Freight carriers are the individuals or companies that transport goods to their destination on behalf of a shipper. Shippers are the companies that have or make the goods needing to be shipped. The type of freight carrier you use depends on what they ship. For example, cargo and sometimes standard airlines carry air freight. Ocean carriers transport freight by sea, which covers most international shipments. Trucks and sometimes trains carry ground cargo. Even within a given country, both air and ground freight carriers ship from one place to another.
Some freight can ship in intermodal containers or vehicles, including non-perishable manufactured goods, perishable goods packed in insulated containers, and frozen or refrigerated items packed in temperature-controlled reefer containers. This kind of freight can go from one mode of transport to another without being unloaded or handled until it reaches its destination. Freight brokers often facilitate these cargo types so there’s one point of contact handling shipment logistics from end to end.
Freight carrier vs. freight broker
Freight carriers usually own their vehicles. Smaller freight carriers typically have 1-5 vehicles. Larger carriers own entire fleets made up of ships, planes, trucks, or a combination. A freight broker does not need to own any freight vehicles. In fact, they don’t handle the freight at all. Brokers serve as the communication connection between the freight carrier and the shipper.
Brokers usually do business with multiple carriers. They know where their routes, their freight terminal locations, and the current rates in different areas. The broker helps the shipper move freight from one location to another, sometimes using more than one carrier or mode of freight transport.
The broker serves as the contact for the shipper and the freight carrier(s) who physically transport the goods. Carriers and shippers don’t interact directly. Instead, the broker handles the communication between the two.
What does a freight carrier do?
The freight carrier transports goods from one place to another. But they have to do this safely, on time, and in compliance with local, regional, and federal regulations.
With international freight, customs and tariffs come into play. Typically, a freight broker helps both the shipper and the carrier ensure that all the paperwork they need for those transactions is in order.
The freight carrier is responsible for their own licensing and insurance, regulation compliance within their transportation mode, and ensuring that the freight employees are trained and appropriately certified. A freight broker often requires all of this information upfront before they will work with a carrier.
Why is it important to choose the right freight carrier?
The right freight carrier makes all the difference to shippers, and several factors go into choosing the right carrier:
- Reliability: The carrier must deliver goods on time and without damage.
- Efficiency: The right carrier will operate efficiently and won’t waste time or money, especially yours.
- Affordability: For a shipper to be profitable, freight carriers must offer competitive rates that are also cost-effective.
Think of it this way: If a shipment is late, the general public rarely blames the freight carrier. Instead, they will place the blame on the shipper. Extra shipping costs, damage, and other problems hurt both the shipper and the carrier’s reputation. The wrong carrier can have a huge negative impact on a shipper’s business.
On the flip side, the right carrier helps ensure both the broker and the shipper run profitable businesses and maintain a great reputation with their customers. Working with the right freight carrier is arguably one of the most critical decisions a company can make.
For freight brokers, doing an excellent job of matching shippers and carriers is vital for your reputation as a broker and building trust with both clients.
What are the types of truck freight options?
Trucks are one of the most common shipping types. When it comes to truck freight, there are multiple options. Brokers and shippers need to understand what all these terms mean when choosing a freight carrier.
Full Truckload (TL)
A full truckload is exactly what it sounds like: a load that fills a truck to capacity and is the only load that truck will carry from end to end. With no further deliveries or pick-ups along the way, freight won’t be unloaded or handled more than once, reducing the risk of damage. The other big advantage? Speed. Driving directly to one destination makes delays less likely and increases the likelihood that freight will arrive quickly.
Less Than Truckload (LTL)
These are loads that take up less than the full capacity of the truck. To make this efficient, the freight carrier will add shipments from other companies headed in the same direction or to the same destination. A truck headed to a retail store might contain freight from several different shippers in one load. While more complex than full truckload (FT) shipping, it can be an efficient way to reduce shipping costs.
Partial Truckload (PTL)
A partial truckload hits the middle ground between a truckload and less than a truckload. Generally, freight must meet three requirements to be considered a partial truckload (PTL):
- It must be higher in volume than an LTL shipment. The exact volume may vary slightly by carrier.
- A partial truckload must have some leeway in transit time. In other words, it can’t be a priority, time-sensitive shipment.
- It cannot be a vulnerable or sensitive shipment, like some medical supplies or frozen and perishable items.
Usually, a truck will carry several partial loads, but it will deliver them in a certain order. Because freight is delivered in a specific sequence, a PTL goes through less handling than an LTL load.
The type of truck a shipper uses depends on what the freight carrier can haul. This is another reason why it’s important to match the right carrier to the right shipper. You can do that more easily by using a load board designed for brokers.
