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Within the transportation marketplace, brokers provide a myriad of services. Brokers fill the gaps between shippers, owner-operators, and draymen. Brokers also assist shippers and trucking companies with resource and technology-constraints. In addition, brokers help cover capacity shortfalls and often provide ancillary services like transportation management outsourcing.

Like everyone else, brokers want to make money. They earn their income by making connections and knowing the market. Brokers live and die by information. They use arbitrage and leverage between available truckload capacity and shipper demand. When there are plenty of trucks competing, brokers keep their fees to a minimum and work to pair available capacity with shipper needs. When capacity is scarce, rates go up; it’s more difficult to secure capacity and to increase margins over time. Sometimes scarcity results in significant markups over the actual cost of the truck. It doesn’t take long for brokers to cover enough shipments to make a profit that offsets any losses. Interestingly, capacity tightening is often regular, seasonal, even predictable — barring catastrophic events like major storms and geopolitical disruptions. Yet, shippers always seem willing to pay the premium when capacity tightens. Thanks to regularly occurring demand surges, brokers can usually be assured opportunities to turn a profit.

In every shipper’s roster of available carriers and capacity, brokers have their place. This is especially true when shippers don’t have the time or means to find asset-based carriers. They also frequently help with unusual, one-off service requests. To ensure the alignment of costs and value, shippers must think strategically about the utilization of brokers. At a minimum, a shipper should have a relationship with at least one broker, contracts in place, and established rates. Shippers also need to clarify liability, payment terms, accessorials, and required minimum service standards. These terms are required in advance to protect shippers from unforeseen circumstances potentially impacting shipments.

Shippers’ agents act as extensions of your staff. Like your employees, these agents are measured by a combination of service, cost, and quality of work. However, the shippers’ agent model minimizes your fixed costs and helps you avoid making difficult staffing decisions in tough economic times. Inherent to the model is transparency regarding levels of service. Clients also have the flexibility to change service levels without making changes to technological infrastructure.