maximize the services to boost your working capital, there are a few specific tips you should keep in mind when choosing your broker.
1. Choose a freight broker who works in your niche.
Freight brokers may handle all types of shipments and work with a range of carriers, but if you want the best service, you may want to select a broker who focuses on your particular shipping or product niche. For example, if you ship heavy equipment, perishable items or hazardous materials, you want a broker who has experience connecting clients to shippers who understand how to ship those items carefully and professionally.
2. Look for a broker who ensures shipper reliability.
When you hire a freight broker, you don't just want a matchmaker who sets you up with carriers who are headed the same direction as your shipment. Rather, you want a broker who investigates the shippers he or she uses. Ultimately, this is one of the biggest benefits of working with a freight broker -- they do the research so that you can focus on other aspects of your business. However, if your broker does not ensure that the shipper is reliable, it may disrupt your shipment, costing you money in the long run.
3. Weigh the value offered by the broker's commission.
On average, freight brokers charge a commission fee of 5 to 11 percent of the cost of shipping. On the surface, this makes shipping more expensive for your business. However, the ideal situation is that your broker's connections, effort and knowledge of the industry ultimately help you get affordable shipping rates that you may not be able to access on your own.
When choosing a freight broker, look at the commission each broker charges, but don't necessarily go with the lowest commission rate. Ask yourself, "What is the broker giving me in exchange for the rate?" For example, an experienced broker who can handle every aspect of the shipment from contacting carriers for bids to filling out customs forms for international shipments may be worth more commission than a fledgling broker who doesn't have great connections. Consider both the amount of the commission and its value proposition.
4. Have the broker send you a single bill.
Freight brokers typically bill in one of two ways. They may send you a bill for their services and then have the carrier bill you directly. Alternatively, they may bill you for both the carrier's fee and their fee in a single bill. Ideally, you want the latter option.
Although it's a relatively small issue, single billing is preferable if you are trying to safeguard your operating capital. Namely, it saves you time when you are dealing with accounts payable, as you only have to make one payment and one journal entry rather than two.
5. Insist on a claim resolution guarantee in 60 days or less.
Working with a freight broker helps to eliminate many of the hassles and mistakes that you may face when you work directly with a carrier. Additionally, if there are problems, you don't have to take time out of your schedule to deal with them. Rather, the broker takes care of any issues for you.
However, in rare incidences, there may be times when a shipment doesn't get to its destination, a carrier damages the shipment or other issues occur. If you want to choose a freight broker who can eliminate problems and protect your working capital, you want a professional who is going to resolve issues for you in a timely fashion. For your assurance, you may want a guarantee that all claims will be resolved within 30 or 60 days after submitting them. That helps to ensure that you don't have a refund tied up for months.
For more information about the services a broker may offer, contact a company Erkon Logistics.Share
9 August 2016
When I started going through our books to see where we were losing money, I was astonished to see how much we were losing on shipping. We were spending a boatload on shipping, and I knew that it needed to stop. I met with our shipping department, and they talked about some of the issues they had been facing, including trying to find small enough boxes and using packing tape that just didn't work well. We started trying to figure out how to lower these costs, and we figured things out pretty quickly. This blog is all about eliminating waste and speeding up your shipping procedures.