Freight Broker Software and How It Supports Transportation Intermediaries
Although carriers can work directly with shippers, they rarely do. Finding customers devours lots of time and money and is especially hard on start-ups. As for shippers, they don’t want to worry about choosing a carrier that meets their budget and time constraints, verifying its reliability, and staying in touch until goods reach the receiver. Both sides prefer to leverage a freight broker as an intermediary.
In this article, we’ll talk about the specifics of the freight brokerage business and detail the software that helps brokers effectively manage freight, invoice shippers, and pay carriers.
Freight brokerage operations and challenges
Within the supply chain, a freight broker connects shippers and carriers, facilitating trustworthy and orderly communication between them. First, a shipper tenders a load for transport at a certain price to a broker. Second, the broker tenders the load at a lower price to a carrier. The end price often varies as carriers can haggle with brokers for a higher reward. Before proceeding, they sign a rate confirmation contract.
Generated rate confirmation for a carrier, Source: Aljex
The difference between the amount offered by the shipper and the money paid to the carrier is what the broker earns. To ensure profitability, they must define the most efficient transport option that benefits their own business while satisfying customer requirements. Doing this involves a lot of challenges.
Collecting quotes. Brokers obtain rates from multiple sources. And getting quotes from each separate carrier manually is a time-consuming process.
Balancing between spot and contracted rates. Contracted rates are set rates agreed upon for a certain lane and cargo volume. Spot rates are negotiated on a lane-by-lane, load-by-load basis and can vary wildly. Balancing between them is likely the trickiest part of the freight brokerage business, which often looks like a gamble. There’s hardly any certainty in knowing when to re-evaluate contracts, move to another bid for a set lane, or abandon working with a carrier altogether and shift to spot rates as they are more attractive.
Managing carriers. Working with carriers on a long-term contractual basis, brokers must be aware of when the contract is coming to an end and must be updated.
Supervising delivery. While the shipment is being delivered, brokers smooth out any issues that may occur on the carrier’s side with timing, damages, or pricing. They also must keep shippers posted on the delivery status and cargo location.
Now, let’s see how freight broker software can solve these problems.
Freight broker software modules
Early in the game, brokers can manage their handful of loads manually. But as their network grows, they’ll need to reinvest the initial profit into technologies to scale their business. The specialized software will systematize the shipment process, improve the overall brokerage service offering, and ultimately organize operations a whole lot better.
Freight broker software is a modular system that typically comprises five key components:
- a load management module to accept loads from shippers and post them to load boards,
- a rate engine to source and assign carrier with most suitable rates,
- a customer portal to keep customers informed,
- a shipment tracking module to track drivers, and
- a billing module to invoice customers and pay carriers.
Also, the freight broker software interacts with other platforms like shipping marketplaces, logistics management systems, and solutions for carriers. It uses the Electronic Data Interchange or EDI standard to distribute business data among the partner systems. Further, we’ll expand on these interactions while explaining each module one by one.
Freight brokerage software in the supply chain IT ecosystem
Load management module
A load management module deals with load lists — or lists of available loads carriers can reserve. They contain load descriptions with important information such as the lane, required vehicle type, going rate, and cargo details (type, size, and weight).
The module has different ways to distribute the loads among carriers.
1. Synchronizing with shipping marketplaces like SHIPNEXT or DAT Power freight-finder, it may generate a load list for each of them and simply post it on their trading desks. A broker is notified if a carrier opts for their load. At the same time, the carrier’s details are automatically logged into the system.
AI-powered trading desk for Cargo-to-Ship matching, Source: SHIPNEXT
2. Another way is to tender loads directly in a carrier’s system if the load matches their experience and their vehicles. In this case, a broker can set up automatic notifications to specific drivers with whom they often work. This required having a central database to store and manage contacts and details of contracted carriers.
3. Allowing carriers to access the internal load board, the latter will be able to search and book loads directly from the brokerage system.
