Do you ever wonder, “how do freight brokers make money?” Many do, and often. Brokers have significant responsibilities in modern freight management, including the creation and execution of loads, tracking service provider performance through carrier scorecards, and much more. Unfortunately, those value-added services are often overshadowed by the misconception that brokers provide simple operations and rely solely on connections. But consider the data surrounding freight brokers.
The U.S. Bureau of Labor Statistics (BLS) reports that cargo and freight agents’ employment will rise 2.6% annually for the foreseeable future.
Meanwhile, the freight brokerage sector will grow an astonishing $41.47 billion between 2020 and 2024, reports Technavio. And yet, the questions remain, “how do freight brokers make money, and what can freight brokers do to make the most money per load?” SONAR is helping to empower the growth of this vital transportation segment. But for reference, let’s take a look at the top six ways for how freight brokers make money.
How Do Freight Brokers Make Money? Here are the Top 6 Ways
1. How do freight brokers make money – they connect loads to data-driven insights
For both asset-based and non-asset-based freight brokers, providing that connection point between loads and data is essential. Through data, brokers:
- Generate more profitability per load.
- Spend less time quoting loads.
- Identify ways to move company assets, if applicable, to secure a better profit margin.
2. How do freight brokers make money – they can manage company-owned assets
Asset-based brokers manage company assets, including trailers and drivers. When the assets are reallocated to in-demand markets, it’s easier to take advantage of backhaul opportunities and maximize profitability per load.
Reallocate assets to in-demand markets for backhaul opps & profitability per load.
3. How do freight brokers make money – they source capacity
Brokers possess carrier-like qualities, identifying trends in shipper activity, and helping carriers get better profit margins by:
- Connecting with more shippers, including smaller shippers with a lower annual freight spend.
- Working across other freight management segments to expand their client networks.
- Identifying at-risk loads and moves, such as those requiring transit during winter weather, and providing those details to carriers.
4. How do freight brokers make money – they hold carriers accountable
Carrier accountability remains a top priority for all types of freight brokers. Since the question, “how do freight brokers make money?” implies a need to understand both carrier and shipper views, they are more likely to hold carriers accountable in:
- Invoicing the correct rate for a load.
- Submitting damage or late claims based on service guarantees.
- Reducing the work in communicating with larger carriers – for smaller shippers in need of one-off, spot-like transportation.
- Overcoming the hassles that arise when dedicated fleets or contract freight suddenly evaporates.
5. How do freight brokers make money – they build out new supply chain relationships
Brokers are the real middlemen of the industry. They look beyond the market activity to understand what’s happening and what needs to happen. In turn, they apply data to build out new relationships by:
- Increasing confidence in accurate rating when using data-driven forecasting resources.
- Identifying hot markets and loads where drivers can make the most profits.
- Working across segments to identify new technologies and processes that add value – and sharing those insights with their clients.
6. How do freight brokers make money – they resell FTE savings to companies
Shippers are in the business of producing and selling merchandise; they are not transportation experts. Simultaneously, it can be difficult for shippers to trust carriers to provide the best and correct rates. For that reason, brokers effectively save full-time equivalents (FTE) for shippers by taking on the burden of transportation management, including:
- Assessing packaging and staging to streamline pickup.
- Handling the dock schedule to reduce overbookings.
- Contacting carriers to obtain and confirm shipments.
- Following through with payment to the carrier.
- Auditing invoices to validate rates and service.
Know the answer to “how do freight brokers make money” to thrive in supply chain operations
Someone will always ask, “how do freight brokers make money?” There’s a real concern behind that question. If the transportation sector is already operating on razor-thin margins, how can a broker survive? Well, freight management segments need to look at the facts – brokers are much more than just a pass-between in logistics. They provide a host of services that may even include moving freight when operating as an asset-based broker. And the best way to maximize the ROI across all these processes is using near-real-time, data-driven insights in all operations. Schedule a SONAR demo online now to learn more about to maximize the profitability of your brokerage now.