Freight forwarders and freight brokers perform similar, but not identical, jobs. Both terms may sound unfamiliar to some, as the logistics industry has its terminology, including in product shipments.
During product shipments, many parties in the logistics industry are involved in facilitating the shipping process. The parties referred to as freight forwarders and freight brokers perform similar jobs but with slight differences.
Let's discuss how exactly freight forwarders differ from freight brokers. First, you need to know that both are part of the freight or logistics industry.
Both freight forwarders and freight brokers arrange product shipments for third parties by connecting shippers and carriers, negotiating shipping rates, and tracking and ensuring delivery.
Now, this is the difference. Freight forwarders are the parties that specialize in arranging the entire process of shipping their client's goods. In addition to transporting goods, they can also store them in their storage facility.
On the contrary, freight brokers are individual persons or companies that help shippers transport their goods to their destinations using the carriers' services.
In essence, freight brokers act as middlemen who help shippers find freight forwarders and track cargo movement.
Freight forwarders and freight brokers also have different responsibilities. As freight forwarders process the cargo, they need their own warehouses, trucks, packaging equipment, and personnel.
Freight forwarders also need insurance and other types of protection due to the hands-on nature of their job. Contrarily, freight brokers do not need these and rarely own warehouses, trucks, or physical freight items.
Freight brokers are responsible for hiring carriers, and the carriers have the responsibility to shippers for the freight.
Freight brokers have multiple clients with higher shipping volumes. That's why they have more bargaining power than individual businesses with only a few regular clients.
With multiple clients they work for, freight brokers can also provide carriers with a steadier supply of loads than individual customers could. This is more profitable for trucking companies as they can keep their trucks full and moving while avoiding empty miles or lack of freight.
Freight brokers connect shippers and carriers. While this is their primary job, they are much more than middlemen who negotiate rates.
They also monitor and track shipments, alert shippers and carriers of any delays or changes, and are responsible for maintaining smooth and open communication between both parties. They make money by charging a small commission on the cost of the transactions they oversee.
As for freight forwarders, they physically process the goods. Thus, their roles are much more hands-on than those of freight brokers. They are also involved in warehousing and shipments, meaning freight forwarders are also responsible for insurance.
Although freight forwarders don't move the goods, they coordinate transportation in a much more physical way than freight brokers do.
Once freight forwarders take the cargo, they're responsible for storing, shipping, and delivering the goods. In addition, they assume liability for the load and its condition after receipt. As a result, they naturally have much stricter insurance and government licensing requirements.
Freight forwarders and freight brokers differ in their duties. Both have similar tasks, and both can collaborate if freight forwarders reduce their role in finding carriers that best provide the transportation the customers require.
Basically, freight forwarders also act as freight brokers. However, when freight forwarders perform more duties or tasks, such as preparing customs documents and other tasks as previously discussed, then the differences between the two become more apparent.
Freight forwarders are responsible for shipments resulting from business transactions, while freight brokers are responsible for overseeing transactions or other activities related to trades of goods between two parties.
Now that you've understood the differences between freight forwarders and freight brokers, you can choose a trusted logistics company. For easy and efficient logistics, entrust it to a dedicated logistics company. That said, you should find a trusted company with a proven reputation and credibility.
One such company is SERA Logistics or SELOG. A business unit of PT Astra International Tbk, SELOG is renowned as one of the largest transport and logistics companies in Indonesia.
SELOG is here to serve the needs of customers in end-to-end logistics through a series of diverse services. These include Contract Logistics, Shipping Services, Shipping Agencies, Freight Forwarding, Warehouse and Yard Management, and Courier Services.
To learn more about SERA and its services, including SELOG, visit its official website at https://www.sera.astra.co.id/id/page/35/perusahaan-logistik-pengiriman-cargo.