Some owner operator businesses look for ways to expand their company. The bottom line needs to go up – but the funds to invest in another rig or a secondary driver just aren’t in the bank. So they move laterally as a freight broker for other drivers. It can be a good option if the broker understands the limits of the job.
For brokers focused on growth, we also cover how to develop customers for your brokerage.
Freight Broker vs Dispatcher: Which Role Fits Your Business?
A freight broker is a licensed middleman who arranges freight on behalf of a shipper by finding a carrier to haul the load. Freight brokers work to find carriers for their clients. They may put loads on load boards to get independent truckers to haul freight, or they may reach out to a carrier they trust.
When an independent trucker wants to grow their business, brokering trucks is a low-investment way to go. With a trucking authority to assign loads to other drivers and a sharp knowledge about the logistics industry, it can be a viable next step. But there needs to be a strong commitment and organizing software to make it work.
Brokerage authority isn’t cheap. Investing in yourself as a broker as a way to build your trucking business has to be legit and handled properly. If starting out as a broker is too expensive, consider working as a dispatcher first. Without the cost of a bond and paying for the authority, it may be a better way to develop your trucking business.
Maybe another choice is to become a dispatcher. What’s the difference?
What Is the Difference Between a Freight Broker and a Dispatcher?
The difference between a freight broker and a dispatcher is who they work for: a freight broker works for the shipper, while a dispatcher works for the carrier. That one distinction clears up most of the confusion between the two roles.
A freight broker works for the shipper. She’s the face that the shipper sees when a load needs to be moved. As the person who contracts with the trucker to haul the load, they’re the middlemen who organize the process. The rate con comes from them while the invoice goes to the shipper when the driver submits their delivery invoice to the broker.
A freight dispatcher is the person who finds loads, plans routes and assigns drivers on behalf of a carrier. A freight dispatcher works for a freight company — the carrier, not the shipper and sets up the loads and routes for the drivers. In most owner operator trucking companies, there isn’t a role for a dispatcher. The driver handles those details by using trucking software like TruckingOffice PRO. A complete trucking software will take a rate con and create a dispatch with a route and an assigned driver.
Who Pays a Freight Broker vs a Dispatcher?
When we say that a broker works for a shipper, we mean that. They’re paid by the shipper. The dispatcher is paid by the trucking company. An independent dispatcher gets a percentage of the load payment from the carrier. An in-house dispatcher might get a salary instead of a commission, but they’re still paid by the carrier.
The dispatcher is on the driver’s side. They’re working to get the best pay for the carriers. They find loads to free up the drivers to stay on the road.
So when an owner-operator wants to pick up a brokerage authority and add it to his company, he’s got to be careful in how he manages to give loads to his own company. It’s a conflict of interest to broker a load only to have your own company haul the freight. The broker needs to look for other truckers to avoid the conflict.
Adding a Brokerage Authority to Your Trucking Authority
It comes down to who will you represent – the shipper or the carrier? If you’re taking a load as a freight broker, you have to work as a freight broker and find a trucker.
Whether you choose to be a freight broker or a dispatcher, TruckingOffice is here to help!
Freight Broker vs Dispatcher: FAQ
What is the difference between a freight broker and a dispatcher?
A freight broker works for the shipper and is paid by the shipper. A dispatcher works for the trucking company and is paid by the carrier. The broker is the middleman who contracts with a trucker to haul a load; the dispatcher is on the driver’s side, finding loads and setting up routes so the truck keeps moving.
Who pays a freight broker and who pays a dispatcher?
The shipper pays the freight broker. The carrier pays the dispatcher. An independent dispatcher usually takes a percentage of the load payment from the carrier, while an in-house dispatcher may be paid a salary instead of a commission — but either way the money comes from the trucking company, not the shipper.
Do you need brokerage authority to work as a dispatcher?
No. Dispatching does not require brokerage authority, a bond or the cost of getting authority, which is why it can be a cheaper first step than brokering. Brokerage authority is not cheap, so if starting out as a broker is too expensive, working as a dispatcher first may be a better way to develop your trucking business.
Can an owner-operator broker a load to their own trucking company?
No — that is a conflict of interest. If you add a brokerage authority to your own trucking authority, you have to be careful about how loads are assigned. Brokering a load only to have your own company haul the freight is a conflict, so the broker needs to look for other truckers.
Does an owner-operator need a dispatcher?
In most owner-operator trucking companies there isn’t a role for a dispatcher. The driver handles those details with trucking software, which takes a rate con and creates a dispatch with a route and an assigned driver.
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