An outline of the structure of freight brokerages and the cash flow within a brokerage. Learn the difference between Freight Brokers and Freight Agents. Begin to understand why brokers are so necessary to our shipping industry. For freight broker training visit logisticsacademy.org, become an excellent logistics coordinator.

1. Cash Flow and Structure in Freight
Brokerages
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2. Presentation Overview
In this presentation we are going to talk about freight brokerages. The
structure, the cash flow & how that whole ordeal works as well as the
importance of brokerages and why we they’re used so frequently in the
transportation industry.

4. Referring to the diagram in the previous slide
Now the structure of a freight brokerage looks something like this, I’ll walk
you through the diagram if it doesn’t make sense right off the bat. So the
brokerage is an entity of its own (the black line) and the brokerage is made
up of the broker who holds the operating authority, basically the broker is
the individual who legally owns the brokerage and they have the bond. Now
within the brokerage there are also freight agents and these freight agents
come on and they get to work under the brokerages authority so they
represent the brokerage as a whole. Agents in one company all work under
the same authority/bond together, and ideally they work together as team
to connect shippers with carriers. Now it is important to note that shippers
and carriers can have a direct line of communication (the dotted line) but if a
shipper goes to a brokerage, a broker has a ton of carriers that they work
with so for the shipper it is like going to one person and having a thousand
carriers at your fingertips.

5. Cash Flow
So obviously brokers make a little bit of money, and the cash just goes
from the shipper to the carrier if they are working together. But if a
broker is doing a load he or she would call the shipper & give them a
quote for a lane that is for instance worth $4000, and he would say
“yea I can do that for $4200” and then they would go off and find a
carrier who can do it for $3800 and they make the $400 in between.
Now the brokers are extending a line of credit to the shippers and they
by law have to pay carriers.

7. Why use brokers?
So I guess if shippers can go directly to carriers why do brokerages even
exist? Well it is an interesting little paradox, considering brokers have a
hand in almost 40% of the freight moved in the US. And as a shipper, a
good broker really does provide you with a lot of peace of mind, they
have a lot of the resources that are needed to make things run
smoothly.

8. Brokers are paid for their expertise
They are professionals in what they do, they literally just specialize in
finding available people & equipment to meet your carrying capacity
needs and they know how much lanes are worth and they have
experience working all across the country consistently.

9. Brokers know the rates
As a shipper you may only be working out of one area in the country
and so you might be a little bit more blind-sided with price fluctuations
because you are not aware of what is happening in the market as a
whole while a broker should be. A really cool aspect of freight
brokerages is that every truck is available to a broker, if you are an asset
based carrier only your trucks are available to you – if you are a broker
all of those asset based carriers are available to you.

10. Learn the Rates
We teach you how to determine what lanes are worth in our Freight
Broker and Freight Agent Training Courses that you can find at
LogisticsAcademy.org