There are no “Class of 2013” banners hanging in the hall or insecure hands tucked away in Letterman Jackets, but here I am suddenly in a high-school anyway. I hear taunting calls and adolescent gestures, so desperately alluding to adult provocations, as I realize that I have stepped into the middle of a high-school-girl-cat-fight.
The earrings are coming off, Ladies and Gents, as the true definition of freight forwarders and freight brokers is disputed.
“Hey!” I naively thought to myself as I began contemplating a blog topic for this week. “I will discuss the differences between forwarders and brokers since they are similar and people often do not realize that they are indeed two very different books of business.”
Boy, was I in for more than I bargained for.
The following are excerpts from various sites I came across in my research. Get yourself some popcorn, sit back, and enjoy.
- “A broker is a parasite that sucks the life out of a transporter — someone who is too lazy to work.”
- “Brokers…can get by with contingent coverage (less than half the cost of primary coverage) because they’re not liable in the event of a loss, absent negligence on the broker’s part.
- “Freight forwarders often mark up the prices in order to make a profit.”
- “A Freight forwarder has a great deal of deficiency.”
To think, all I did was type in “difference between freight forwarders and brokers” into my Google Toolbar.
Therefore, I have resolved to present a completely unbiased definition of freight broker and freight forwarder and outline the main comparisons and contrasts.
Wish me luck as I cautiously enter the high-school hallway with my white-flag.
A freight broker, as defined by the online Merriam Webster Dictionary, is “one who acts as an intermediary.”
A freight forwarder, as defined by the online Merriam Webster Dictionary, is “one that forwards; especially : an agent who performs services (as receiving, transshipping, or delivering) designed to move goods to their destination.”
Whew! That was easy and non-confrontational, maybe this can be done peacefully, I muse to myself.
On a deeper level, WiseGeek defines a freight broker as “an individual or company that serves as a liaison between another individual or company that needs shipping services and an authorized motor carrier.” So, the broker (ARPCO for instance) is the middle-man between shipper and carrier.
A freight forwarder, also defined by WiseGeek, is “a person [or company] who facilitates shipping of perishable or non-perishable goods for a third party.” For example DHL and UPS are both freight forwarders.
Sounds similar, but there is one key difference to keep in mind. A forwarder comes directly into contact with the shipment or freight, whereas a broker never even sees, much less handles, the freight.
A freight forwarder will normally have their own warehouse, bills of lading, and insurance to handle either personal individual shipments or commercial shipments for large companies and industrial firms. They will repackage the product according to the shippers specifications and then ship the product, normally on their own trucks, trains, or planes acting as the carrier. They are licensed as a carrier and must register with the Federal Motor Carrier Safety Administration (FMCSA) if operating by truck and register with the International Federation of Freight Forwarders (FIATA) if operating by air.
A freight broker is federally required to maintain a $10,000 bond (soon to be raised to $75,000 on October 1, 2013), be registered by the FMCSA , and have insurance to cover both the shipper and carrier. A broker operates off of a niche market offering various services catering to any or all types of logistics needs, i.e., truckload, less-than-truckload (LTL), less-than-container-load (LCL), intermodal rail, ocean, specialized (HAZMAT), and drive-away services. A broker develops a relationship with both the shipper and the carrier to connect the two together for a shipment.
Often both freight brokers and freight forwarders can negotiate a shipment for a lower price for the shipper because of their knowledge of the logistics industry and their connections with both sides of the logistics supply chain.
Well, well, well. Imagine that, not a single word of animosity was shed in this entire comparison.
Peace has been restored to the high-school hallway.