What is the difference between a 3PL and a freight broker? If you’re a shipper looking to move freight across the United States, understanding the impact each of these roles play in logistics will help you make the best decision for your business.
Key Takeaways
- Third party logistics (3PL) providers offer complete shipping and warehousing services, while freight brokers focus on connecting shippers with carriers to move freight.
- Businesses with consistent freight shipping and storage needs are likely to benefit from full 3PL services, while more sporadic shipments can be effectively handled by a broker.
- A 3PL provider may employ one or more brokers, but brokerage is only one part of what the provider is capable of offering to shippers.
In this article, I’ll explain how freight brokers and 3PLs differ and illustrate their respective roles within the logistics industry.
What is a 3PL (Third-Party Logistics) Company?
3PL companies provide logistics services for other businesses, handling tasks such as the following:
- Warehousing and Storage – Secure storage and inventory management
- Distribution and Fulfillment – Picking, packing, and shipping to customers
- Freight Management – Coordinating shipments with freight carriers
- Reverse Logistics – Handling returns and exchanges
- Supply Chain Consulting – Providing insights to enhance logistics operations
Essentially, a 3PL handles as much or as little of their clients’ logistics needs as they’re contracted to do. Freight brokers have a much narrower focus.
What is a Freight Broker?
A freight broker acts as an intermediary between carriers and companies that need transportation services. Unlike 3PLs, freight brokers don’t handle physical inventory. Instead, they make freight arrangements between shippers and carriers, negotiating rates and connecting the two parties to facilitate efficient shipping.
Other duties a broker might handle on behalf of a shipper are:
- Tracking Shipments – Monitoring cargo during transit and providing tracking data
- Managing Paperwork – Handling bills of lading, invoices, and compliance documents
- Ensuring regulatory compliance – Ensuring all shipments meet federal and state transportation regulations
A 3PL may employ or work with freight brokers as part of its operations, but those operations encompass a number of logistics-related tasks, not just brokerage.
Related: What Does a Truckload Freight Broker Do?
Key Differences Between 3PL and Freight Brokers
Understanding the differences between 3PLs and freight brokers can help businesses determine the best solution for their needs. The following comparisons serve to illustrate three of the major differences between these roles.
Scope of Services
- 3PL: Provides comprehensive logistics solutions, including warehousing, distribution, and fulfilling orders
- Freight Broker: Specializes in matching shippers and carriers
Control & Management
- 3PL: Manages logistics operations internally with dedicated resources and infrastructure
- Freight Broker: Acts as an intermediary without direct control over shipments
Use Cases
- 3PL: Ideal for businesses with complex supply chains in need of multiple shipping and storage solutions
- Freight Broker: Best suited for companies that only need transportation coordination without additional logistics support
In order to provide further clarity, let’s examine some scenarios where a 3PL would be your best choice and others where a freight broker alone can get the job done alone.
When Should a Business Use a 3PL?
Consider the following scenarios where a business would benefit from full 3PL support rather than a freight broker.
- A growing e-commerce company experiences a surge in online orders and needs a scalable logistics solution. Instead of simply finding carriers to transport goods, they require a 3PL provider that can offer warehousing, pick-and-pack services, and last-mile delivery coordination.
- A mid-sized manufacturer produces automotive parts and distributes them to wholesalers across the U.S. The company struggles with managing multiple warehouses and ensuring just-in-time delivery. Turning those responsibilities over to a 3PL gives the manufacturer more bandwidth to address other needs of the business.
A good general rule is that a business with consistent shipping and storage requirements can benefit from full 3PL services far more than just brokerage.
When Should a Business Use a Freight Broker?
These are just some circumstances a freight broker can handle without necessarily involving a full 3PL provider.
- A small manufacturer makes specialized machinery parts and sometimes needs to ship large orders to different parts of the country. Since the business doesn’t ship in high volumes or require warehousing, a freight broker can meet their needs.
- To minimize transportation costs, a mid-size food distributor works with a freight broker. The broker negotiates competitive rates with refrigerated freight carriers on behalf of the shipper.
No matter which service you need, choosing the right broker or provider can elevate your business and give you an edge over the competition.
Related: 5 Benefits of Using a Freight Broker
Third Party Logistics Services From USA Truckload Shipping
Whether you’re looking for a broker to coordinate your shipments or a full 3PL provider, USA Truckload Shipping has the resources and experience to meet your needs. Our nationwide network of carriers and warehouses can store and ship your goods effortlessly across the United States and beyond.
Our services include:
Call us today at (866) 353-7178 or submit a request for proposal online. We have the knowledge and resources you need for efficient, reliable storage and shipping.
