What is a Freight Broker?

One of the primary differences between freight forwarders and brokers is that brokers don’t take possession of the freight. A broker functions as a middleman for connecting shippers and carriers and generally doesn’t issue expenses of the bill of lading (BOL) with their name as the carrier. Brokers generally can’t be kept responsible for any claims. They need to register with the Federal Electric motor Carrier Basic safety Administration (FMCSA) and bring insurance to protect their customers from loss.

 

What is a Freight Forwarder?

Freight forwarders are companies that specialize in arranging storage and shipping of merchandise on behalf of their customers. They physically take charge of merchandise and usually ship under their own bills of lading and provide preparation of shipping and export documents. Consolidation, transportation, and insurance of the freight is the responsibility of the forwarder. They also book cargo space and negotiate rates for transport.

 

Freight companies will load up shipment via shipping requirement set to meet your needs.

Freight companies will load up shipment via shipping requirement set to meet your needs.

 

They are also responsible for the loss of, or damage to, the shipment. Freight Forwarders usually ship freight under their own BOLs, provide preparation of shipping and export documents and store freight at their warehouses.


For a more in-depth understanding, check out our article for the definition of freight forwarder.


What Can Freight Forwarders Offer?

When it comes to services of freight forwarders and brokers, freight forwarding services can vary between different companies. The main function of freight forwarders is to act as an intermediary between the client who is hiring them and various transportation services that are involved in getting the product overseas to the customer, including carriers, customs, and handlers.

Depending on the final destination and the nature of the items shipped, there may be many transportation companies involved in the movement of the items from the supplier to the customer.

The freight forwarder may have to deal with many export and import issues that could be involved in the movement of the goods.

Freight forwarders will also provide the client insurance services to make sure that if the items do arrive damaged, they will be reimbursed and not liable for the damages.

Labeling

Labeling is important in the world of freight shipping, and both freight forwarders and brokers will need to ensure that all packages are labeled correctly. However, freight forwarders go the extra step and will assist their customers in providing the correct labeling they require for their items.

The correct label will be required to show:

  • The precise items in the shipping container
  • Any hazardous items
  • Country of origin
  • Correct weight in pounds and kilograms
  • Port of entry details
  • Any details that are required in the language of the destination country

Packaging

A freight forwarder should provide assistance to the customer on how to package their products for export. Packaging that would normally be used for shipping within the US may not be sufficient for extended transportation where the items may be either loaded in a container or loaded and unloaded several times along the route.

 

Freight forwarders packaging boxes for shipment

Packaging and labeling is an important step for freight forwarders to ensure transportation success.

The item may be allowed to be stored in environments where extreme temperatures or weather may be experienced. If an item is being shipped via air, then the freight forwarder may suggest packaging that is lighter than normal to keep shipping costs to a minimum.


Related Article: 10 Common Questions Asked of Freight Companies


Documentation

Documentation is important for the shipment of an item overseas. There are a number of documents that the freight forwarder needs to prepare for the shipment that requires specialist knowledge.

Bill of Lading (BOL) – The BOL is a contract between the owner of the goods and the carrier. There are two types of BOL; firstly a straight bill of lading which is non-negotiable and secondly, a negotiable or shipper’s order bill of lading. The negotiable BOL can be bought, sold, or traded while the goods are in transit. The customer will usually need an original as proof of ownership to take possession of the goods.

Commercial Invoice – The invoice is the bill for the goods from the seller to the buyer. It can be used to determine the true value of goods when assessing the amount of customs duty.

Certificate of Origin (COO) – The COO is a signed statement which identifies the origin of the export item.

Inspection Certificate – This document may be required by the customer to certify the goods have been inspected or tested and the quality of the goods is acceptable.

 

Freight forwarding importance of documents

Documentation is crucial for freight forwarders to ensure all shipments and commodities are accounted for and handle successfully by the carriers.

 

Export License – This license is a government document that authorizes the export of goods in specific quantities to a specific destination.

Shipper’s Export Declaration (SED) – The SED is used for export statistics. It is prepared via the US Postal Service (USPS) when the shipment is greater than $500.

Export Packing List – This is a detailed packing list that itemizes each item in the shipment, what type of packaging container was used, gross weight, and package measurements.


When looking for freight forwarders or brokers to help service your next shipment, it is important to know exactly what your shipment needs. Whether you need additional supply chain and logistics services or not, the first step is to lay out the game-plan. For more information on how freight forwarders can help you, just click on the link. If you need freight forwarding services, feel free to contact one of our locations near you today!

INDUSTRIES WE SERVE

Ready to ship?

Get started with Mach 1 Global Services today!