If you haven’t worked in the logistics industry for very long, the terms and jargon that you hear may be confusing. For example, you may hear Third Party Logistics (3PL) and Freight Brokerage and think they are the same thing. Although, there is a lot of similarities these two terms have very distinct differences.
What is a Freight Brokerage?
Firstly, a freight brokerage acts as a middle man between the shipper and the motor carrier. Both of these parties have their own schedules and requirements. Therefore, a freight brokerage will coordinate with both the shipper and the motor carrier to arrange transportation of the freight.
Additionally, freight brokers are usually not asset-based, meaning they do not own any physical equipment. This gives freight brokers a lot more flexibility than you may think. They are able to find whatever equipment that is needed to ship the freight. Freight brokerages work with many different carriers and partners, which allows them to search for reliable drivers on your behalf. Freight brokers are very convenient because they handle most of the communication and paperwork that is necessary for booking freight.
What is a 3PL?
A 3PL, or Third Party Logistics company, provides a variety of outsourced transportation and logistics services. Therefore, 3PLs provide a wide range of transportation services such as shipment tracking, dispatch, warehousing, and supply chain management.
3PL companies also maintain thousands of relationships with carriers, suppliers, vendors, brokers, and more. Therefore they have a large network of connections that allows them to perform complex operations. This allows them to perform any activity related to logistics, not just shipping.
In Conclusion
3PL companies and freight brokerages both serve as the connection between shippers and motor carriers, but they have different roles. A 3PL is able to provide an extensive range of services and try to build trusted, long-term relationships with customers rather than managing one or two shipments. 3PLs are also able to manage any volume of freight shipments and many other logistics functions.
To make it simple, 3PL companies are freight brokerages and more. the duties of a freight broker full under the umbrella of a 3PL.
Determining whether you need to work with a freight brokerage or 3PL company is based on the volume of your freight. If a company only occasionally needs to send a few shipments, then a freight broker may be the most cost-effective solution. Companies that require complex shipments would be better off going with a 3PL company that will coordinate partnerships, equipment, freight rates, and services.
Whether a company is using a 3PL or freight brokerage, it is important to be aware of what services you need and how each company can fulfill your needs. Knowing the difference between a 3PL and a freight broker is important when determining how to transport your freight.
If you are in the market for a new transportation provider then Becker Logistics may be the company for you. We have been in the industry for over 24 years and have developed the processes to ensure shipping stays simple. To reach out you can contact us here or request a quote and start shipping today.
