Selecting the right freight broker isn’t simply a supply chain decision—it’s a critical component of risk management. Although freight brokerage is easy to enter due to low startup and overhead costs, manufacturers should understand the regulatory gaps that may expose them to financial or operational risk.

A key misconception is that freight brokers are required to carry insurance. The Federal Motor Carrier Safety Administration (FMCSA) only requires brokers to maintain a $75,000 surety bond, which does not provide cargo coverage and will not compensate you if your products are damaged, stolen, or lost during transit. Because of this, careful broker selection is essential to protect your business.

Experience and Industry Tenure

A broker’s experience influences their ability to navigate disruptions, vet carriers effectively, and troubleshoot issues. Look for brokers with several years of operational history and a proven track record serving businesses with transportation needs like yours.

Licensing, Compliance, and Operational Legitimacy

Before engaging a broker, confirm that they hold a valid FMCSA authority and the required surety bond. It’s also important to assess their business stability:

• Do they operate from a physical office?
• Are they staffed in a way that supports reliable communication and load management?
• Does their business model suggest long‑term sustainability?

Reputation and Client Feedback

A broker’s reputation reflects their service quality, responsiveness, and integrity. Review industry ratings, online feedback, and request references when possible. A reputable broker should be transparent and willing to provide references from current clients.

Expertise With Your Specific Product

As a manufacturer, you know not all products travel the same way. Ensure your broker understands the unique characteristics of your cargo, whether that includes special handling, temperature control, high value, or regulatory requirements. Specialized knowledge helps prevent avoidable losses.

Contract Structure and Role Clarity

Freight contracts should clearly outline roles, responsibilities, and financial terms. Contracts lacking clarity can create significant exposure in the event of a dispute or loss. Look for agreements that define:

• The broker’s role in the supply chain.
• Liability limitations.
• Rate structure and any accessorial fees.
• How claims will be handled.

Technology, Visibility, and Communication Tools

Advanced technology enhances visibility and reduces uncertainty, creating a smoother experience for both the manufacturer and the end customer. Strong brokers often provide:

• Real‑time tracking
• Load status updates
• Digital document access
• Automated communication tools

Understand how the broker manages claims. Ask about filing procedures, required documentation, expected timelines, and how involved they will be in advocating on your behalf. A proactive claims process can significantly reduce disruption after a loss event.

Broker Insurance Coverage

While not required, brokers should carry insurance that protects shippers. At a minimum, request proof of Contingent Cargo Insurance with limits that meet or exceed your product value. Always request certificates of insurance and verify active coverage dates. Additional recommended policies include:

• Contingent Auto Liability
• General Liability
• Professional Errors & Omissions (E&O)
• Cyber Liability

Best Practices for How Brokers Should Select Carriers

A trustworthy broker should follow rigorous standards when choosing carriers. These steps reduce the likelihood of service failures, fraud, and uninsured losses. Strong internal carrier‑vetting practices commonly include:

• Maintaining long‑term relationships with reliable carriers.
• Avoiding carriers with two or more SMS BASIC Alerts, a federal safety scoring measure.
• Working with carriers that have been operating for at least one year.
• Using a written Broker–Carrier Agreement.
• Utilizing vetting tools such as SAFERWATCH or RMIS.
• Conducting detailed insurance verification on every carrier.

The Right Partner Makes a Difference

Choosing a freight broker is more than a cost decision—it’s a strategic safeguard for your products and your business. By evaluating experience, compliance, transparency, technology, and insurance coverage, manufacturers can minimize liability exposure and ensure a more secure and reliable transportation process.

Our Transportation experts at Holmes Murphy understand the unique needs of manufacturers seeking a trustworthy freight broker committed to a positive and productive partnership. If you need assistance selecting the right broker for your business, reach out today to connect with our team.