How are freight carrier rates determined?
Freight carriers use several factors to determine rates, and it’s important that both shippers and brokers understand them.
The further a shipment has to travel, the more fuel and time a carrier uses, which drives up the shipping cost. But where it’s going matters, too. Shipping in certain regions is more expensive than in others. If freight crosses several regions, the cost will be higher.
Freight size, weight, and density
Size is simply the dimensions of the freight and how much room it takes up. The larger the shipment, the more expensive. The same is true of weight: The heavier the load, the more it will cost to ship. Less obvious is density, which relates to both size and weight. A heavier load that takes up less room will be less expensive to ship than freight that weighs the same but takes up more space.
All freight falls into certain classifications. Every type of product or commodity will fall within a specific class that helps carriers standardize freight rates. The class is made up of product type, weight, and size. Calculating the right class can be a challenge because of all of the different types. Freight brokers often help shippers with this process.
Supply and demand
Freight rates can also vary by season and supply and demand. If there’s a lot of freight to ship but fewer trucks available, demand is high, supply is low, and prices rise. Take the example of the Ever Given ship, which famously became wedged in the Suez Canal, blocking passage through one of the biggest trade routes in the world. The traffic jam left 400 other cargo ships stranded, causing huge delays. Those delays created trucking freight rate spikes as carriers and brokers scrambled to deliver their now urgent and overdue cargo.
Other events can influence supply and demand, from natural disasters to an over-abundant produce season, and overwhelm the usual shipping capacity.
The cost of fuel goes beyond the price of diesel at the pump. Different regions might require taxes and other surcharges that increase fuel expenses. Costs vary from region to region, state to state, and even within any given shipping lane. Of course, as fuel prices fall, so do shipping costs. When fuel prices rise, shipping costs follow.
Finally, accessorial charges also affect rates. Things like lift gates, delivering to residential or non-commercial areas, or forklift unloading vs. unloading at a loading dock come with extra fees. Think of these charges as anything that delays the driver or requires them to use special equipment. Deliveries that require an appointment or have an extremely tight delivery window might also charge extra.
It’s a lot to navigate, but knowing what to expect when it comes to freight rates helps a great deal when you’re choosing the right carrier for the right shipper.
How do freight shippers and freight carriers connect?
Shippers often hire brokers and other partners to work directly with carriers because it saves them time. Here’s how it works:
- Freight broker: As a freight broker, you connect the right carrier with the right shipper. You know what the shipper needs to move, and which shippers typically handle that kind of freight well.
- Freight forwarder: A freight forwarder typically takes possession of the freight, sometimes warehousing and packaging it. Then they make sure it gets from place to place efficiently and safely. Freight forwarders also work closely with carriers and will often combine smaller shipments.
- Third-party logistics: A third-party logistics, or 3PL company, handles everything from shipping to storage, distribution, and final delivery to customers all in one place. Essentially, they handle the process from end to end. Sometimes they have their own carrier arm and contract other carriers as needed.
These are the most common ways shippers and carriers get connected. How they connect largely depends on the size of the shipper, the volume of goods they ship, and how often.
How do you choose the right freight carrier?
Here are several tips for choosing the right freight carrier:
- Cost, quality, and time: Does the cost still allow you, the shipper, and the carrier to make a profit?
- Services: Does this carrier handle the kind of freight you’re shipping, and how responsive are they?
- Reliability: Does this carrier deliver shipments consistently on time and without damage?
- Capacity: Can the carrier handle the amount of freight you need to ship on time?
- Safety: Does the carrier have a good safety record when it comes to their drivers and equipment?
- Sustainability: Does the carrier operate efficiently to minimize its environmental impact?
- Stability: How long has the carrier been in business? How likely are they to stay in business?
Shippers often want to know the answers to these questions. As a broker, your reputation depends on having those answers and contracting with carriers who deliver a positive experience.
How do you set the best carrier rates?
When you take all of these factors into account, setting the best rates is actually pretty straightforward.
- Step 1: Use the tools at Truckstop.com, like rate analysis, to benchmark rates in real-time.
- Step 2: Use a Truckstop.com Load Board designed for freight brokers. Post unlimited loads and compare rates by equipment type, rate trends, and rate levels for more negotiating power.
As a freight broker, much of what you do will depend on your understanding of freight carriers, the industry terms, and using the best tools to set rates that work for both shippers and carriers. Doing those things correctly will help you be a successful and trusted broker who makes the right connections to move freight reliably.
The resources at Truckstop.com can help you build a better business. Schedule your demo today.