Imagine a world where goods seamlessly transition from manufacturers to consumers, a complex dance orchestrated with precision and efficiency. This vision, though seemingly effortless, is brought to life by a pivotal yet often overlooked player – the Freight Broker. Join us as we pull back the curtain and unveil the intricate role these professionals play in the labyrinth of transportation and logistics.
Freight brokers and dispatchers are two different roles in the transportation and supply chain world, but they often get confused. While they have some things in common, they have some very clear differences. If you’re considering becoming a freight broker or a dispatcher, this blog is for you.
What is a Dispatcher
In the simplest sense, a dispatcher is an individual that finds loads for a trucking company. In this case of dispatcher, we are not talking about an employee that works for a freight broker that has the job title of dispatcher. That is completely different. We’re talking about the person that is contracted by and paid by an actual motor carrier.
The job of a dispatcher is to make a carrier’s job easier when it comes to finding available loads. They know that some carriers run small fleets or perhaps are just a single owner-operator. These small carriers are focused on picking up loads, driving safely, and getting loads delivered. In order to do that, they need to make sure they always have loads to haul. Carriers can use loadboards like DAT to find available loads that brokers have posted, but they can’t do that while they are physically driving down the road. If a carrier is small, they probably don’t have a dedicated employee to find their next loads for them, which is where the role of an independent dispatcher comes in.
Independent dispatchers are not employees of the carrier, which allows them to free-lance for as many carriers as they want. In fact, they’ll likely need to dispatch for multiple carriers to keep themselves busy and earn enough to make a good living. Dispatchers are paid a commission by the carrier for finding them their loads. This commission can range, but usually sits between 5-10% of the pay rate for that load. Here’s a basic example. A broker has a load that pays $1,000. If a dispatcher acquires that load on behalf of the carrier, the carrier would then pay $50-100 to that dispatcher for their services. The load is never tendered to the dispatcher. They simply assist the carrier in finding the load. The dispatcher isn’t involved in the invoicing process either. The carrier still invoices the broker themselves.
Differences Between Freight Brokers and Dispatchers
Independent dispatchers are not freight brokers. Let me repeat that loud and clear. Dispatchers are not licensed freight brokers. In fact, they’re not licensed or insured at all which makes them very unregulated and potentially dangerous if they conduct business in any way that could make them appear to be doing the broker’s job. They cannot legally represent a freight broker. They are simply an independent contract that is contracted on a motor carrier’s behalf. As I mentioned earlier, they also aren’t a billing party in the transaction. The carrier invoices the broker directly, and the broker pays the carrier directly. Any agreement that a dispatcher has with a carrier is strictly between them. The broker has no involvement.
Dispatchers are also not licensed motor carriers. They don’t carry the legal authority or insurance required to do so. This is extremely important to understand. In the case of a legal matter, a judge will look at the parties involved and make a determination of fault. If a dispatcher in any way identified themselves as a representative or the broker or the carrier, that broker or carrier could be held liable for that dispatcher’s actions or negligence.
Similarities Between Freight Brokers and Dispatchers
Brokers and dispatchers both serve as a value-add to carriers in certain circumstances. Brokers add value by bringing a large volume of shipments from their customers to the motor carriers. Likewise, dispatchers bring all of that broker business to their network of carriers as a way to save them time from searching the load boards when they are focused on safe driving.
Benefits of Dispatchers
In addition to what we already covered, there are some other key benefits that dispatchers offer to both brokers and carriers. First, let’s look at brokers. Now, more than ever, capacity in the carrier market is so tight and the difficulty to secure a truck is at an all time high. By building relationships with good dispatchers, brokers can gain access to a larger portion of the carrier market with less contacts.
Now on the carrier side, dispatchers save small carriers time and energy by doing administrative tasks on their behalf. They are sifting through available loads and attempting to find loads that pair up well with a carrier’s location and desired pay. That means more money and less empty miles. This is what makes dispatchers worth the 5-10% that they are paid in commission. They even help out with carrier paperwork at times, which takes one more task off that small owner-operators plate.