Freight brokers are very important in the world of logistics as they are the ones who connect shippers with the right carriers. As intermediaries, they ensure that loads can reach their destinations as efficiently and cost-effectively as possible.
Also known as logistics brokers, freight brokers handle all the logistics of the shipping process so that both shippers and carriers can focus on their core operations. In return, they charge a fee for their services.
Brokers earn their income through commissions or service fees, but the charges can vary widely depending on a range of factors. This is what we are going to cover here today. Here, One Freight Broker will break down how freight brokers charge for their services, the different pricing models they use, and the various factors that influence the costs.
What is a Freight Broker and What Do They Do?
To fully understand the costs associated with freight brokers, we need to fully understand what they do.
Freight brokers are licensed professionals who serve as matchmakers between shippers and carriers. For those who are unfamiliar with those terms, shippers are the companies and individuals who have goods that need to be transported, while carriers are the trucking companies or independent truckers who have the capacity to move them.
When a shipper needs to move freight, they often don’t have the time, resources, or knowledge to find the best carrier for the job. This is where freight brokers come in.
A freight broker serves as the middleman in the shipping process. They do not own trucks or cargo; instead, they use their industry knowledge and networks to match shipments with reliable trucking companies, rail operators, or other freight carriers.
Aside from making sure shipments are moved efficiently, they also ensure that they are in compliance with regulations. Other responsibilities include negotiating rates with carriers and shippers, tracking shipments, ensuring proper documentation, and maintaining strong communication throughout the shipping process.
Brokers operate within a highly competitive and fast-paced industry. This is why most of them leverage technology such as transportation management systems (TMS) to streamline their operations and complement their logistics expertise. In order to thrive in this business, they also need to stay informed about market trends, fuel prices, and regulatory changes.
With all of this in mind, we can take a closer look at how brokers charge for their services.
Types of Freight Broker Charges
Freight brokers can charge in different ways, but the most common methods are:
- Flat Fees
- Percentage-Based Fees
- Hourly Rates
Each of these pricing models has its pros and cons, and it’s essential to understand them to grasp the full picture of freight brokerage fees.
Flat Fees
With a flat fee arrangement, the freight broker charges a set amount for handling a particular shipment.
A flat fee might range from $100 to $500 per load, depending on the shipment type, distance, and complexity. This fee is often agreed upon in advance and does not fluctuate afterwards. This typically covers all aspects of the brokerage service, including finding a carrier, negotiating rates, and managing the shipment.
Flat fees are often used for regular shipments where the logistics are relatively simple, or the broker has a long-standing relationship with the shipper.
Percentage-Based Fees
The most common way freight brokers charge for their services is using percentage-based fees. In this model, the broker takes a percentage of the total cost of the load. The percentage can vary, but it typically ranges between 10% and 25%, depending on the type of shipment and the broker’s relationship with the carrier.
For example, if a load costs $1,000 to ship, and the broker charges a 15% commission, they would earn $150 for that shipment. For a $5,000 load, the freight broker could charge anywhere from $500 to $1,250 as a service fee. The benefit of percentage-based fees is that they scale with the size of the shipment, meaning that brokers earn more for larger and more complex shipments.
Hourly Rates
In some cases, brokers might charge by the hour, especially when they are involved in long-term or more involved logistics projects. However, this is less common for individual shipments. Hourly rates are more frequently used in scenarios like coordinating large-scale shipments or overseeing complex, multi-stop routes.
For example, a broker might charge $100 to $200 per hour to handle specialized freight needs, or a long-distance route that requires extensive coordination. Hourly charges are typically applied when additional services are needed like customs brokerage, special handling, or extra logistics management.
Factors That Affect Broker Charges
Several factors influence how much a freight broker will charge for their services. These include the type of freight, the distance it needs to travel, the complexity of the route, and the relationship between the broker and the shipper or carrier.
Freight Type
One of the most significant factors that determine the brokerage fee is the nature of goods being shipped. High-value, fragile, or hazardous cargo often requires extra care and specialized transportation services. This added complexity increases the broker’s involvement, leading to higher charges.
- Standard Freight: General loads like non-perishable goods or basic equipment are less complicated and tend to have lower brokerage fees.
- Specialized Freight: Freight that requires specialized equipment (such as refrigerated units for perishable goods or flatbed trucks for large machinery) often costs more to transport.
- Hazardous Materials: Freight brokers charge a premium for handling hazardous or dangerous goods because these shipments require compliance with strict safety regulations and additional insurance.
Shipment Distance
Distance is another key factor. Longer shipments often come with more complexities—routes may need to be planned around weather, road conditions, or permits, all of which can increase the broker’s time and effort.
- Local Shipments: For short-haul loads (under 100 miles), brokers often charge lower fees because the logistics are simpler, and fewer factors need to be coordinated.
- Long-Distance Shipments: For interstate or cross-country shipments, brokers may charge more due to the increased logistical complexity involved. Long-haul freight also often requires more fuel, tolls, and driver compensation, all of which add to the overall cost.
