Becoming a Freight Broker – Information That You Absolutely Need in Order to Succeed in 2022
Freight Brokers are in high demand and an integral part of the transportation industry. The Bureau of Labor and Statistics (BLS) anticipates that this field will grow by 30% in the next five years. Even though Freight brokers aren’t a newly established job, their services are still in high demand today. But what is the process of becoming a freight broker?
If you are looking to start and thrive in this fast-growing field, the secret is being well-informed and well-rounded. By securing the knowledge and skills from all areas of logistics you will be in a position to make the right decisions for your business.
Whether you are looking to start a freight brokerage business or you are simply in search of freight broker training, this article will give you the information to get you headed in the right direction.
What is a freight broker, and what do they do?
Freight brokers are professional intermediaries who connect shippers with carriers. They are paid by both parties and exist to make your shipping experience more manageable and less stressful. A freight broker will negotiate rates with carriers on your behalf, find the best fit for your shipment, and handle all aspects of logistics once your goods are shipped.
A freight broker may represent one shipper or many, including trucking companies, railroads, airlines, and ocean carriers, and will often help you find the most cost-effective transportation options for your business.
As a result, they are an integral part of the supply chain system that connects producers with consumers. Freight brokers play a crucial role in ensuring that hand-offs go smoothly and goods get from point A to point B safely and on time.
Freight brokers are not just limited to arranging shipments but also help with various other services like insurance, customs, clearance, and warehousing.
The role of a freight broker has evolved as technology and regulations have changed. However, the primary purpose has remained the same; to help companies move products from point A to point B efficiently and at an affordable price.
The benefits of being a freight broker
The benefits of being a freight broker are numerous, and they include the following.
You can be your own boss. Freight brokers are independent contractors who set their own schedules and billable hours. This means you can be as involved as you want, depending on how much time you want to devote to your own business.
There’s no limit on earnings potential for freight brokers who put enough time and effort into building their business over time.
This means there’s no cap on how much money you can make if you put in the effort needed to grow your business and reach new clients. Some agents make over $100,000 per year!
You can work from anywhere. There is no need to spend hours traveling every day to the office when you have your own freight brokerage. Instead, you can work from home using a laptop and freight brokering software.
There are no restrictions on who you can work with. Unlike many other professions, such as doctors or lawyers who must work for specific clients, freight brokers have the freedom to partner with anyone within the shipping industry.
This gives them the freedom to work with a variety of clients from trucking companies to most shipping companies and even other brokers.
How to become a freight broker
Before becoming a freight broker, you must understand the entire process it takes to succeed.
Success depends mainly on the freight broker training and experience you receive before you get your authority. There are several ways you can go about getting freight broker training; freight broker school, hiring someone to teach you how to do it, or working under an experienced freight broker in the field.
Be open to continuous learning through websites, and follow expert leaders in the industry who have experiences that they share. Work in a freight brokerage business as a dispatcher or process agent to gain industry experience before venturing out with your own freight brokerage business.
To establish a successful freight broker business, you must develop a strong knowledge of the freight industry and how it works. This starts with gaining an understanding of basic freight transportation methods, including:
- How freight is priced
- The trucking industry as a whole
- How transportation routes are planned and scheduled
- How freight can be moved by land, sea, or air
- Many more
Once you have this industry knowledge, you can move on to learning about more advanced subjects like:
- Brokerage agreement terms and conditions
- Risk management techniques for brokers and carriers
- Freight forwarding software technologies
- Industry trends
- Shipping process and shipping regulations
- Load boards and contingent cargo insurance
The education and training needed to become a freight broker vary by state. In most cases, you’ll need to be at least 18 years old, have a valid driver’s license, complete an approved training program and pass an exam. Once you’ve passed the exam you will be able to apply for a freight broker authority and a carrier authority through FMCSA.
There are a lot of differences between being a freight broker and having your own freight brokerage business. Nn education in business management will help you understand the types of business processes and terminology you’ll uncover when dealing with carriers and other businesses. The following are things you might want to learn about if you plan to have your own business.
- A solid business plan
- Business structure (sole proprietorship, limited liability corporation or LLC, s-corp)
- General liability insurance
- Surety bonds and surety bond types
- Procedure for applying for a business loan
There are start up costs and start up procedures that will need to be in place and covered before you can really work in your business. You also have state and federal government requirements.
