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What is the Difference Between a Transportation Broker and a Transportation 3PL?

Capacity is tight and the market is in a bit of a panic right now.  The transportation industry always gets a little more introspective and innovative when capacity tightens.  Carriers have the pick of the freight they want to haul right now, so they are being choosy.  Several have been making declarations about who they will and will not do business with right now.  Many are declaring that they will not do business with Transportation Brokers.  Instead they choose to do business with Transportation 3PL’s.  What is the difference between the two?

Transportation Brokers pay shippers to move freight between two points.  Brokers own no assets and serve as an intermediary between shippers and carriers.  Brokerage is all about execution on a spot lane basis.  Rates are sometimes contracted but for many large to mid size shippers, brokers play a spot role.  In a contract role, they award a small part of a high volume lane or all a low volume lane.  For small shippers, they can be a one stop shop moving a handful of loads a day – whatever they have to wherever they need to go.

Transportation 3PLs provide managed transportation services.  3PL employees make carrier dispatch and/or carrier routing decisions on behalf of the shipper.  They do this from an onsite or an off site location.  Often they work along side shipper employees as if they themselves were employees of the shipper.  The work they do is inclusive of the entire suite of transportation services the shipper requires, not just on a lane or spot basis.

What services are you using and what value are they providing your organization?  The best solution is the one that solves your organizations transportation problems.  Given market conditions, it is a good time to question your current strategy.

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