Working with the right freight broker can save your company time and money, making it easier to access capacity when you need it. But not all freight brokers are created equal, and shippers that have never worked with one before and don’t know what to look for can sometimes find themselves overpaying for poor service.
In the most egregious cases, shippers have even suffered reputational damage after working with freight brokers that lack professionalism or are not dependable. After all, if your client doesn’t receive their order on time or in the condition they expect, who are they going to blame? Not the freight broker or the brokered carrier—it’ll be your company in the line of fire.
So, how can you evaluate a freight broker before you work with them to ensure they’re reliable and on the level? Use this handy five-point checklist when comparing freight brokers to find the one that best meets your needs.
1. They’re fully licensed, bonded, and insured
In the U.S., freight brokers must be licensed by the Federal Motor Carrier Safety Administration (FMCSA). To confirm the legitimacy of a broker, always request their license and registration details and run a quick check on the FMCSA’s website. If the broker refuses or is unable to provide this information, this is a red flag—and a good time to start looking elsewhere.
Freight brokers also need to have an appropriate bond in place to operate legally. While they may have a combination of bonds and insurance, at the bare minimum, they need a bond of at least $75,000 to receive their license. This bond is designed to protect shippers against brokers behaving badly, so do not trust a freight broker that isn’t bonded.
In terms of insurance, coverage will vary from broker to broker, but it’s worth checking whether they have a valid contingent cargo or shipper’s interest policy, with the latter being preferable.
2. They’re financially stable
The last thing that any shipper wants is for their freight broker to suddenly and unexpectedly go out of business. Not only can this leave shippers scrambling to find capacity on their own, but it can also result in carriers trying to claim payment from the shipper for the load—whether or not the shipper already paid the broker for it. This is within a carrier’s rights, and it can lead to shipper’s paying double what they expected to pay—along with any legal fees they accrue.
Running a credit check on a freight broker before signing a contract is generally advisable. A small upfront cost is better than a costly surprise down the line.
3. They’re an experienced freight brokerage
While years in service isn’t always a reliable indicator of quality (the oldest freight brokers aren’t necessarily the best, and newcomers can often deliver excellent service), experience can go a long way. Freight brokers that have been around the block a few times can be well-equipped to handle any hurdles that might arise—after all, they’ve probably seen them a dozen times before. And since they’ve been around for a while, they may have built stronger relationships with top carriers.
It’s also worth considering whether a freight broker has successfully navigated periods of economic recession that may have put their competitors out of business, as this can provide an insight into their long-term stability.
4. They vet their carriers carefully
The best freight brokers are diligent about vetting their carriers before contracting with them, ensuring they don’t fall short of shippers’ expectations. They also monitor them on an ongoing basis to ensure quality doesn’t slip and that they continue to meet necessary requirements, including operating authority and insurance coverage.
Ask any prospective freight brokers what process they go through to vet their carriers. How many active, approved carriers do they have? How often do they re-evaluate them? This can help you find a broker that is careful about who they work with, rather than posting to every load board.
5. They offer the modes you need
Once you’ve found a brokerage you’re comfortable with and that’s proven dependable, you probably don’t want to go through the evaluation process all over again should your needs change. That’s why, as a general rule of thumb, it’s best to work with a freight broker that offers multiple modes of freight transportation, even if you don’t use all of them right now. This allows you to expand your business into new territory over time, safe in the knowledge that your broker can support you.
An option to suit any need
While there may be other criteria that matter to your business, this checklist should provide a good foundation for you to evaluate freight brokers and find the right one for your company.
At CTSI-Global, we offer carrier management as a standalone service or as part of our customizable ‘logistics as a service’ bundles. We’ve been in the logistics game for more than 60 years, and we’ve built strong relationships with carriers all around the world. Today, our network is 20,000 carriers strong, each thoroughly vetted—and we’re proud to help companies find the most reliable and cost-effective transportation for every shipment.
Find a partner that checks every box. Contact CTSI-Global today.