Getting your freight broker license, which is obtained through the Federal Motor Carrier Safety Administration or FMCSA is step one. You’ll also need to apply and obtain a freight broker bond to continue operating.
The bond requirement is typically from $10,000-$75,000 depending on your personal assets, credit score, criminal background history and other factors. You can reduce this by working with a bond company.
Once established, you need to select a process agent and have process agents in each state you wish to operate. The process agent is appointed to deal with legal matters should proceedings be needed.
Freight broker salary ranges
The freight broker career path is an exciting one. You get to work with clients, pick up and deliver cargo, and make a good living. It’s also a very lucrative field, with the average annual salary being $70,000-$90,000 per year, according to the Bureau of Labor Statistics (BLS).
Freight brokers typically work full-time or part-time. The salary of a freight broker will likely depend on their years of experience, industry knowledge, employment status, and geographical location.
The average salary in the U.S. is $78,427 per year. If you start your own brokerage, you’ll find you can make quite a bit more. You’ll also discover that running your own business has its challenges that any new business will likely need to overcome to be successful.
The future outlook for the freight brokerage industry
Running a freight brokerage business is not just about finding good deals for your clients. It is also about knowing how to satisfy them with your services and ensure they will keep coming back for more.
It’s about connecting shippers with them to create better delivery opportunities. Its about understanding the transportation industry and nuances of the supply chain and shipping industry to produce satisfied customers.
The advancement in technology has made the freight brokerage industry easier to manage. With the improvement in transportation management systems (TMS), a shipping company can optimize their transportation needs and follow through easily. A TMS makes it easier for new freight brokers to gain footing within this competitive industry.
TMS systems enable freight brokers to improve their services by enhancing transparency in their communication across all partners. With the right system in place, a freight broker can transform their businesses and produce better results.
What are the five characteristics of a successful freight broker?
A successful freight broker will need to possess some of the following traits.
- Be hardworking and reliable.
- Be willing to engage in ongoing training and education pertaining to the sector, and sign up for relevant events.
- Have a comprehension of the fundamentals involved in the operation of a company, such as the distinctions between cash flow, profit and loss accounts, and balance sheets.
- If you want your task to be less difficult, you should embrace the usage of technology in your everyday operations. You may make the day-to-day operations of your company more controllable and productive with the assistance of technological goods like a TMS.
- Always put the needs of the customer first and strive to provide outstanding support for them in any situation.
Starting a freight broker business involves more than a company name and startup capital. You need to know the complexities of the industry and the nuances of what a successful freight broker company does for its clients.
You might best start by going to freight broker training school or learn by working as a freight broker agent for another firm. Maybe you start by working at a trucking company and learn from the ground up.
Regardless of your process, your success is largely tied to your knowledge of the freight broker industry and your commitment to your customers. Understanding as much as you can will give you a leg up on the competition and earn you success.
Frequently Asked Questions
Is becoming a freight broker worth it?
Becoming a freight broker is worth it. The most obvious benefit is that you will be your own boss. You can set your own schedule, work from anywhere and make as much money as your work ethic takes you.
How long does it take to become a freight broker?
The process can be anywhere from 2-5 years depending on a number of factors. The time varies based on your work ethic, level of commitment to the craft and background, education and training.
To become a freight broker, you’ll need to be a licensed broker first. This means you’ll need at least two years of experience as an employer or trucking employee.
You’ll also need to take a written exam covering various aspects of trucking, such as federal regulations and financial management. You’ll need to apply for licensing and other authorities.
How to become a freight broker with no experience?
You can still become a freight broker with no experience.
Look for any vacancies in a freight brokerage company and start in customer service or dispatch to gain insight into the industry and experience. Later as you understand the industry better, you can open your own freight brokerage firm.
How do freight brokers find clients?
Finding clients is one of the biggest hurdles that business owners grapple with. It will take work to find shippers and carriers as a freight broker. However, the process is made easier with technology.
You can find a variety of databases with shippers’ information. Many people in the industry will work with physical or online directories. Many freight brokers use load boards to find opportunities. A marketing strategy can also assist in getting your name out into the marketplace.
After you start getting clients, it is essential that you give excellent customer service so that they return as customers. Do not be afraid to ask for referrals from friends and colleagues in the industry.
Is freight brokering hard?
There are many challenges that you encounter while working as a freight broker. An example is finding reliable carriers. Another is navigating the motor carrier operating authority for the carriers you plan to use. You will need to vet carriers properly to ensure they meet your client requirements.