Some history on the Freight Broker Industry
The Logistics and Transportation Industry in the United States
The logistics and transportation industry in the United States is highly competitive. By investing in this sector, multinational firms position themselves to better facilitate the flow of goods throughout the largest consumer market in the world.. International and domestic companies in this industry benefit from a highly skilled workforce and relatively low costs and regulatory burdens.
Spending in the U.S. logistics and transportation industry totaled $1.33 trillion in 2012, and represented 8.5 percent of annual gross domestic product (GDP). Analysts expect industry investment to correlate with growth in the U.S. economy.
A highly integrated supply chain network in the United States links producers and consumers through multiple transportation modes, including air and express delivery services, freight rail, maritime transport, and truck transport. To serve customers efficiently, multinational and domestic firms provide tailored logistics and transportation solutions that ensure coordinated goods movement from origin to end user through each supply chain network segment.
This subsector includes inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply and demand planning, third-party logistics management, and other support services. Logistics services are involved at all levels in the planning and execution of the movement of goods.
Air and express delivery services (EDS):
Firms offer expedited, time-sensitive, and end-to-end services for documents, small parcels, and high-value items. EDS firms also provide the export infrastructure for many exporters, particularly small and medium-sized businesses that cannot afford to operate their own supply chain.
High volumes of heavy cargo and products are transported long distances via the U.S. rail tracking network. Freight rail moves more than 70 percent of the coal, 58 percent of its raw metal ores, and more than 30 percent of its grain for the nation. This subsector accounted for approximately one third of all U.S. exports.
This subsector includes carriers, seaports, terminals, and labor involved in the movement of cargo and passengers by water. Water transportation carries about 78 percent of U.S. exports by tonnage, via both foreign-flag and U.S.-flag carriers.
Trucking: Over-the-road transportation of cargo is provided by motor vehicles over short and medium distances. The American Trucking Associations reports that in 2012, trucks moved 9.4 billion tons of freight, or about 68.5 percent of all freight tonnage transported domestically. Motor carriers collected $642 billion in revenues, or about 81 percent of total revenue earned by all domestic transport modes.
American Association of Port Authorities
American Society of Transportation and Logistics
American Trucking Associations
Association of American Railroads
Council of Supply Chain Management Professionals
Express Delivery and Logistics Association
Journal of Commerce
Material Handling & Logistics
North American Industry Classification System For Transportation
The Transportation and Warehousing sector includes industries providing transportation of passengers and cargo, warehousing and storage for goods, scenic and sightseeing transportation, and support activities related to modes of transportation. Establishments in these industries use transportation equipment or transportation related facilities as a productive asset. The type of equipment depends on the mode of transportation. The modes of transportation are air, rail, water, road, and pipeline.
The Transportation and Warehousing sector distinguishes three basic types of activities: subsectors for each mode of transportation, a subsector for warehousing and storage, and a subsector for establishments providing support activities for transportation. In addition, there are subsectors for establishments that provide passenger transportation for scenic and sightseeing purposes, postal services, and courier services.
A separate subsector for support activities is established in the sector because, first, support activities for transportation are inherently multimodal, such as freight transportation arrangement, or have multimodal aspects. Secondly, there are production process similarities among the support activity industries.
One of the support activities identified in the support activity subsector is the routine repair and maintenance of transportation equipment (e.g., aircraft at an airport, railroad rolling stock at a railroad terminal, or ships at a harbor or port facility). Such establishments do not perform complete overhauling or rebuilding of transportation equipment (i.e., periodic restoration of transportation equipment to original design specifications) or transportation equipment conversion (i.e., major modification to
systems). An establishment that primarily performs factory (or shipyard) overhauls, rebuilding, or conversions of aircraft, railroad rolling stock, or a ship is classified in Subsector 336, Transportation Equipment Manufacturing according to the type of equipment.
Many of the establishments in this sector often operate on networks, with physical facilities, labor forces, and equipment spread over an extensive geographic area.
Industries in the Truck Transportation subsector provide over-the-road transportation of cargo using motor vehicles, such as trucks and tractor trailers. The subsector is subdivided into general freight trucking and specialized freight trucking. This distinction reflects differences in equipment used, type of load carried, scheduling, terminal, and other networking services. General freight transportation establishments handle a wide variety of general commodities, generally palletized, and transported in a container
or van trailer. Specialized freight transportation is the transportation of cargo that, because of size, weight, shape, or other inherent characteristics require specialized equipment for transportation.
