When finding freight, carriers have quite a few options: load boards, dispatchers and freight brokers. Owner operators who don’t have the time to search through load boards can use a freight broker or a dispatcher to find loads.
If you’re new to the business, you may be wondering whether dispatchers and freight brokers are the same thing – they’re not.
What’s the difference between the two? When does it make sense to use dedicated trucking dispatch companies?
What is the Difference Between a Truck Dispatcher and Freight Brokers?
Freight brokers are middle men. They work with both carriers and shippers, and they make money by negotiating rates individually with carriers and shippers. This means that brokers have an incentive to negotiate higher rates with shippers and lower rates with carriers to turn a bigger profit.
If you want to work with a freight broker, you need to have good negotiation skills, knowledge of your operating costs, and knowledge of pay rates in certain lanes. It’s very easy for freight broker loads to become unprofitable if you don’t have the right knowledge or experience.
Dispatchers represent carriers when negotiating freight. Instead of acting as a middle man, dispatchers work on your behalf. And because they take a percentage of your rate, they have an incentive to find high-paying freight.
A good dispatcher will get to know you as a carrier and keep a log of your desired rates, lane preferences and equipment specifications.
Dispatchers will contact shippers or freight brokers on your behalf to negotiate loads that meet your personal requirements. You won’t be charged any fees until after the load is agreed upon.
Essentially, dispatchers work for you, while freight brokers are simple middle men trying to get the highest rate possible for themselves.
Choosing a Dispatch Service
Outsourcing dispatch comes with a number of benefits, but there are several things you’ll need to consider when choosing a service provided.
Before you start looking at companies, it’s important to determine what type of services you need. Make a list of everything (don’t leave out any details) you need to do to keep your business in operation. Next, determine which of those things you can realistically do on your own.
Once you know what you’re capable of and what services you’ll need, you can start looking for dispatchers that meet all of your requirements.
In addition to the services the company offers, you also want to consider:
Look for reviews of the company, and consult with your colleagues to get recommendations on reputable service providers.
Recommendations are usually the best way to go, as you can get first-hand accounts on quality of service and how things work. But if you can’t get any recommendations, reviews are your next best bet. Reputable, well-reviewed service providers are more likely to give you a positive experience and meet your expectations.
Dispatchers don’t work for free, and you have costs of your own to consider. Make sure that you understand exactly how much you’ll be spending before you even start running loads.
Determine the costs of running your business and how much the dispatcher will charge. Use this figure to determine the lowest possible amount you can charge to cover expenses. This figure will help you and your dispatcher figure out whether a load is profitable.
3 Benefits of Outsourcing Dispatch Services for Owner Operators
Dispatch services offer many benefits to owner operators in addition to finding high-paying freight.
#1 – More Than Just Finding Freight
Yes, dispatchers find loads, but they also offer other services that can benefit your operation.
Motor carrier compliance: Dispatchers will ensure that you maintain motor carrier compliance so that you can stay on the road and continue earning a living.
Customer care: A good dispatcher will help you manage relationships with shippers, establish service expectations and tackle any issues that may arise.
Manage unexpected delays: Dispatchers can help you address unexpected delays caused by weather, traffic and other issues while you’re on the road.
Billing, paperwork and collections: Many dispatch services also take care of billing, paperwork and collections on your behalf to save you time.
Dispatch services have an incentive to ensure that the process of negotiating, transporting and delivery goes as smoothly as possible. These additional services not only benefit their company, but also benefit your operations as well.
#2 – Saves Time
When many owner operators first start out, they use load boards to find work. This may work well for a while, but once you start accepting loads, you’ll have less time to spend on load boards. You’re also missing out on opportunities to make more money on higher-paying freight.
That’s where dispatch services come in. You’ll spend more time working and less time searching for freight.
One of the main reasons why owner operators fail in their first years is because they’re unable to find consistent loads to keep their business up and running. Back-office tasks, like finding loads and billing, is very time-consuming. Time is money.
Of course, not all truck dispatch services are created equal. It’s important to do your research and find a company that will work for you – not against you.
#3 – They work For You
A good dispatcher works for you. They take a percentage of your rate, so they have an incentive to negotiate high rates for you. The more money you make, the more money they make.
Dispatchers also have an incentive to ensure that shippers are billed in a timely manner and pay their invoices in a timely manner. That’s why they offer additional services, like billing, paperwork and collecting.