Keeping track of all the loads in progress is very convenient with a well-organized load management dashboard. It contains tabs to enter all the necessary information such as carrier, customer, pickup, and delivery details, including dispatch.
Load management dashboard, Source: Weber Systems
In the rate acceptance process, there are a lot of personalized agreements between brokers and carriers. Although there is no escaping manual operations, a rate engine can streamline a great deal of the quoting workload. It integrates with the APIs of carriers, shipping platforms, and larger brokerages, and pulls rates from all those sources into one place at once.
For carriers that provide contracted rate matrices, brokers can configure a custom tariff in the system. That way, the shipments delivered by these carriers will be automatically rated without the need to manually consult a spreadsheet every time.
Powerful rate analysis and reporting tools aid brokers’ rating decisions. Integrated with multiple shipment sources, freight brokerage software gets access to pools of freight information. Analyzing and comparing historical and real-time freight data, the software recognizes trends within the market before they materialize.
Rate forecasting graphic, Source: Truckstop
Relying on these findings, brokers can better place or request bids and select the right lane and carrier.
Measuring the value for one lane over another, Source: SONAR
Shipment tracking module
Real-time shipment visibility for all the parties involved helps brokers reduce disruptions.
To manage its location, brokers can ask drivers to accept tracking by a real-time freight visibility platform. If there isn’t one in-house, the software integrates with an external solution like MacroPoint. Then, a broker is always aware of where the cargo is, avoiding logging into dozens of websites or calling terminals on the phone.
Color-coded map for tracking loads, Source: Aljex
If charging customers per mile, brokers need a mileage calculation tool embedded in a tracking module. It will provide easy-to-read mileage data that can be further displayed to shippers. Using such a tool, brokers can get realistic arrival times and also compare alternative route options making sure a carrier chooses the most practical, shortest, or fastest route.
Route planning data, Source: PC Miler
Brokers can automate communication with shippers through a customer portal. That’s where shippers can tender them loads. The portal can be integrated with the tracking software to enable customers to track their shipments in real time.
Besides that, a portal can have a chat to collect customer feedback or assist shippers without having to pick up the phone or send emails.
Through the customer portal, brokers keep customers informed and satisfied. There they can maintain invoicing correspondence and upload all the documents related to a specific load.
Sending an email through the CRM portal, Source: Shipthis
A billing module ensures that all parties receive the proper payment. Typically, brokers bill their customers (shippers) first and pay carriers on an ex-post basis. But sometimes, if a broker delays payments or a carrier hasn’t worked with a company yet, they pay COD (cash on delivery).
Synced up with the load page, the billing tool uploads all the necessary data and generates invoices. It also automatically creates other documents like a bill of lading, proof of delivery, and rate confirmation. Via EDI, brokers can receive invoice data and status updates directly from carriers, and send the invoice data directly to the customer’s system.
We’ve already mentioned the load board where brokers can track the order fulfillment, but it’s also very practical to have a separate billing board to manage load payments. There, brokers can easily spot non-billed loads. Other accounting capabilities include financial reports like income statements, balance sheets, and freight bill audit.
The integration with a payment gateway enables brokers to accept payments from shippers right through the system and manage financial transactions.
Freight brokerage off-the-rack solutions
If you have a freight brokerage business and decide to purchase software instead of building it from scratch, you have a wide choice of solutions. As they all have similar functionality, a good practice is to select options within your budget range and then trial each of them. Make sure the system is highly optimized because speed is everything in this business. Also, don’t commit to a long-term contract right away. It’s better to start with a monthly or quarterly contract.
Below we review four freight broker systems that are well-known in brokerage circles.
Freight Broker Software compared
DAT Broker TMS
DAT is most known for its load board, but they also offer a transportation management system (TMS) for brokers. They have a good understanding of how brokers work and what they need.
Features. DAT Broker TMS is a suite of integrated operations and accounting and analysis modules. So brokers can enter orders, bill, and settle in a single-entry system.
