Are you constantly researching the best logistics solution for your business, and come across terms like freight broker services and 3PL, and their meaning is very confusing? We are here to help you understand their differences.
Freight brokers and 3PL are often used interchangeably, but they're not the same thing, and choosing the wrong one can affect your business in a negative manner.
Freight broker services are the ones that connect business owners to reliable trucks, while a 3PL is responsible for handling the running of your entire supply chain. Understanding the difference between these two roles is very important to avoid choosing the wrong one.
A lot of business owners often think these two options are the same but are only different because of the price. That assumption can cause problems for your business over time. For example, if your business needs are warehousing or inventory management, you need to partner with a third-party logistics provider. On the other hand, you need a freight broker if all you need is a company that can help you get truck carriers that can be trusted.
Continue reading as Unify Logistics explains in detail the meaning of both services, what they represent, where each one is needed in your business, and what to ask before choosing the one to partner with. By the end of this blog, business owners will be able to understand what will work for their business, and which one will be the best option as they grow.
What Does a Freight Broker Do?
A freight broker is the person who stands as a middleman between a business owner and the trucking companies that move freight from one place to another. They are experts with many years of experience and licensed.
They are also regulated by the FMCSA, and all they do is help look for trucks that are available for your business freight capacity and negotiate the best price for you. Brokers do not touch your freight, store it, manage it, or be responsible for monitoring it throughout the shipping process. Once they handle the carrier booking and the freight is delivered successfully, their job is done.
Freight brokers are really exceptional in situations where all you need is a truck that can help ship your goods and deliver on time. A broker often has a network of reliable capacity that can meet your business logistics needs. They're also helpful when you need a specific freight mode that you do not use often for shipping your cargo.
However, there are limits to the services a broker can provide for your business. They can't store or manage your inventory, handle cross-docking or fulfillment operations, and they do not help in managing every detail of your shipment.
What Does a Third-party Logistics Provider Do?
A third-party logistics provider has a bigger responsibility when it comes to freight shipping. They manage how your cargo is transported from truckload, LTL, intermodal, to drainage, and also handle the warehouse where your freight is kept, inventory, inbound and outbound freight.
The duty is to provide complete visibility and management of the entire process of your shipments. 3PL is a part of your business logistics operation that ensures everything is in place and works perfectly.
Logistics freight solutions that are designed to work with a 3PL model are a better option in terms of performance when compared to a broker-only approach for growing businesses. With 3PL, business owners get to enjoy end-to-end freight management, warehousing and distribution, stronger carrier relationships, and real-time reporting that tells you every stage of your freight shipment.
The best third-party logistic freight solutions often act as an extension of your own logistics team and are strictly accountable for all the services they handle just like what you will expect if you hire them as part of your internal logistic team.
What is the Difference Between Freight Broker and 3PL
| Factor | Freight Broker | 3PL |
| Scope of Service | Transportation only | Transportation, warehousing, fulfillment, and management |
| Accountability | Arranges the shipment | Executes and owns the results |
| Relationship Type | Transactional, per shipment | Long-term partnership with shared goals |
The two services use different and distinct technologies. Brokers typically work off load boards and basic tools. 3PLs, on the other hand, offer shipper-facing portals, direct integration with your warehouse systems, and dashboards that show what's happening in real time.
Their pricing structures are also very different. While brokers build their margin according to the rate of every shipment, 3PLs have packages for their services. They are also more transparent and use activity-based pricing, which makes it easy for business owners to budget their logistics costs.
When a Freight Broker Is the Right Call
Brokers absolutely serve a real purpose, and there's nothing wrong with using one when your business needs one. If you have your warehouse space, ship in small volumes, but need help moving freight sometimes, a broker handles it for you by providing the right carriers.
They are also helpful when the market is not stable, where rates are not stable daily, and flexibility is very important. Freight brokers help you choose from a network of carriers and can find the right ones for your business faster than a 3PL when they need a one-off load shipment.
When Is the Right Time to Call a 3PL?
If you're shipping regularly, handling inventory across multiple locations, using different types of freight modes, and your business is growing faster than your internal team can handle, you need a 3PL to handle this type of complexity in your logistics process. They are designed for businesses that want an expert with experience who can manage their entire logistics. They are very different from reaching out to a brokerage service when you occasionally need a carrier. This is because it is a complete management process where business owners see real improvements within the first year, both in the cost of the freight and in the consistency of their logistics process.
Questions to Ask Before You Choose Which One is Right for Your Business
Before choosing the service that will work best for your business needs, do thorough research and ask yourself a few questions about your business.
| Questions | The Right Choice |
| Do I need warehousing, or just transportation? | 3PL if you need warehousing |
| Am I shipping enough volume for a managed relationship? | 3PL, especially at higher monthly shipment counts |
| Am I shipping enough volume for a managed relationship? | 3PL, especially at higher monthly shipment counts |
| Do I want one point of contact for every logistics issue? | If yes, choose 3PL |
| Do I just need to move a single load without ongoing commitment? | If yes, choose a freight broker |
If your answers show you need an expert to handle your logistics complexity, a 3PL is the best long-term investment. However, if you only need an expert to handle occasional shipments, a broker might be all your business needs right now.
It's also worth thinking about the future of your business. This is because you might only need a broker today but outgrow it within a year or two. So, if you have a growth strategy for your business and see that it is working perfectly with more locations, SKUs, and tighter delivery windows, plan to work with a 3PL before you need them.
Why Are More Businesses Moving Toward Managed Logistics?
Over the years, the logistics industry has become more complicated, and managing all the processes internally, or allowing just a broker to handle every process, is no longer sustainable. This is also because of the increase in the cost of freight, higher delivery expectations, and growing inventory complexity that business owners have not constantly dealt with.
Full-scale logistic solutions make everything easier by integrating the entire process instead of partnering with service providers for transportation, warehousing, and fulfillment.
The goal of every business owner is to work with a company that can provide all the services they need and also accountable for every process. That shift is not only about convenience, but it is one of the best ways to improve cost control and service reliability.
Unify Logistic Solutions is a full-service partner that provides all the services you need for your freight to move from one place to another in the best possible way. We offer truckload, LTL, intermodal, and drayage freight with warehousing and cross-docking services across different industries.
Unify Logistic Solutions is not limited to industries. No matter what your business needs, our team of experts has the best solution and transparent pricing that will solve all your logistics problems.
Frequently Asked Questions
A freight broker is responsible for arranging the best carriers and transportation between shippers and carriers. A 3PL, on the other hand, has more responsibilities. They handle the entire process including warehousing, fulfillment, and freight management. In simple words, freight brokers provide only carriers, while 3PLs operate as partners within your supply chain.
No, freight brokers do not have the proper training, experience, or license to store your inventory. Their job is strictly to get you the right carriers for your business shipping needs. They do not have warehousing or fulfillment centers where you can put your freight. If storage or pick-and-pack services are what you need, a 3PL is the best option for your business.
The price you pay for a freight broker and a 3PL is often determined by the type of services they are providing for your business. Brokers are known for charging according to the shipment rate. 3PLs, on the other hand, focus more on giving you a price based on the service package they are providing for your business.
A broker is often the best choice if you only need carriers once in a while to ship your freight but have your own warehouse space. However, if you ship regularly or need storage and real-time visibility, a 3PL will work better for your business and give you the reliability you need for constant growth.
Unify Logistic Solutions is a full-service 3PL that also provides the right carriers for shipping freight across the United States. Our services include providing truckload, LTL, intermodal, drayage, warehousing, and cross-docking, no matter your industry. Our team also manages carrier relationships as part of an integrated solution for your business needs.
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