That’s a lot of freight! But we shouldn’t be surprised. The movement of freight around the world is a big deal. The trucking industry is a big deal. We wouldn’t have the smooth movement of commerce that we currently do without it. And yet, the trucking industry and trucking companies are separate from freight brokers, freight forwarders and freight factorers. To make it even more complicated, brokers, forwarders and factorers are also quite distinct. That’s why now is a good time to go over them.
What Does a Freight Broker Do?
Put simply, a freight broker is someone who assists shipper with freight ready to haul. They help shippers find hauls. Freight brokers operate in one of two ways. They either run their own business or work for another company. Freight brokers also ensure motor carriers have updates on the status of the shipper’s freight.
On a higher level, freight brokers help shippers find appropriate trucking companies for the job. The reason this service must be performed is because most shippers lack the time and inside information to know if a certain freight hauler is right for them. And while most carriers are reputable and dependable, it may very well be that a certain carrier is just not good for the job.
Yet freight brokers do more than simply connect freight haulers with freight shippers. They must always stay in touch with both parties to ensure the freight is verified, picked up, and delivered within the agreed-upon timeframe. The freight brokers make money by being paid a certain amount by the client to find a hauler and then charge the hauler a particular amount. Their profit is the ‘spread’ in between.
Freight brokers help facilitate the movement of freight by linking the shipper with the carrier. And they use load boards to do it. Load boards are used by freight brokers to connect with the trucking company of their choice. Using load boards like Quick Transport Solutions, freight brokers can quickly find qualified candidates anywhere in The U.S., Mexico, or Canada.
What Does a Freight Forwarder Do?
To get the goods where they need to go, you need freight forwarders. Importing and exporting are critical parts of the supply chain. And with all the problems in the supply chain, the job of the freight forwarder comes into greater focus. International shipping is daunting, which is why there are specialists to help get the goods where they need to go so the trucks can pick them up.
What a freight forwarder is not is a shipping company, distribution manager, or importing or exporting partner. Commercial freight forwarders operate in an entirely different space. They exist more as a partner to help deal with the process, paperwork, and regulations involved in international trade. Freight forwarders are essentially companies who specialize in providing storage and shipping on behalf of shippers. They also arrange, import, and export goods.
Freight forwarders generally provide services like export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and insurance claims. Forwarders often use their own bills of lading and agents who work for them provide document delivery. They also handle deconsolidation and freight collection.
One thing to note is that a forwarder is not a hauler or a broker. They do not actually move the freight themselves or connect shippers with carriers. Instead, they act as intermediaries between shippers and other transportation services, whether it be ocean shipping, cargo ships, tractor/trailers, air freight, or rail car. They have established relationships with transportation companies and work to negotiate the best prices for their customers.
Freight forwarders do considerable work ensuring the logistics of shipping goods from one international destination to another goes smooth and by the numbers. And their services are in high demand because complex logistics of this nature, from documentation to delivery, can be a huge burden to their clients. They essentially take the pain away of international shipping, importing, exporting and logistics.
What is Freight Factoring?
Next up on our list of freight trifectas, we look at freight factoring, a topic we have touched on before. Put simply, freight factoring is a way for trucking companies to fund their business, get paid for invoices, and avoid long delays on payments. They have essentially put to pasture the problem of trucking companies having to wait inordinate amounts of time to get paid on their invoices. Freight factoring offers a financial benefit for trucking companies who need to get paid.
Because freight factoring provides an influx of capital, trucking companies use it to prevent themselves from entering a cash crunch. This can be especially valuable for small trucking companies who have less liquidity to keep their business afloat. Owner-operators spend a lot of time ensuring quick financing happens. Freight factorers ensure they get the financing they need when they need it.
To break it down even further, freight factoring takes invoices that trucking companies would normally wait 30, 60, and 90 days for. Any small trucking companies will tell you that trucking invoices are normally never paid immediately. And these process times can essentially kill a small fleet’s bottom line as they wait to get paid. When you have maintenance, fuel, and salary needs to consider, the longer you have to wait for your money the more problematic it becomes.
In the past, trucking companies would simply have to hope they could get a loan of some time from a bank or perhaps use a credit card. But these are costly and inefficient ways of funding their businesses. And in many cases, they simply could not get loans from banks. This kind of financial chaos can lead to big problems for new and smaller fleets.
How Does Freight Factoring Work?
Want to learn the basics of freight factoring and how it works? Knowing the mechanism of its functionality will give you a greater sense of trust for the service. Premier freight factoring services work with you and purchase your invoices so that you get paid on time. They also provide other services to help trucking companies stay on top of client acquisition and competitive analysis.
The process works when the shipper needs a carrier. They hire the carrier to deliver the freight, and then the trucking company does a credit check with the factoring company they work with. The paperwork for this process can generally be submitted online or through a mobile application. Once a credit check has been done, the freight factorer then purchases the invoice based on an agreed-upon set of terms, and the trucking company gets paid.
Even better, credit and invoice checks are generally made to go smooth and by the numbers. And getting the invoice paid is also usually very quick. Trucking companies who need cash now can expect a turnaround time of within 24 hours. For some, it can be low as one hour, but for others the more complex or pricey the invoice, the longer the processing time.
Now, you may be wondering, how do I qualify? Fortunately, you will work with your freight factoring partner to do so. They ask you a series of questions to determine your qualifications. Those questions will surround the following factors:
- Monthly Invoice Volume
- Customer Base
- Customers’ Days to Pay
- Invoice Amount Required for Factoring
What is a Freight Hauler?
We left it out of the title, but we would be remiss if we left actual trucking companies out of the picture. Freight haulers represent all the amazing trucking companies that occupy our load boards and other load boards throughout the country. Freight haulers, fleets, motor carriers, trucking companies – whatever you call them, they are the core of how commerce gets done in America and around the world.
Businesses or individuals that need something brought from one place to another by truck will use a freight hauler to do so. This could be for long-haul, delivery van, reefer, and so many more classifications. Whatever type of freight one needs hauled, there is a freight hauler out there somewhere who will haul it for them.
We hope you enjoyed our look at the three freights! The quick and easy movement of freight around North America is what keeps the economies of this region strong. We support all companies and players, whether forwarders, factoring brokers, or haulers. Here’s to a healthy and strong freight environment for years to come!