Starting a career as a freight broker can be daunting with so many brokerage models to choose from. One option you may come across is the asset based brokerage. But is it the right fit for you?
In this article, we will explain what an asset based brokerage is, highlight its benefits, and compare it to other brokerage types. By the end, you’ll have the information you need to make an informed decision about which brokerage model suits your career goals.
What Is an Asset Based Brokerage?
An asset based brokerage is a freight brokerage that operates as both a trucking company and a broker. In addition to being licensed as freight brokers, these companies also own and operate their own fleets of trucks and trailers.
Difference between traditional freight brokerage and asset based brokerage
The key difference is ownership and control. Pure play freight brokers do not own transportation equipment and act as middlemen, while asset based brokerages own the assets and handle logistics and transportation directly.
A freight broker is an intermediary between a shipper and a transportation provider. They arrange loads for shippers by finding available trucks and trailers through their network of partner carriers. Pure play freight brokers do not own equipment; they rely on third-party carriers to transport the goods. They coordinate the logistics and ensure that the shipment gets from point A to point B by working with external transportation providers.
An asset based brokerage, however, operates both as a trucking company and a broker. These companies have the legal authority to act as freight brokers, own trucks and trailers, and employ drivers. This dual capability allows them to use their own assets in addition to an external carrier network to find truck capacity for their customers.
What Types of Services Does an Asset Based Freight Brokerage Offer?
If you’re considering a career as a freight broker at an asset based brokerage, it’s essential to understand the unique advantages and services you can offer by utilizing both owned assets and external carrier networks. Here are some key services you can facilitate:
- Full truckload (FTL) shipping: With access to the brokerage’s own fleet of trucks and trailers, you can manage large shipments that require the entire space of a truck. This is particularly beneficial for businesses needing to move substantial goods efficiently.
- Less than truckload (LTL) shipping: By combining loads from multiple customers, you can handle smaller shipments that don’t require a full truck. This service optimizes the use of the brokerage’s trucks and reduces shipping costs for clients.
- Dedicated fleet services: You can coordinate dedicated trucks and drivers for specific customers, providing tailored services that ensure higher reliability and meet unique customer needs.
- Expedited shipping: When time is critical, you can offer expedited shipping services using the brokerage’s own fleet, ensuring faster and more reliable delivery options to meet tight deadlines.
- Warehousing and distribution: With access to the brokerage’s storage facilities, you can provide comprehensive warehousing and distribution services, including inventory management, order fulfillment, and cross-docking, offering a complete logistics solution.
Benefits of an Asset Based Brokerage
When choosing the right brokerage model for your career, understanding the benefits of an asset-based brokerage can help you make an informed decision. Here are some key advantages:
Increased quality control
Since asset based brokerages own and maintain their fleet of trucks and trailers, they can provide a high level of quality because they have direct control over their operations. Business owners can enforce strict standards for their vehicles and drivers, ensure freight is handled with care and professionalism, and use technology to optimize fleet performance.
Reliability and pricing consistency
An asset based brokerage can offer better pricing consistency and reliability because it operates its own equipment. Costs are often more predictable because carriers can calculate operations costs more accurately. Not relying on third-party carriers also means asset-based carriers can provide more reliable scheduling and faster response times.
Higher carrier quality
Compared to other brokers, asset based brokerages can be more selective when choosing which carriers to work with because they can also use their own fleet. With more options to select from, the company can choose higher-quality carriers, negotiate better rates, and customize solutions to meet individual customer needs.
Greater flexibility and nationwide coverage
A large asset based network can offer greater flexibility regarding shipping options and routes. This scalability allows asset based brokers to efficiently meet client demands, even nationally. Whether you need to ship across the state or the country, an asset based brokerage can provide coverage and adaptability.
Choosing Which Type of Brokerage is Right for You
To become a successful freight broker, you should carefully consider all your options so you can make an informed decision that fits your needs and preferences. Here’s a breakdown of brokerage types.
Traditional freight brokerage
Traditional brokerages operate with a split-model structure: a sales team finds customers and books loads, while carrier representatives develop and maintain relationships with national trucking companies. Broker employees receive salaries, commissions, and benefits, which provides a stable work environment.
Stability and financial backing allow traditional brokerages to offer high-quality service and consistent capacity through their established network of trusted carriers. However, they don’t own trucks or trailers, which can limit their ability to guarantee capacity, and they may lack the personalized attention found in agent model brokerages.
Agent model freight brokerage
Another common freight brokerage model is the agent model, a popular choice used by many shippers. A freight broker (called a “freight agent”) is not an employee of a parent brokerage company, but a 1099 contractor who brokers freight for customers on behalf of that company. These agents manage every aspect of the freight movement process, from quoting and booking to arranging timelines and monitoring the journey.
The high percentage of margin these brokers can earn motivates them to maintain quality partnerships and provide personalized service. However, they aren’t paid a salary or given traditional employee benefits and also lack physical trucking assets. These aspects make it difficult to guarantee work and they may struggle during tough times due to limited resources.
Third-party logistics (3PL)
Third-party logistics companies (3PL) aren’t brokerages per se but rather companies that manage all aspects of a company’s transportation supply chain. Where other forms of brokerage solely work to provide truck capacity when and where their customers need it, 3PLs take on a more comprehensive role, offering services like freight transportation, warehousing, and inventory distribution.
For brokers working at a 3PL, the benefits include gaining experience in a broad range of logistics services and the ability to offer comprehensive solutions to clients, which can enhance your skill set. The broad scope of services, however, can mean freight brokers are less likely to specialize deeply in pure freight brokerage, which can make it more difficult for them to offer highly competitive rates and offer the personalized attention that more specialized brokerage models provide.
Digital freight brokerage
Digital freight brokers are matchmaking platforms that connect shippers with truck capacity using algorithms. These platforms offer quick, low-cost freight rates through websites or mobile apps. The speed and efficiency of rate generation, coupled with minimal overhead costs, often result in the lowest freight rates.
The benefits of working with a digital brokerage include streamlined processes, faster transactions, and increased business volume. This model, however, often lacks the relationship-building aspect critical to long-term client retention. In addition, brokers may have fewer opportunities to offer tailored, high-touch services that can differentiate them in the market.
Use the Best Technology to Ensure Success for your Asset-based Brokerage
For many freight brokers, choosing an asset-based brokerage provides the best of both worlds: managing your own fleet solutions and leveraging an external carrier network to provide coverage when needed. No matter which brokerage model you decide to pursue, using the best technology is crucial for your success. A robust Transportation Management System (TMS) like PCS TMS can help you efficiently manage operations, connect with shippers and carriers, and ensure high-quality service. Learn more about how the best TMS for brokers can support your career as a freight broker and set you up for success.
