By: Joe Lynch

Cut out the middle man and save! Who could possibly disagree with that wisdom?

I disagree!  As a middle man, I say not all middle men are created equal.  In fact, some middlemen can actually save you money.

Some logistics companies buy freight from Less-Than-Truckload (LTL) carriers and resell it to their clients who are shippers. Even though these companies are reselling a service, new clients can typically save 10-15% on their freight spending. Over time, they save even more by utilizing a company that provides this service.

Predictably, prospective clients are skeptical about how they still can still save money. It certainly is counterintuitive: these companies can save money for their clients, while still making a little profit for themselves.

This is accomplished by negotiating better prices with carriers and using the right carriers.

Better Carrier Negotiations

This negotiation is carried on daily and LTL carriers are willing to negotiate better prices because logistics companies specialize in this specific service and have a large amount of clients and databases full of shipping data. This knowledge gives logistics companies a definite edge over shippers when it comes to negotiating with carriers. In exchange for better pricing, carriers have high expectations from logistics companies. These companies should provide market intelligence, great customer service and most of all direct some freight their way. The carriers also know that logistics companies can direct millions of dollars in freight and they expect logistics companies to involve them when it is a good fit.

Using the Right Carriers

In contrast to logistics companies, most shippers don’t use the right carriers because they see them as all the same. Shippers often do not take the time to get the details to save customers money.

On the other hand, logistics companies understand LTL carrier preferences and are able to pick just the right carrier for the job. At the same time, the carrier will give better pricing to get the right type of freight or the right pick-up and delivery locations.

Bottom Line

The conventional wisdom of cutting out the middle man makes sense in many situations; however, before you cut this person out, determine if the middle man is adding value.

Joe Lynch is a contributor to anmexponews.com on logistics and supply chain topics. Joe is the General Manager of Rock Solid Business Solutions, a hybrid company with expertise in logistics, IT solutions and consulting. Follow Joe on Twitter at @The_LOL_ and on the web at TheLogisitcsofLogistics.com. Email:

joe@TheLogisticsofLogistics.com.