Load Size
The size of the load plays an essential role in determining how much a freight broker charges. Larger loads or shipments that require multiple trucks will increase the broker’s workload, which of course translates to higher charges.
- Full Truckload (FTL): Full truckload shipments tend to cost more to broker, as they require a dedicated truck and potentially a longer route or more involved logistics management.
- Less than Truckload (LTL): LTL shipments involve combining smaller loads from multiple shippers, which means brokers need to coordinate more complex logistics to ensure everything fits together. While each LTL load is smaller, they may require more management, which could drive up the cost.
Load Complexity
If a shipment requires multiple stops or involves additional services, brokers may charge a premium. Complex shipments take more time and coordination, leading to higher fees. Examples include shipments that require custom routing, multiple carriers, or special handling,
- Multiple Stops: If a shipment involves several pick-up or drop-off points, the broker has to coordinate the timing, routes, and handling, increasing their workload.
- Special Handling or Services: If your shipment needs extra services such as insurance, expedited shipping, or tracking, the freight broker will typically charge a higher fee for these additional services.
Broker’s Experience and Network
A broker’s experience and their ability to leverage an established network of carriers can influence their pricing. Brokers with more experience or better relationships with carriers can often secure better rates for the shipper, reducing the overall cost. However, these brokers may also charge higher fees for their services due to the added value they provide.
Experienced brokers are likely to charge higher fees because they offer greater efficiency, better negotiation power, and access to a broader network of carriers. On the other hand, new or smaller brokers may charge lower fees to attract clients. Just keep in mind that they might not have the same negotiating leverage or resources as larger, more established firms.
Time Sensitivity
When freight is time-sensitive or needs to be delivered within a specific timeframe, brokers will charge more to prioritize the shipment. Expedited shipments, emergency deliveries, or rush orders often come with a premium.
- Standard Delivery: Routine, non-time-sensitive shipments will generally have lower fees.
- Expedited or Time-Critical Shipments: For shipments that need to be delivered quickly, brokers will often charge more due to the additional coordination and urgency involved.
How to Lower Freight Broker Fees
When working with freight brokers, the fees can be one of the major expenses in shipping logistics. However, with a little effort and strategic planning, it is possible to lower these costs and ensure that your shipments remain within budget. Here are a few strategies to consider:
Negotiate Rates
One of the most direct ways to lower freight broker fees is through negotiation. Many brokers are willing to adjust their rates, especially if you have a good relationship with them or are offering regular business. Before agreeing to any fees, research the market to understand average prices, and don’t hesitate to ask for discounts—especially if you are committing to long-term business or multiple shipments.
Ship Larger Loads
Freight brokers typically charge based on the size or weight of the shipment. You can often negotiate for more favorable pricing by consolidating shipments or sending larger loads. Larger shipments can often be more cost-effective for brokers to manage, and this savings can be passed down to you.
Shipping in bulk is a great way to take advantage of economies of scale, resulting in reduced fees per unit.
Plan Ahead
Last-minute shipments are tough for brokers because they need to expedite the process or find last-minute availability with carriers. This will typically lead to higher fees. Planning your shipments well in advance allows you to take advantage of lower rates and gives brokers more time to find the most cost-effective options. Avoid rushed deliveries to improve the efficiency of your shipping process while also reducing broker fees.
Build a Relationship with Your Broker
Over time, establishing a strong, long-term relationship with your freight broker can help in negotiating lower fees. Brokers are more likely to offer better rates to clients who show loyalty, provide consistent business, and communicate clearly. Grow your network and start building trust—this may lead to discounts and access to better shipping options in the long run.
Work with One Freight Broker
By understanding how freight brokers charge and what affects their pricing, shippers can make more informed decisions while working with them. While you may not have complete control over the pricing, knowing how and why brokers charge the way they do helps you get the most value from their services.
If you are in need of reliable freight transportation services, you should consider working with One Freight Broker. Our approach allows our shipping partners to build direct, beneficial, and enduring connections with carriers. We assist businesses in managing shipments every month, linking them with dependable trucking allies to facilitate cost and time savings.
In fact, since our founding in 2013, we have significantly reduced shipping costs for our clients, amounting to tens of millions in savings, by reducing their dependence on intermediaries. This is all thanks to our unique and inclusive approach that enables us to pass on high-volume discounts to our clients.
One Freight Broker offers a wide service range, providing exactly what our clients need, whether it’s LTL, FTL, domestic, international, or expedited shipping. Additionally, our user-friendly online platform and TMS streamline the shipping process, from obtaining quotes to tracking shipments in real-time, offering transparency and efficiency.
When you partner with One Freight Broker, you gain access to a vast network of carriers, competitive rates, and a team of experts dedicated to optimizing your shipping process. With over two decades of experience, One Freight Broker brings unparalleled knowledge of the freight industry, staying ahead of trends and regulatory changes to serve you better.
Contact Us Today
Ready to simplify your shipping experience? Contact One Freight Broker to discover how our expertise can benefit your business, ensuring your cargo is in safe hands every step of the way.
For more information on how we can assist your business, visit our website at 1fr8.broker.
