Transport carriers employ a number of workers to fill their trucks. Among such workers are freight brokers and dispatchers. It is not difficult to confuse these two terms as they perform similar tasks. However, they are very different.
In this article, we will explain the differences between a freight broker and a dispatcher as well as their functions.
What Is a Freight Broker?
A freight broker facilitates communication between shippers and carriers, ensuring that the cargo makes it to its destination on schedule.
Brokers negotiate the price, plan the route, and track the freight on behalf of the shipper. It is in the best interest of the broker to negotiate low transport rates given that he or she earns, as a commission, the difference between the freight rate paid to the carrier and that paid by the shipper.
What Is a Dispatcher?
A dispatcher deals with the transmission of information about the location of cargo on the road.
Dispatchers help smaller carriers to find loads through load boards and brokers. They use the carrier’s lane preferences, equipment specifications, and preferred freight rates to find brokers and shippers.
In this sense, dispatchers bridge the gap between customers and truck drivers. They coordinate movements to ensure on-time delivery of goods by using a transport management system to optimize fleet movements.
Dispatchers must have excellent communication skills and should consider becoming certified in supply chain management.
Below are some differences between freight brokers and dispatchers.
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Dispatchers Represent the Carrier
Because dispatchers receive a percentage of the carrier’s rate as payment, their goal is to negotiate the best prices for the carrier. They make sure to help carriers find available loads, and they can help the carrier to navigate around risky areas such as poor weather or road repairs.
The Freight Broker’s Goal is to Grow the Business
While dispatchers represent the best interests of the cargo carrier, freight brokers work to grow their own business. The freight broker’s profit comes from the difference between the negotiated freight rate and the price that the shipper pays. Therefore, it is in the best interest of the freight broker to negotiate the lowest transport rate possible and charge their customers the highest rate possible.
Brokers Invoice the Shipper and Pay the Carrier While Dispatchers Deal with Carriers
Freight brokers operate independently: they bill the shipper and pay the carrier. In contrast, dispatchers do not invoice the shipper because the agreement between the dispatcher and the carrier does not include the shipper. Consequently, dispatchers will often prioritize their relationship with the carrier rather than with the shipper.
Dispatchers perform a lot of the Admin Work for Carriers
Dispatchers do admin work for the carrier, which is particularly important for small owner-operators as they may not have the necessary structures to manage all the paperwork required for billing and compliance.
Because dispatchers search load boards to find cargo to fill the load and maximize truck utilization, the dispatcher’s income depends on load maximization and higher negotiated transport rates.
Additionally, dispatchers assist trucking companies with invoicing and revenue collection. In some cases, they assist other customer service and compliance-related admin work. If the carrier uses factoring, many dispatchers will generate invoices and submit them to the factoring company.
As we can see, both dispatchers and freight brokers serve as a liaison between the customer and transport carriers; however, their roles differ greatly.