Last Updated January 29, 2025
Freight brokers and freight carriers have two of the most important roles within the transportation and logistics industry. Even from a nationwide workforce perspective, brokers and carriers are crucial to keeping the economy going.
If you’re relatively new to the trucking industry, you might find yourself wondering what the differences are between a freight broker vs. carrier and how these differences impact business operations. The terms are often mentioned in the same breath, so it can get confusing. However, understanding how brokers and carriers work together and what they do differently will help you better manage your own logistics needs.
Here’s an overview of brokers vs. carriers.
What Is a Freight Broker?
Freight brokers are intermediaries between carriers and companies that need shipping services. A typical freight broker does not own transportation equipment. Instead, freight brokers work with multiple carriers and shippers to negotiate rates and match shippers with optimized routes and carriers. Shippers work with freight brokers to help them manage their logistics, while carriers (particularly owner-operators) often rely on brokers to source loads.
What Do Freight Brokers Do?
As part of their work of connecting carriers and shippers, freight brokers oversee a wide range of tasks. This includes negotiating freight rates to ensure they are fair and competitive for all parties involved, tracking shipments, and addressing any potential issues that might occur while a carrier is in transit, such as route changes or delays. Freight brokers verify that the carriers they work with meet applicable federal regulations. They also oversee the freight billing process for contracts they are involved in.
A major part of what freight brokers do involves finding shippers and loads for carriers. They use shippers’ lists (including USDA business listings), as well as their own freight broker network to find prospective clients who are in need of a carrier. They also study the purchase history of current and former clients and may even use cold calls to find new loads.
What Is a Carrier?
A freight carrier is a company or individual owner-operator that specializes in shipping goods from one location to another. While truck carriers are the most common, carriers may also ship goods by railroad, air, or ocean carriers. Carriers own or lease their equipment to provide shipping services to their clients. Depending on the nature of the business, a carrier may negotiate rates and schedule loads on their own, or they may work with a broker.
What Do Carriers Do?
Carriers are responsible for handling the actual physical transportation of products, from pickup to delivery. Carriers will typically plan the route and schedule for a proposed shipment based on their experience, capabilities, and equipment. Carrier route planning is done to optimize the cost and distance of the shipment while minimizing its complexity. In addition to ensuring that their drivers and vehicles remain compliant with all applicable regulations, carriers that operate internationally may also be responsible for managing the customs process.
How Do Brokers and Carriers Work Together?
While not all carriers rely on brokers to find loads for their trucking business, many prefer to work with a broker because of how much this can simplify the process of consistently finding loads to haul. Brokers handle all outreach to potential shipping clients, including negotiations over the rate, pickup and drop-off times, and pickup and delivery locations. They also handle the majority of paperwork and communication between the shipper and carrier, including providing updates on shipment status.
Carriers within a broker’s network will provide the broker with information such as their availability (both in terms of dates and geographic area), as well as an acceptable range for rates, which the broker will use in determining which of their carrier partners could handle a shipment. Carrier and broker negotiations play a critical role in determining the rate that will be charged to a client.
For their work, the broker will then claim a fee as a percentage of the negotiated load rate (this is often 20-25% of the total value of the load). The client pays the broker, who then pays the carrier.
How Freight Broker – Carrier Agreements Work
Carriers will often negotiate freight rates with brokers based on information such as their operating costs, average spot rates, load delivery times and locations, and extra considerations such as tolls, special permit needs, or deadhead miles. Once a rate has been agreed upon and the client accepts that rate, the freight broker carrier agreement moves forward.
A contract between a broker and carrier is typically verified through the invoicing process. The two parties negotiate payment terms (such as net 15 or net 30) up front, which is reflected in the invoice the carrier sends to the broker.
The invoice will include the agreed-upon price for the loads that have been scheduled between the carrier and the broker. The broker will submit payment within the terms outlined in the invoice, typically after the load has been completed.
It’s important to note that shipping clients don’t pay carriers directly in this arrangement. Instead, the company that needed shipping services pays the broker, allowing the broker to keep their load fee for facilitating the shipment. It’s then the broker who facilitates payment with the carrier.
This streamlines payment for customers, who are in constant communication with the broker, while also ensuring that the carrier doesn’t have to worry about making direct payments to the broker.
What Is the Difference Between Broker Authority vs. Carrier Authority?
Because they each fulfill different roles within the trucking industry, brokers and carriers also operate under different types of trucking authority.
Brokers must apply for operating authority as a Broker of Property or a Broker of Household Goods. With this type of authority, it is understood that the broker will receive payment for arranging transportation of others’ goods with an authorized motor carrier. This type of authority specifically notes that the broker never takes possession of (or physically handles) the property that will be transported. Freight brokers must obtain a USDOT number and provide proof of insurance coverage valued at at least $75,000.
Carrier authority gives a business the authorization to transport regulated commodities or household goods for intrastate or interstate purposes. To obtain trucking authority, carriers must get a USDOT number and a Motor Carrier (MC) number. For interstate operations, carriers must provide proof of bodily injury and property damage liability coverage. Carriers also need to pay the HVUT, register with the IRP, get an IFTA account, complete a Unified Carrier Registration permit, and pass a drug and alcohol test.
While operating authority is required for both brokers and carriers, the type of authority they receive has a direct influence on what activities they are legally allowed to perform—as well as what ongoing requirements they will be subjected to.
Differences Between Brokers vs. Carriers
Here is a quick breakdown of key carrier vs. broker differences.
| Freight Brokers | Carriers |
| Do not own any transportation equipment | Own or lease their own equipment, such as semi-trucks |
| Work as an intermediary to schedule shipments and manage client communication | Are responsible for the actual transportation and delivery of shipped goods |
| Use a network of carriers to serve a broader geographic area | Typically serve a smaller geographic area |
| Negotiate rates with clients based on carrier availability and other factors | Set rates based on volume, fuel costs, mileage, and so on |
| Are paid by the shipping client and then keep a percentage of the load fee as payment | Are paid the remainder of the load fee by the broker (when using a broker) |
Can You Be a Carrier and a Freight Broker?
Yes, it is possible for a business to operate as both a freight broker and a carrier, but this is relatively uncommon in the industry. This is called dual authority, as both brokerage authority and carrier authority are required to operate this type of business. However, it is common for a business to have two separate business entities to more easily manage the carrier and broker sides of the work.
With this setup, the freight brokerage side of the business can help secure trucking contracts for the carrier side of the business. In situations where your own carrier’s schedule is full or a prospective load lies outside their geographic area of operations, this gives the business the added flexibility to broker loads with other carriers. However, other brokers are unlikely to book your carrier if you have brokerage authority.
It is also worth noting that by operating their own carrier services, a business can maintain greater oversight of these operations, which helps maintain quality control and ensure positive outcomes for their clients.
In-Summary: Freight Brokers vs. Carriers
Whether you are a single-truck owner-operator or a carrier with a large fleet of trucks, working with a quality freight broker can make a significant difference in your ability to run your business at a profit. While brokers charge a percentage of the load as a fee for their services, they can play a critical role in helping you find consistent work. For companies in need of shipping services, understanding the relationship between brokers and carriers will help you find solutions that allow you to ship your own goods in a timely and cost-efficient manner.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
