An outline of the structure of freight brokerages and the cash flow within a brokerage.

1. 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 at
LogisticsAcademy.org