Each of these industry groups is further subdivided based on distance traveled. Local trucking establishments primarily carry goods within a single metropolitan area and its adjacent nonurban areas. Long distance trucking establishments carry goods between metropolitan areas.
The Specialized Freight Trucking industry group includes a separate industry for Used Household and Office Goods Moving. The household and office goods movers are separated because of the substantial network of establishments that has developed to deal with local and long-distance moving and the associated storage. In this area, the same establishment provides both local and long-distance services, while other specialized freight establishments generally limit their services to either local or long-distance hauling.
General Freight Trucking
This industry group comprises establishments primarily engaged in providing general freight trucking. General freight establishments handle a wide variety of commodities, generally palletized, and transported in a container or van trailer. The establishments of this industry group provide a combination of the following network activities: local pickup, local sorting and terminal operations, line-haul, destination sorting and terminal operations, and local delivery.
General Freight Trucking, Local
This industry comprises establishments primarily engaged in providing local general freight trucking. General freight establishments handle a wide variety of commodities, generally palletized and transported in a container or van trailer. Local general freight trucking establishments usually provide trucking within a metropolitan area which may cross state lines. Generally the trips are same-day return.
General Freight Trucking, Long-Distance
This industry comprises establishments primarily engaged in providing long-distance general freight trucking. General freight establishments handle a wide variety of commodities, generally palletized and transported in a container or van trailer. Long-distance general freight trucking establishments usually provide trucking between metropolitan areas which may cross North American country borders. Included in this industry are establishments operating as truckload (TL) or less than truckload (LTL) carriers.
General Freight Trucking, Long-Distance, Truckload
This U.S. industry comprises establishments primarily engaged in providing long-distance general freight truckload (TL) trucking. These long-distance general freight truckload carrier establishments provide full truck movement of freight from origin to destination. The shipment of freight on a truck is characterized as a full single load not combined with other shipments.
General Freight Trucking, Long-Distance, Less Than Truckload
This U.S. industry comprises establishments primarily engaged in providing long-distance, general freight, less than truckload (LTL) trucking. LTL carriage is characterized as multiple shipments combined onto a single truck for multiple deliveries within a network. These establishments are generally characterized by the following network activities: local pickup, local sorting and terminal operations, line-haul, destination sorting and terminal operations, and local delivery.
Specialized Freight Trucking
This industry group comprises establishments primarily engaged in providing local or long-distance specialized freight trucking. The establishments of this industry are primarily engaged in the transportation of freight which, because of size, weight, shape, or other inherent characteristics, requires specialized equipment, such as flatbeds, tankers, or refrigerated trailers. This industry includes the transportation of used household, institutional, and commercial furniture and equipment.
Used Household and Office Goods Moving
This industry comprises establishments primarily engaged in providing local or long-distance trucking of used household, used institutional, or used commercial furniture and equipment. Incidental packing and storage activities are often provided by these establishments. Specialized Freight (except Used Goods) Trucking, Local
Specialized Freight (except Used Goods) Trucking, Long-Distance
This industry comprises establishments primarily engaged in providing long-distance specialized trucking. These establishments provide trucking between metropolitan areas that may cross North American country borders.
A freight broker is an individual or company that serves as a liaison between another individual or company that needs shipping services and an authorized motor carrier. Though a freight broker plays an important role in the movement of cargo, the broker doesn't function as a shipper or a carrier.
To operate as a freight broker, a business or individual must obtain a license from the Federal Motor Carrier Safety Administration (FMCSA). Freight brokers are required to carry surety bonds as well.
Freight broker services are valuable to both shippers and motor carriers. Freight brokers help shippers find reliable carriers that might otherwise be difficult to locate. They assist motor carriers in filling their trucks and earning money for transporting a wide variety of items. For their efforts, freight brokers earn commissions.
Freight brokers use their knowledge of the shipping industry and technological resources to help shippers and carriers accomplish their goals. Many companies find the services provided by freight brokers indispensable. In fact, some companies hire brokers to coordinate all of their shipping needs.
Often, freight brokers are confused with forwarders. Though a freight forwarder performs some of the same tasks as a freight broker, the two are not the same. A forwarder takes possession of the items being shipped, consolidates smaller shipments, and arranges for the transportation of the consolidated shipments. By contrast, a freight broker never takes possession of items being shipped thus in the absence of negligent entrustment, a freight broker is not normally involved as a party litigant in a cargo claim
dispute, although as an accommodation, the freight broker may assist the shipper at their request and expense with filing freight claims.
