Freight Forwarder vs Freight Broker

Freight Forwarder vs Freight Broker

February 19, 2010 - 3:28 PM

Brad Eldeen Logistics is an agent for Network F.O.B. Below is excerpt from an article written by Network F.O.B. President, Tim Taylor

 

Network F.O.B is a freight forwarder, not a broker. There is an important distinction between the two.

Forwarders must adhere to Carmack amendment liability requiring proper claims handling. A forwarder has the same cargo claims and cargo insurance responsibility as that of a motor carrier. 

Brokers, on the other hand, do not have a statutory freight claims (Carmack) liability and can get by with contingent coverage (less than half the cost of primary coverage) because they're not liable in the event of a loss, absent negligence on the broker's part.  Brokers typically forward freight claims onto the carrier for handling.

The important part of the process here is responsibility and the approach to the application of that responsibility.

When a trucker uses a broker it's safe to assume that broker is not their bread-and-butter customer.  Whether that trucker  responsibly processes and pays a claim without being forced by a court of law sometimes is a matter of customer relations and, absent a true customer relationship, the outcome is not assured.

A forwarder, on the other hand, is not only more comprehensively covered by cargo insurance, but also willingly stands up for the customer and works diligently to resolve the issue with the motor carrier on the customer's behalf in a timely and satisfactory way.

A few key points to make in regards to accepting shipment:

Take photos before the shipment leaves your facility to ensure the condition of your freight prior to shipping. Take photos of the damaged material while it's still on the truck.

The bill of lading is an essential part of the claims the process.  When you notice damage open the box or inspect the equipment to avoid having a concealed damage claim after the driver leaves.  When you find damage note it on all copies of the bill of lading.  Many claims are dead in the water due to the driver leaving with a clear signed bill of lading.  

Make sure to save any parts or boxes that have been damaged.  The damaged goods are often the evidence of your claim.  Disposing the evidence can give the carrier or insurance adjuster a reason to deny your claim.

When in doubt call someone to help assess the situation.

Response to Freight Forwarder vs Freight Broker

  • Clay said on August 31, 2011 - 3:47 PM

    Brad, I interpreted your view of brokers as being somewhat negative. I can understand that since you are a forwarder, and my question is, do you think it logical to start a brokerage with the intent of becoming a forwarder? Thanks for your time! Clay Kuenstler The Load Connection 623-688-4864

  • Brad Eldeen said on September 1, 2011 - 8:10 AM

    Clay, From a clients perspective a freight forwarder will offer an added layer of primary cargo protection. This extra layer often a great selling point over a broker's contingent cargo. Choosing the proper authority can be a tough decision and each type of authority comes with its own pros and cons. Many large carriers do not deal with freight forwarders, largely in part to the FMCSA not requiring a surety bond for freight forwarders. Even if you do acquire a bond some carriers still will not use you. The simplest and most economic choice is a standard brokerage. Hope that helps!

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