Freight Broker vs. Freight Forwarder: Is There a Difference?
Many involved in the shipping industry use the terms freight broker and freight forwarder interchangeably. Granted, these two branches of freight transport perform similar functions.
However, the differences are also significant enough to deserve a closer look.
If you’re starting an e-commerce business and need to ship freight, you might not be sure whether you need a freight broker or freight forwarder. UK-based business owners should fully understand all types of services available to them and make an informed decision.
What Is a Freight Broker?
The term “broker” is used in many industries, and each represents the same concept. A broker is a person or a company that acts as an intermediary or a liaison and connects two parties in a business transaction.
A freight broker uses their skills and knowledge to connect a business with shipping needs with transportation carriers. These two parties need each other but can’t communicate effectively to achieve a specific goal.
Various conflicts may arise without a freight broker and might not get resolved. A skilled freight broker possesses all the appropriate licenses and has extensive education on freight laws which helps the process.
Unlike the two parties involved in the transaction, they can see the bigger picture, smooth out the issues, and reach a satisfactory solution for everyone. There are several important benefits of hiring a freight broker.
First and foremost, a top-of-the-line freight broker can handle the continuous changes in the industry and adapt effortlessly. Their job is also to get the best possible shipping fees and optimize the entire process.
Finally, they can help businesses handle claims for damaged and lost goods and ensure that all the correct legal steps are taken.
What Is a Freight Forwarder?
A freight forwarder is an intercessor between a business and a carrier – the same as a freight broker. But even though a freight forwarding company provides many of the same services as freight brokerage, they go beyond them too.
In essence, what freight forwarders do is a consolidation of freight services. The scope of freight forwarding is broader and often includes complex freight logistics. Essentially, a freight forwarder takes over the freight and uses their own Bill of Lading (BOL).
Your freight forwarder typically breaks up the goods and places them in storage before it’s prepared for distribution. They devise a thorough plan to find the optimal “forwarding” solution with their clients.
Then, same as the broker, they act as an intermediary between shippers and carriers and handle all the documentation.
The international shipping paperwork can often be too complicated and overwhelming and the leading reason to hire a freight forwarder. UK-based businesses can also expect services of proper packaging and labeling.
They let freight forwarding agents label the hazardous cargo properly and contain all port entry details, among other essential items.
The Main Differences Between Freight Broker and Freight Forwarder
There are two important distinctions between a freight broker and a freight forwarder when compared closely. Firstly, the brokers are never in possession of freight. That is incredibly important to remember.
Unlike freight forwarders, who take over the freight from businesses and store it in warehouses until it is moved, brokers don’t come in contact with it. Freight brokers don’t need to issue a Bill of Lading nor handle any preparation before shipping. The second vital difference has to do with liability.
In case of damage or loss of cargo, brokers are not liable in any way. On the other hand, freight forwarders have legal obligations towards making sure a shipment is not damaged or lost.
That is why having a comprehensive insurance policy is a significant part of their process. The broker can offer their services to handle any claims or issues but doesn’t carry legal responsibility.
Which Service Is Right for Your Business?
These services overlap but are not in competition against each other necessarily. Whether a business with shipping requirements will need a freight broker or a forwarder largely depends on the specificities of a single shipping project.
Often, brokers are a much more efficient option for local shipping that might not require any warehousing or extensive documentation.
However, freight services from a freight forwarder UK are the right choice if you plan a multi-stop international freight transport with complex storage needs. Whatever you decide, make sure to do thorough research and find a reliable freight transport service.