Freight Broker VS. Freight Agent: What Is the Difference?

What are a freight agent and a freight broker? What is the difference between them? In this article, we will tell you what is a freight broker and what is a freight agent, and what is the difference between them.

What Is a Freight Agent?

Freight agents are also known as cargo transportation agents, and they can refer to a person or a group. Their responsibility is to entrust the goods entrusted by the principal through the designated transport route from one place to another, freight agents play an important role in completing the trade between the owner and the customer connect.

What Is a Freight Broker?

Acting as an intermediary between the customer and the carrier, freight brokers arrange the transportation of goods by matching the means of transportation to the customer’s needs. They ensure that the handoff between the carrier and shipper goes smoothly and that the shipment arrives safely and on time. Also, freight brokers must be licensed as brokers by the Federal Motor Carrier Safety Administration (FMCSA) and are required to have a minimum $75,000 surety bond.

What‘s the Difference between a Freight Agent and a Freight Broker?

Freight agents and freight brokers have the following main differences.

License and Authority 

Freight brokers are licensed by the Federal Motor Carrier Safety Administration (FMCSA) and have the authority to facilitate the movement of goods, freight brokers must comply with laws and keep records for three years, which vary from state to state, but are mostly related to transportation safety aspects. Most freight brokers are large companies that need freight agents to make their business grow.

Conversely, freight agents are not licensed to operate, so they must work together under a freight broker.

Responsibilities 

The responsibilities and duties of freight brokers are more significant than those of freight agents. Freight brokers are licensed to do business, so they must pay close attention to the status of their business, as licenses are likely to be revoked if significant errors are made. The agents hired by freight brokers must also be in line with their development goals and need to have sufficient expertise and experience in the industry. In addition, freight brokers are responsible for invoicing, credit checks, payments to carriers, and payments to freight agents. Freight agents are mainly responsible for sales, customer service, pickup and delivery of goods, etc.  

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Costs

Freight brokers need to purchase expensive software for transportation management systems, pay for office rent, purchase cargo liability insurance or post security deposits, etc., while freight forwarders do not.

Profits

How much money agents and freight brokers make on each transaction depends on the agreement between these two parties. In general, freight brokers’ profit is the amount they charge their clients minus the price they pay to the carrier. Typically, brokers can earn up to 8% of the total transaction cost of each shipment. At the same time, brokers are paid on a commission basis, ranging from 60% to 80% of the gross profit. At the same time, there is a limit to the percentage or amount of profit a freight agent can receive.

Size and Structure

Freight agents refer to individuals without a business license who lack the resources needed to run a company. Thus, agents are individual contractors and are usually mobile or home-based.

In contrast, brokers are usually large businesses with fixed offices. They often employ several agents to represent their companies and act as intermediaries between clients and carriers. In most cases, customers prefer to entrust their shipments to established brokerage firms.

Which Type Is Best For You?

That’s all we have to say about freight agents and freight brokers. Which one you choose depends on the needs of your company. If you don’t know which one to choose, feel free to contact us!

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