What Is a Freight Broker?

Wide angle of American Semi Truck parked at the dock. Tucking and logistics with red big rig waiting to get loaded at company. Shipping and receiving in the transportation business on a sunny day.

Navigating freight transportation’s complex world demands keen insight into various modes, including intermodal logistics. A pivotal link in the logistics solutions chain, an intermodal broker connects shippers with multiple transportation options, facilitating efficient movement of goods across rail, truck, and ship modes. Intermodal freight, offering flexibility and often cost-effective solutions for long-distance transportation, is crucial in the supply chain.

While exact savings may vary, recent data from JOC.com highlights significant financial benefits. In the US, intermodal shippers saved almost 26% under annual contracts in the third quarter, a slight decrease from savings of more than 29% in Q3 2022. However, these figures still align with the long-term averages for intermodal savings when choosing rail over trucking. This trend of sustained savings is likely to continue through the year’s end, underlining intermodal transportation’s cost-effectiveness. Crucial in orchestrating these movements, intermodal brokers ensure cargo transitions smoothly from one mode to another, reaching its destination efficiently. Let’s take a closer look.

Benefits of Hiring an Intermodal Broker

Selecting an intermodal broker brings strategic advantages to freight transportation, combining cost savings with operational expertise. Of course, the benefits of hiring an intermodal broker go much further than simply eliminating your need to manage intermodal logistics, including:

Enhanced Cost Efficiency. Brokers leverage their expertise to secure competitive rates with carriers, translating into direct shipping cost reductions.
Optimized Routing Solutions. They utilize their knowledge to design efficient routes, reducing transit times and potential logistical hurdles.
Customized Shipping Options. Access to a diverse range of intermodal solutions is made possible through their extensive carrier networks tailored to specific logistic needs.
Regulatory Expertise. Brokers navigate complex transportation regulations and paperwork, ensuring compliance and speeding up customs processes.
Seamless Transition Management. They coordinate the intricacies of transitioning goods between different transport modes, ensuring fluidity and reducing potential delays.
Risk Mitigation. Offering various insurance options, brokers provide an added layer of security against loss or damage, enhancing peace of mind.
Market Insights. A broker’s in-depth understanding of market trends and changes helps make informed logistical decisions.
Sustainability Options. Brokers can suggest more environmentally friendly transportation options that align with sustainable business practices.
Scalability. As business needs grow and change, brokers can adjust logistics strategies accordingly, supporting scalability.
Improved Visibility and Control. Advanced tracking and management tools brokers offer improved shipment visibility and control over the logistics process.
Customer Service Excellence. Brokers often prioritize customer service, ensuring smooth communication and problem resolution.

Factors to Consider Before Hiring an Intermodal Broker

There are many different ways to approach the process of selecting and hiring an intermodal freight broker. Amazon Freight said it best, “Which type of broker you choose depends on your needs. So, before you go further down your selection path, assess your shipping situation, looking at factors such as: the volume and frequency of your shipments, the value of goods you are transporting, if you need live load/unload or a drop trailer, and if you have the same or new origins and destinations.” Rather than simply retelling Amazon’s tips, here’s a more comprehensive list of things to consider when hiring an intermodal broker:

Business Size and Shipping Complexity. Consider how your operations’ scale and logistics needs’ complexity might benefit from a broker’s expertise.
Internal Resources and Expertise. Assess if your team has the necessary skills and resources for efficient intermodal logistics management. A gap here might necessitate a broker’s services.
Cost-Benefit Analysis. Determine whether a broker’s financial savings outweigh their fees, ensuring a positive return on investment.
Broker’s Reputation and Track Record. Investigate the broker’s history in the industry. A broker known for reliability and success will likely be a valuable asset.
Alignment with Business Goals and Values. Ensure the broker’s business approach and ethical standards align with your company’s ethos, fostering a synergistic relationship.
Range of Services Offered. Look for brokers who offer additional services like drayage, which can enhance the efficiency of goods movement.
Technology and Tools. Evaluate the broker’s use of technology for logistics management, including tracking systems and communication tools.
Customer Service and Support. Assess the broker’s commitment to customer service, including their responsiveness and problem-solving capabilities.
Industry Knowledge and Network. A broker with a vast network and deep industry knowledge can provide more options and insights.
Customization and Flexibility. Consider the broker’s flexibility in tailoring services to fit your specific needs.
Legal Compliance and Insurance Options. Ensure the broker adheres to all relevant legal regulations and offers comprehensive insurance coverage.

Drawbacks and Risks of Hiring an Intermodal Broker

As with hiring any company to assist with freight management, intermodal brokerage relationships do carry some risk. After all, you’re trusting that your brokerage will have your back, charge rates reflective of actual market conditions, and have your best interests in mind. However, the internet is littered with stories of the opposite. Rather than going in blind, knowing what drawbacks or risks might exist when working with an intermodal brokerage is best. These include the following:

Additional costs.

Reduced control.

Miscommunication risks.

Dependency on broker expertise.

Potential inflexibility.

Limited direct carrier interaction.

Variable quality of service.

Overreliance on a single point of contact.

Complexity in resolving disputes.

Hidden fees or terms

Possible alignment issues with business strategies

Time spent on broker selection and management.

Limited market exposure.

Risk of broker’s business instability.

Tap the Value of Intermodal Broker Services With LOTTE Global Logistics

The real essence of avoiding risk and maximizing use of intermodal services is to thoroughly vet and choose a brokerage that will take your company to the next level. In other words, get to know your brokerage, and learn what makes them tick. If they align with your core values, the right partnerships will become clear. Still, intermodal logistics management will always be complex, and that’s particularly true as more companies look to tap additional intermodal options to move containers across whole continents and avoid potential sources of disruption, including issues with traversing the Suez or Panama Canal in the coming years. Speak with an intermodal logistics expert to improve your use of intermodal logistics at LOTTE Global Logistics now.