A freight broker is an entity or a company that brings together a shipper that requires transporting merchandise with an authorized motor carrier that wants to provide the service. A freight broker falls under the category of transportation intermediary, which is a company that is neither a shipper nor an asset-owning carrier, but plays a dominant role in the movement of cargo.

Brokers provide a crucial and useful service to both motor carriers and shippers. They help carriers fill their trucks and receive a commission for their efforts. They provide valuable assistance to shippers in finding credible motor carriers that the shippers might not have otherwise known about. In fact, some companies use brokers as their traffic department, permitting the broker to synchronize all their shipping needs.

Brokers aren't new people to the trucking industry; they've been around since the industry itself began in the early part of the 20th century. Before the 1970s, however, regulations governing brokers were so restraining that few firms were willing to even try to gain entry into the industry. But with the remarkable changes in the federal transportation policy during the 1970s, regulatory restrictions were simplified, giving rise to new entrepreneurial opportunities in the third-party logistics arena.

An industry so vast and diverse requires a wide range of participants to flourish. Some of the titles of the players in the freight brokerage business may be a bit perplexing, and some of their responsibilities may overlap. But to keep things as transparent and simple as possible, let us look at who the key players are and what are their duties:

• Freight broker: A freight broker is the middleman who brings together shippers and carriers.

• Shipper: A shipper is a person or company that has merchandise or goods to transport.

• Motor carrier: A motor carrier is a company that offers truck transportation. There are two kinds of motor carriers: private that is a company that provides truck transportation of its own cargo and for hire that is company that is paid to provide truck transportation of cargo belonging to other companies

• Freight forwarder: time and again confused with freight brokers, freight forwarders are considerably different. Forwarders basically take possession of the goods, amalgamate numerous smaller shipments into one large shipment, then organize for transport of that larger shipment using different shipping methods, including air, land and water carriers.

• Import-export broker: These people are catalysts for importers and exporters.

• Shipper's associations: Shipper's associations are non-profit, cooperative organizations created by shippers to reduce transportation costs by pooling shipments. Shipper's associations operate in a manner very alike to that of freight forwarders, but their service is restricted to their members and is not available to the general public.

In a perfect world, each entity in the industry would manage its conventional role and that's all. However, the transportation industry is changing so drastically that once-distinctive lines are hazing. Also, it's quite customary for a successful freight broker to expand his or her business by developing subsidiaries or additional companies that offer various freight services.