An operations module manages the following truck broker operations:
- order entry,
- tracking, and
- creating customer and carrier profiles with all the information on them including preferences and history.
DAT Broker TMS’s load board
An accounting and analysis module automates load billing and helps you manage the overall finances with the following functionality:
- invoices and supporting document management;
- real-time finances view — from transportation expenses and revenues to rent and phone bill;
- reports evaluating customers and carriers profitability, and brokers’ performance; and
- carrier settlement screens with all the updated details.
You can request a demo to explore the features yourself.
Price. The price for the standard Ops package starts at $100 per month and is dependent on the number of users and features you want to include. For a lower fee, you get Broker TMS via the web instead of installing it in-house.
Brokerware by 3PL Systems
Features. Brokerware covers a lot of operations. Among other things it may
- create quotes for both contracted and spot rates;
- book shipments;
- track loads;
- generate, send, and store important documents (BOLs, labels, dispatch sheets, carrier agreements, invoices, etc.); and
- handle accounting needs.
Also, it has separate portals for customers and sales agents.
Customers praise DAT Solutions for easy and fast loads and drivers posting
Price. Please make direct inquiries.
Features. Aljex features reside in the following major modules:
- Customer Management,
- Carrier Management with automated carrier rate acceptance,
- Utilities, and
- Administration & Reporting.
Aljex offers SmartSearch, a decision-making feature. It recommends carriers based on your criteria, historical data, and researches made through external load boards. It also takes into account any contracted rates that may be with a particular company on a specific lane. SmartSearch can send out load offers, bid requests, and enable trusted carriers to accept a load offer.
Customers at G2 note that sometimes the system lags, but you can reach out to the support desk and get a resolution rather quickly.
Price. A basic pricing level is $290 per month in addition to the setup fee of $1,500. There are also standard ($550) and PRO ($1050) options.
BrokerPro by Infinity Software Solutions
BrokerPro is a comprehensive transportation software that helps any size transportation intermediaries – brokers, 3PLs, and shippers – manage their day-to-day operations.
Features. BrokerPro modules include:
- Document Manager,
- SMS/Text Messaging,
- Rate Quote System,
- LTL (less-than-load) module,
- Infinity Posting Service,
- Customer/Carrier Portal,
- Load Tender,
- Invoice, and
- Status Update.
BrokerPro integrates with accounting software QuickBooks, security system SaferWatch, rate database RateView, AI-based solution for funding decisions HubTran, and many more.
BrokerPro integration with DocuSign enables managing electronically-signed documents
Price. BrokerPro’s price depends on the number of users and different modules you add to it. A basic user costs $100.00 per month. Each additional user costs another $25. With the option to pay for certain features, you can customize it to work for your business without spending money on things you do not need. You can learn what the pricing would be for you by filling out the form here.
Digital freight brokerage: replacing brokers
Besides actual intermediaries, companies and truck drivers can also connect via a matchmaking platform with programmed algorithms at its core.
This works for smaller shippers with flexible requirements. Having no long-term contracts, they go on the app and input the delivery details. Having all the info, the digital freight brokerage finds nearby drivers who can accommodate given needs. On the other side, the driver can accept or deny the shipment.
A shipper is matched with a driver within minutes. Once they agree on the terms, a driver can set off right away. Utilizing machine learning, the digital broker can also optimize routes and improve the supply chain.
If you’re interested, check out these platforms:
- Convoy – digital freight network with real-time analytics;
- Transfix – transportation solutions provider with true pricing algorithms and tracking capabilities;
- Uber Freight – Uber technology with instant payments and a rating system to know who you’re partnering with; and
- Loadsmart – technology for truckload and drayage shipments.
This model is a time and cost saver for delivering freight on a one-time, low-cost basis. Still, the bottom line is that digital freight software doesn’t allow for establishing a proper relationship between shipper and carrier. So right now, it can’t substitute the conventional solutions just yet.