Freight Broker vs Freight Forwarder Differences

TL;DR

• Freight forwarders manage the entire shipping process, including logistics and customs, while freight brokers connect shippers and carriers without owning vehicles.
• Freight forwarders take possession of goods and provide storage and insurance; brokers do not handle cargo.
• Forwarders may charge higher fees but offer comprehensive services; brokers negotiate lower rates but offer limited assistance.
• Choose forwarders for complex logistics and international shipping; opt for brokers for straightforward, cost-effective solutions.

The terms “freight forwarder ” and “freight broker” are often used interchangeably when referring to the movement of goods. For most people, it can be difficult to distinguish between them, but there are some concrete differences between freight forwarders and freight brokers.

How do you know which one to choose? In this article, we will tackle the differences between freight forwarders and freight brokers and identify their main characteristics and pros and cons.

What is a freight forwarder?

A freight forwarder arranges the movement of goods from one country to another, navigating or “forwarding” shipments according to the legal transport requirements of each location. They are also known as “forwarding agents”, “consolidators” or just “forwarders”.

Freight forwarders take on more responsibilities for the cargo than freight brokers. The role of a freight forwarder includes:

• Collecting, transporting, and delivering cargo
• Storing and handling cargo in their own warehouses
• Assembling/distributing shipments as required
• Managing their own fleet of vehicles and trucks
• Preparing documentation such as customs forms and the bill of lading
• Seeing to it that goods are safe and insured in transit
• Packing and consolidating shipments

Freight forwarders operate according to the national laws in their respective countries, such as the FCMSA in the USA. Unlike freight brokers, freight forwarders take possession of goods during transport and are liable for any losses or damages, and must also provide at least the minimum required insurance coverage for shipments under their control.

Read more about:

• What is a freight forwarder?
• The best international freight forwarders
• International freight shipping insurance

Freight forwarders vs freight brokers: pros and cons

Freight forwarder advantages

• Freight forwarders handle customs and import/export issues
• They provide a range of services such as packaging and storage
• They facilitate correct labelling to ensure successful delivery

Freight forwarder disadvantages

• Freight forwarders may charge inflated prices for their services
• The risk of loss or damage is still present, even with the best freight forwarder
• Freight forwarding is not regulated in some parts of the world, increasing the risk of issues

What is a freight broker?

A freight broker will bring customers and logistics companies together. The role of a broker is to match the demand of buyers with the supply.

The main difference between freight forwarders and freight brokers is that the latter does not own a fleet of vehicles, so they outsource all the logistics activities. A freight broker operates as a single point of contact between shippers and hauliers, even in cases when the shipment is handled by multiple logistics providers.

Unlike freight forwarders, freight brokers don’t take possession of the goods being shipped. They usually don’t handle any customs paperwork, and they don’t provide additional services such as consolidation or warehousing.

Freight brokers are very beneficial for carriers because they bring them additional volume. Similar to freight forwarders, freight brokers have more bargaining power in negotiating the final rates than an individual customer would have. Freight brokers operate on commissions taken from the total cost of the transport service.

Are freight brokers the same as customs brokers?

Although they may seem similar, a freight broker is not the same as a customs broker. A freight broker is an intermediary between a shipper and freight service provider within a country’s borders.

On the other hand, a customs broker is the intermediary between an importer/exporter, and a government’s customs department in the destination country.

Freight forwarders vs freight brokers: pros and cons

Freight broker advantages

• Freight brokers arrange the transport, saving you valuable time
• They are in a better position to negotiate shipping rates
• Freight brokers are a one-stop point of contact for all logistics needs

Freight broker disadvantages

• As the intermediary, they are less liable for shipping issues
• Freight brokers don’t own fleets of vehicles or warehouses
• They typically don’t offer assistance with customs/paperwork

You may also be interested in:

• International freight services
• Tailored logistics services
• Freight customs procedures

Differences between freight forwarders and freight brokers

When comparing freight brokers vs freight forwarders, you will see that both move goods, but they have different roles in the freight industry. These roles are where you will see the actual difference between freight forwarders and freight brokers.

Freight forwarders arrange the entire shipping process, including freight transport, paperwork, storage and consolidation of goods from various clients.

Freight brokers act as an intermediary between shippers and carriers. They connect the two parties but are far less involved in the actual shipping process. Freight brokers also assume fewer responsibilities for the cargo or any issues connected with shipping.

Choose the best freight forwarders here.

Freight forwarders vs freight brokers: Which to choose?

When choosing between freight brokers vs freight forwarders, you need to understand what your requirements are and whether you need more than just moving goods from A to B.

Check the quick summary points below to help you decide:

• If your logistics needs are complex, you ship internationally to many locations and you require multiple levels of support, a freight forwarder would be the ideal choice.
• If your logistics needs are not so complex, you ship on a smaller scale, and you are simply looking to get lower shipping rates, consider a freight broker instead.

If you are looking for a reliable logistics service provider offering a wide range of freight shipping services at very reasonable prices, look no further than Eurosender!

Interested in learning more about pallet and freight shipping? Check all our articles about pallet deliveries.

This article was written in collaboration with Gabriela Buzoianu.