Traditional freight brokers act as a middleman between shippers and carriers by taking on the responsibility of booking shipments, optimizing routes, paying carrier invoices, and various other transportation services. This support helps a company free up its internal resources for core competencies like production, sales, and marketing.
However, the standalone freight brokerage business model is built to support organizations with in-house logistics and supply chain capabilities. As companies continue the trend of outsourcing logistics to manage supply chain volatility, they often require more capabilities than a traditional freight broker can provide. In these cases, businesses can use a third-party logistics (3PL) firm that offers freight brokerage as part of its service portfolio.
Why You Should Choose 3PL Freight Brokerage
Using a 3PL for freight brokerage services has numerous advantages when stacked against the offerings of traditional freight brokers. Here are some reasons to consider using a 3PL for your freight brokerage needs:
- Diverse service offerings. The primary difference between standalone freight brokerage firms and 3PLs is the range of services they can provide to a business. Freight brokers exclusively facilitate freight movement by acting as a liaison between companies and carriers. However, 3PL services are much broader, often encompassing inventory management, order fulfillment, distribution, supply chain optimization, reverse logistics, and many other capabilities on top of the movement of the freight itself.
- Scalability and flexibility. The ability to scale and pivot is essential for any growing business. 3PLs can typically scale their services based on your evolving business needs. Whether you’re experiencing seasonal fluctuations or rapid growth, a 3PL can adjust its services to accommodate changes in demand, offering you greater flexibility than working with a traditional freight broker.
- Industry expertise. Compared to traditional freight brokers, 3PLs bring more knowledge and experience to the table on a much broader range of logistics topics. This expertise can be especially valuable for organizations that don’t have experienced supply chain personnel in-house to lean on for advice. It also helps 3PLs to tailor holistic solutions for each customer that address the unique challenges of a particular industry vertical or market niche.
- Customer satisfaction. A reputable 3PL will be an extension of its customer’s business, whereas a standalone freight broker typically has a more transactional relationship. The 3PL’s greater level of involvement in a client’s logistics operations means that it has a vested interest in providing good service to that client’s customer base.
- Continuous improvement. By their nature, logistics providers need to stay on top of the latest trends, technologies, and innovations and adapt their service offerings to match. By working with a forward-thinking 3PL, a business can expect to benefit from ongoing process enhancements and the implementation of best practices that can drive efficiency and competitiveness across supply chain operations.
- Cost control. Using a 3PL often results in more cost-effective freight movement because a 3PL can leverage the total shipment volume of all its customers to secure better rates with carriers. Shippers also benefit from a 3PL’s technology stack, which means they can turn the high upfront costs of technology investments into a fixed cost via their 3PL contract.
For organizations with an in-house supply chain department, a traditional freight broker may help ease the burden associated with booking, tracking, and billing for freight shipments. However, companies that outsource their supply chain and logistics operations will benefit more from using their 3PL’s freight brokerage capabilities rather than bringing an additional standalone freight broker into the mix.
For more information about 3PL freight brokerage services and how they fit into your outsourced logistics model, please don’t hesitate to contact us.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.