Not sure about the difference between a freight broker and a 3PL (third-party logistics) provider? You’re not alone—and the transportation industry doesn’t make it any easier by using the two terms interchangeably. Plus, there are a lot of similarities between the two. Both freight brokers and 3PLs act as intermediaries between shippers and carriers, arranging deals between the manufacturers who need shipping and the carriers who will transport the goods. They make sure both parties communicate efficiently, and that they both get their needs met.
What’s the Difference Between the Two?
Though both freight brokers and 3PLs work as intermediaries between shippers and carriers, brokers don’t take possession of the goods at any point. They typically focus on individual shipments, finding the best method of transportation for your products, and using their relationships with carriers to get the best deals. Since freight brokers typically do not own equipment or warehouses, they can be especially flexible in finding the specific best fit for your shipping needs.
3PL providers often own vehicles and storage facilities in order to fulfill their mission of being all-in-one logistics providers. They provide not just freight brokerage, but a range of supply chain services including assembly, packaging, warehousing, and distribution. 3PLs generally look at your company’s long-range transportation goals rather than focusing on a particular shipment.
In other words, a freight broker acts as a “middle man,” whereas a 3PL will offer additional services when tasked with moving freight. While a freight broker may be less costly for your business, a 3PL can assist you with additional tasks at the warehouse. For example, if your packing and delivering processes tend to be time-consuming or confusing, a 3PL can streamline the process for you.
Both freight broker and 3PLs are valuable logistics partners who can:
Offer expertise and Resources
These professionals stay up-to-date about new rules and regulations, the latest technology, and current best practices. They can also identify the most efficient routes, advise you on the best (and most cost-effective) mode of transport for your goods, and suggest freight companies that suit your particular needs.
Freight brokers and 3PLs necessarily have large networks of trusted transportation providers. Some of them (like us at Next Exit Logistics) work with carriers who specialize in unusual or difficult-to-haul freight. Having these networks at your disposal provides more than one benefit: You’ll get the right carrier for your needs, and your freight brokers or 3PLs can pass on any volume discounts they receive.
Provide additional resources.
Freight brokers and 3PLs necessarily have large networks of trusted transportation providers. Some of them (like us at Next Exit Logistics) work with carriers who specialize in unusual or difficult-to-haul freight. Having these networks at your disposal provides more than one benefit: You’ll get the right carrier for your needs, and your freight brokers or 3PLs can pass on any volume discounts they receive.
Deliver access to the newest technology
Since freight brokers and 3PLs specialize in efficient shipping transportation, they also invest in the latest software and technology—which means you don’t have to. 3PLs and freight brokers will already have the required technology to complete their job, and they can also equip your business with any upgrades you may find necessary.
Assist with documentation.
The paperwork involved in transportation can be overwhelming, especially when it comes to import and export. Freight brokers and 3PLs understand what’s needed and can make sure that all necessary forms and documents are completed. They can also manage carrier contracts and handle insurance issues. Rather than attempt to navigate complicated documents on your own, have your freight broker or 3PL address it so that you can focus on other tasks at hand.
Ensure compliance.
3PL providers and freight brokers must be up-to-date with the latest compliance regulations. They also ensure that any company they work with is compliant. You won’t have to worry about drivers who don’t meet DOT safety regulations or drive without cargo insurance.
Offer scalability and flexibility.
Transportation needs change, whether due to the economy, your personal business environment, or even the seasons. When using freight brokers or 3PLs, you can scale your shipping needs accordingly.
The actual process of moving freight can also become more flexible if you hire a 3PL. This allows your company to focus its attention on other tasks while the 3PL ensures other processes are completed smoothly.
Reduce costs.
As mentioned, freight brokers and 3PLs can help save your company money by offering scalability and flexibility, and by leveraging their increased buying power. Their expertise also helps to cut costs—they know the most economical way to ship goods from one place to another. That’s their business. Freight brokers tend to be cheaper to work with, as they only have a few specific tasks they perform, but even if you hire a 3PL provider, they’ll work diligently to ensure you’re not overspending.
Improve customer service.
These professionals make sure that shipping is efficient, dependable, and on time. Not only will this please your customers, but you’ll have more time to focus on their needs. You’ll have an easier time drawing in and retaining customers when you’re focused on their needs, not on cryptic documentation, shipping problems, and more.
Should I Hire a Freight Broker or 3PL?
When choosing either a freight broker or 3PL provider to help operate your business, there are several pros and cons to weigh out.
For instance, a freight broker may not offer as many services as a 3PL broker, but they tend to be more cost-effective. Freight brokers operate in a network with other brokers and are reliable in pricing. However, a freight broker won’t assist with additional tasks at your workplace, such as inventory management, order fulfillment, logistics service counseling, and more. Every business is different and has its own needs that must be met, but if you have a smaller budget and don’t need the additional features of a 3PL, you can go with a freight broker.
It’s also a better idea to hire a freight broker if you don’t need assistance as frequently as other businesses. You don’t want to spend more on a 3PL provider when you don’t utilize their abilities as frequently. Companies looking for a long-term partnership to enhance their business should take advantage of 3PLs, as their various qualities can greatly benefit you.
You can Feel Secure with Us
At Next Exit Logistics, we earn the trust of our clients with efficiency, transparency, and security. In addition, we understand how to handle freight services for unusual, oversize, or overweight shipments and are certified to arrange the shipment of hazardous materials. To learn more about our services, call Next Exit Logistics at 866-624-2661 or contact us via e-mail.