NAICS Index Description
Bulk mail truck transportation, contract, local
Container trucking services, local
General freight trucking, local
Motor freight carrier, general, local
Transfer (trucking) services, general freight, local
Trucking, general freight, local
Bulk mail truck transportation, contract, long-distance (TL)
Container trucking services, long-distance (TL)
General freight trucking, long-distance, truckload (TL)
Motor freight carrier, general, long-distance, truckload (TL)
Trucking, general freight, long-distance, truckload (TL)
General freight trucking, long-distance, less-than-truckload (LTL)
LTL (less-than-truckload) long-distance freight trucking
Motor freight carrier, general, long-distance, less-than-truckload (LTL)
Trucking, general freight, long-distance, less-than-truckload (LTL)
Furniture moving, used
Motor freight carrier, used household goods
Trucking used household, office, or institutional furniture and equipment
Used household and office goods moving
Van lines, moving and storage services
Agricultural products trucking, local
Automobile carrier trucking, local
Boat hauling, truck, local
Bulk liquids trucking, local
Coal hauling, truck, local
Dry bulk trucking (except garbage collection, garbage hauling), local
Dump trucking (e.g., gravel, sand, top soil)
Farm products hauling, local
Flatbed trucking, local
Grain hauling, local
Gravel hauling, local
Livestock trucking, local
Log hauling, local
Milk hauling, local
Mobile home towing services, local
Refrigerated products trucking, local
Rubbish hauling without collection or disposal, truck, local
Sand hauling, local
Tanker trucking (e.g., chemical, juice, milk, petroleum), local
Top-soil hauling, local
Tracked vehicle freight transportation, local
Trucking, specialized freight (except used goods), local
Automobile carrier trucking, long-distance
Boat hauling, truck, long-distance
Bulk liquids trucking, long-distance
Dry bulk carrier, truck, long-distance
Farm products trucking, long-distance
Flatbed trucking, long-distance
Forest products trucking, long-distance
Grain hauling, long-distance
Gravel hauling, long-distance
Livestock trucking, long-distance
Log hauling, long-distance
Mobile home towing services, long-distance
Radioactive waste hauling, long-distance
Recyclable material hauling, long-distance
Refrigerated products trucking, long-distance
Refuse hauling, long-distance
Rubbish hauling without collection or disposal, truck, long-distance
Sand hauling, long-distance
Tanker trucking (e.g., chemical, juice, milk, petroleum), long-distance
Tracked vehicle freight transportation, long-distance
Trash hauling, long-distance
Trucking, specialized freight (except used goods), long-distance
Waste hauling, hazardous, long-distance
Waste hauling, nonhazardous, long-distance
Economic Impact of Trucking
The importance of trucking can summed up by an old industry addage:
"If you bought it, a truck brought it." Retail stores, hospitals, gas stations, garbage disposal,
construction sites, banks, and even a clean water supply depends entirely upon trucks
to distribute vital cargo. Even before a product reaches store shelves, the raw materials and other stages
of production materials that go into manufacturing any given product are moved by trucks.
Trucking is vitally important to U.S. industry, however, measuring the impact of trucking
on the economy is more difficult, because trucking services are so intertwined with all sectors
of the economy. According to the measurable share of the economy that trucking represents,
the industry directly contributes about 5 percent to the gross domestic product annually.
In addition, the industry plays a critical support role for other transportation modes and for
other sectors of the economy such as the resource, manufacturing, construction, and
wholesale and retail trade industries
Third Party Logistics-Freight Brokers
Freight brokers are federally regulated and bonded companies. Most commonly they have
a vast network and access to a library of freight carriers and search for the right availability
based on customer specifications. These brokers also offer various value-added services
that encompass transportation, logistics, and distribution.
Typically, freight brokers do not touch the freight.
They engage in helping shippers find the best price with the best carrier for any given load.
The proliferation of freight brokers called for an increase in financial integrity and liability of these companies,
which has led to the passing of the Moving Ahead for Progress in the 21st Century Act.
In order to obtain a license to broker freight, a freight brokerage must purchase a surety bond
or trust agreement with the Federal Motor Carrier Safety Administration.
Prior to June 2012 when the bill was signed by President Obama, the surety bond coverage required to
hold a broker license was $10,000. Effective October 1, 2013, the surety bond requirement increased to $75,000.
Other logistics companies include 3rd-Party Logistics Providers. They offer a variety of
supply chain and distribution-related practices and techniques in order to improve in-house logistics.
The main difference between a traditional freight broker and most 3rd-Party Logistics Providers
is that freight brokers do not actually touch the freight, whereas 3rd-Party Logistics providers often do.