As your business continues to grow and your transportation needs increase, you might find yourself looking for assistance. Shipping brokers and third-party logistics (3PL) providers are often the first two considerations for an expanding business. And now you might find yourself asking what’s the difference between the two, and is one option better than the other?

We’re here to explain what is a shipping broker and a 3PL provider, the difference between the two companies, and tips on determining which one is right for your needs. 

What is a Shipping Broker?

To answer the question, “what is a shipping broker” we need to start with its official name, freight broker. Although you might hear the term shipping broker, it’s important to note that we use the term freight broker within the industry. A freight broker is a transportation intermediary between the shipper (you) and the carrier (trucking company). This broker could be a company with a team of people or an individual. 

Their Purpose 

The freight broker is responsible for ensuring the shipment is moved from the shipper to the carrier, arrives on time and intact to its destination. Typically, they act as the middleman and have no contact with the freight. Their purpose is to serve as the facilitator between the shipper and carrier. This ensures that each party only speaks with the freight broker throughout the job. 

Typical Responsibilities of a Broker 

  • Finds the suitable carrier for the shipment 
  • Tracks the freight from pickup to delivery 
  • Negotiates costs between the shipper and carrier 
  • Coordinates shipping the cargo to its destination, whether its 50 or 500 miles away 

What is a 3PL?

They’re a logistics company that others will outsource their transportation and logistics needs to when they can no longer handle it on their own. They’re your partner for your supply chain needs and the connection between you and your customers. They ensure the deliveries arrive to the customers safely and on time.

Their Purpose 

The 3PL handles any responsibilities that relate to transportation or logistics. Most 3PLs offer a variety of services and can grow with your company. You might only need one service, but as your business expands, the 3PL can grow with you.

Unlike a broker, a 3PL provider isn’t a middleman. Instead, they handle many of the responsibilities themselves. They will coordinate the storage or transportation of freight with their network of partners.

Typical Services of a 3PL

  • Final mile delivery 
  • Freight consolidation
  • Freight distribution
  • Product repackaging
  • Product returns management
  • Route and networking
  • Pool distribution 
  • Pick and pack 
  • Sort and seg 
  • Truckload and LTL transportation 
  • Warehouse storage

3PL vs. Freight Broker: Making the Right Choice 

The next step is determining which option is right for your business. Consider the below factors to help you make a decision.

Reasons to Use a 3PL

  • Grows alongside your business (increase your services as needed)
  • Your current freight deliveries aren’t arriving on time 
  • You can’t store all your inventory in house 
  • You no longer want to negotiate carrier costs and route planning 
  • You’re changing locations and will no longer have space for your logistics and distribution services  
  • Your logistical expenses continue to increase, and you’re looking to cut costs
  • Your staff can no longer handle your logistics and distribution needs 
  • You want to reduce transportation costs by storing inventory in high shipping regions  

There are many reasons to use a 3PL. Understanding your current and future needs will help you see where you’ll need extra assistance as your business expands. 

Reasons to Use a Freight Broker 

  • Work with a single point of contact from point A to point B 
  • You no longer want to negotiate carrier costs and route planning 
  • You want to improve the reliability of your supply chain process 
  • You want to reduce transportation costs and time 
  • Your staff can no longer handle your distribution needs 

Since there are many similarities between a freight broker and 3PL, learning your needs will help you find the right fit.

Learn What BLS Can Do for You

At the end of the day, instead of deciding if you want to work with a 3PL or a freight broker, find a company that offers the services you need (and will fit your budget) now and in the future. At Beitler Logistics Services (BLS), our team has the knowledge and experience to work with companies of all sizes. And thanks to our immense network of partners, we can provide you with logistics and transportation services all around the United States.

Contact us to learn how our team can help meet your freight needs.