When choosing a company that offers shipping services, one question often arises. What to choose, a parcel broker or a courier company? And what exactly is the difference between those two?
The complexity of logistics industry translates into a multitude of companies that are making their way to the market, offering different types of services. Moreover, not only the services have been refined throughout the time, but also there is an increasing number of companies, both international and local, that offer either the access to shipping services or perform the services themselves.
What is a parcel broker?
A parcel broker is an intermediary between customers and courier service providers. Basically, a parcel broker matches the demand with the supply. A parcel broker has a higher volume of orders that can be passed on to the courier service provider, simply because it acts as an aggregator of all people’s demands. This increases their bargaining power when negotiating the rates with the courier service providers.
Simply put, at least theoretically, it would be easier for a parcel broker to receive lower rates for shipping services from courier companies than it would be for a single company that has a lower volume of shipping. This is usually the case of SMEs, newly founded businesses, startups and sole owners who don’t have a constant need for shipping services and they end up paying higher prices whenever they need to ship their items every once in a while.
Types of parcel brokers
The point of differentiation between different parcel brokers is, except the number of the logistics operators that they cooperate with, also the system they have in place.
- Parcel brokers that act as comparison websites – on their website, for any selected route and type of a service, different courier companies are displayed, along with the prices that each of them has to offer. The customer is free to choose preferred courier company to perform the service.
- Parcel brokers that act as platforms which automatically select the best price – by using such platforms, you obtain a single price and receive all the details about the assigned courier company after you place the order. This is because, depending on the parameters (such as the selected route, dimensions and weight), the courier service provider offering the best price is automatically selected. Moreover, many parcel brokers are developing quality control systems in order to monitor the performance of the courier companies and make the selection based on this variable as well. This is precisely how Eurosender works.
What is a courier company?
In a nutshell, a courier company is one which owns its own fleet of vehicles and has its own courier drivers, performs the actual service of collection of the mail, packages and bigger shipment and delivers them from point A to point B.
Types of courier companies
There are many types of courier companies and they can be segregated by:
- The size and the area where they offer the services: they can be international companies, national or even local ones.
- The type of the shipping services offered: ranging from standard shipping service, express service or next day deliveries. You can read more about the types of courier services in our article.
Most of the courier companies usually have their own warehouses, where they can store the parcels.
Shipping services: Parcel broker vs. courier company
Not all the logistics players can provide complete shipping solutions and serve wide areas with shipping services. Some logistics operators are optimized for shipping on given routes.
What parcel brokers do is gather all logistics capabilities and provide a wider array of services on many different routes.
Since parcel brokers are asset-light companies, their main focus is to seal partnerships with many courier companies in order to cover as many services and areas as possible. In this way, they manage to make inroads faster than courier companies and offer more possibilities for deliveries in more problematic zones, such as remote areas or gridlocked cities, and are able to cover any shortages that one courier company is experiencing by shifting the service to another courier service provider.
Courier companies set their own prices depending on different parameters such as, but not limited to:
- Weight and dimensions of shipment;
- Fuel surcharges;
- Type of service surcharge (for instance “Priority mail”, “Delivery confirmation” etc.);
- Residential delivery surcharge (if applicable).
The price a parcel broker offers is usually the courier company’s fees + their commission. Nonetheless, the final price can turn out to be cheaper if the broker is able to establish low rates with the courier companies, so you can definitely save money.
When a parcel broker is involved, the payment is done either directly to them or is arranged for you with the courier company.
Should you choose a parcel broker or a courier company?
There are many things to take into consideration.
- The price
The question is how many parcels do you send every month? If you are a one-time shipper or if your company doesn’t have a constant high volume of shipments, then you are best suited with the services and prices that a parcel broker has to offer.
The shipping rates will most probably be more affordable than what you would pay to the courier company directly and you will not be constrained by the volume of shipments. But if you ship items on a regular basis, regardless of the location, you might be able to negotiate a good contract directly with a courier service provider.
- The time spent looking for the best offer available on the market
If you don’t want to deal with managing the transport with different couriers, researching the best options each time you need to ship an item and you also want to have one single point of contact for your shipping needs, then a parcel broker is the way to go.
- Quality of the service
If you already had a good experience with some courier companies, chances are that you will trust them more than a company you never heard of.
However, parcel brokers cooperate with many local and international courier companies and it is just natural that they choose them based on their reliability as well. The reputation of the courier companies is naturally transferred to the parcel brokers. Since they want to increase their reputation, they will not cooperate with companies that turn out to be unreliable.
Therefore, through a parcel broker, you will have access to services of a good quality that otherwise might remain unknown to you.
Why are parcel brokers beneficial for courier companies?
Parcel brokers supplement the courier companies’ current volume and help them to optimize the transportation costs and losses that may occur due to partially loaded trucks. At the same time, parcel brokers are a “source” of constant volume for courier companies and give more volume predictability in comparison to a sudden slump in contracts between the couriers and customers.
Whatever you choose, make sure you plan it well in advance. If you need more tips, you can always check out our blog or chat with us online. Speak soon!
Last modified: May 23, 2018