Freight Agency

Freight Agency vs. Freight Brokerage

Both freight agencies and freight brokerages handle similar work. In fact, they can work together as one entity. Freight brokers often hire several agents to act as the middlemen for their customers while handling the more challenging aspects of running a business. However, some companies perform the same functions as freight brokers but aren’t considered one due to not having the credentials, calling themselves freight agencies instead.

It sounds confusing, but the main differences between a freight agency and a freight brokerage are licensing and liability of freight.

Licensing

Freight agencies do not have to do any licensing to operate their business. They are salespeople working exclusively with their customers to find carriers and get a rate on shipments. In other words, freight agents handle the everyday operations of a brokerage, selling their services and earning sales through deals with their network of carriers.

Freight brokers, however, have more responsibilities to handle. Prospective freight brokers wishing to operate a brokerage need a freight broker license from the Federal Motor Carrier Safety Administration (FMCSA). This involves getting a USDOT number, which the FMCSA issues to certain commercial transportation-related businesses, and then registering on the FMCSA’s website through the Unified Registration System (URS). Brokers also need to have the following prepared:

• Proof of Insurance Coverage through a Surety Bond or Trust Fund Agreement of $75,000
• a Designation of Process Agent form
• A non-refundable Application processing fee of $300

After that, brokers must wait 4-6 weeks for the application to process. Brokers must also purchase shipping management software, cargo/liability insurance, and office space, which are all expensive. That’s why brokers start as freight agents before making their way to licensing as a broker.

Liability

Freight agencies and brokerages do not own or operate transportation, nor do they deliver any freight their customers are shipping. They are the intermediaries, the liaison between the customer, consignee, and carriers that arrange the shipment, which means agents and brokers never touch the freight. Therefore, they are not responsible for any damages, losses, or thefts during delivery, with liability usually falling to the carrier delivering the shipment.

However, freight brokers do have the authority to deny any customers they feel are uncreditworthy. Customers don’t always pay their brokers and carriers immediately after a shipment; instead, they may use lines of credit or hold off on paying until their final billing goes through. If customers don’t pay their brokers and carriers on time, then both will have trouble keeping up with their company’s expenses and bills, jeopardizing their company’s future.

Freight agents don’t have to worry too much about repayment, as they usually act under a broker who handles the business side of the brokerage. If a customer does hold the company liable for any incidents, it will fall on the broker, not the agent or agency working with them. However, some individual agencies have similar responsibilities as brokerages and do have to worry about repayment and liability. This actually makes them more trustworthy than agents representing a broker, as they are more in control over the booking process and can check a customer’s credit history.

Is Freightcenter a Freight Agency?

A freight agency has relationships with one or more freight carriers, allowing them special rates and services. The agency then represents a best-fit match to any potential customer shipping freight. Agencies have become important in the freight industry since many companies do not ship enough to justify logistics departments. In fact, for many small to midsize businesses (SMBs), freight agencies act as logistics departments, thus helping you grow.

That said, FreightCenter can be considered a freight agency and a third-party logistics (3PL) provider. That means we offer transportation and shipping services and additional services like expedited shipping, blind shipping, white glove services, and more. We also have access to other third-party services like warehousing, packaging, and freight insurance.

Using a freight agency combined with a 3PL provider like FreightCenter helps move a freight shipment efficiently. We help you save money on your shipment from origin to destination. We handle all logistics involved in the transaction, including billing, scheduling, bills for lading, and more. When your business succeeds, so do we.

Find out more by calling FreightCenter at (800) 716-7608, or try our free online quote tool to get started today!