Who Is a Freight Broker?
A freight broker is a person who connects truckers and shippers when they have goods that need to be moved. Freight and shipping is a billion-dollar industry, and freight brokers play a key role in managing the high volume of goods transported annually.
As the demand for truckers grows and the logistics industry continues to grow, there is an opportunity to carve out a profitable career as a freight broker. Freight brokers can work remotely, set their own hours, and make a pretty penny.
Duties of a Freight Broker
A few examples of a freight broker’s duties include:
- Identifying and choosing reputable carriers.
- Providing customers with shipping quotes.
- Generating leads and attracting new customers.
- Tracking the status of goods.
- Booking orders with the carriers.
- Helping to prepare carriers to receive goods.
- Updating customers with the status of shipments and assisting with other inquiries.
- Keeping accurate records of any relevant occurrences.
- Staying up to date with relevant trends in the industry.
- Collaborating with all parties to ensure goods are collected and delivered on time.
- Ensuring that freight paperwork is in order before transportation.
- Negotiating agreements with the carriers.
- Resolving any issues in a timely fashion.
- Developing new sales strategies to improve their business.
Steps To Become a Freight Broker
Freight brokers should intimately know the freight industry and understand the trucking industry. To become a freight broker, you should learn how the freight industry works and understand industry trends.
These are the common steps to becoming a freight broker:
Step 1: Completing High School
The most basic requirement of freight brokerage is a GED. You must complete high school if you hope to become a freight broker.
Step 2: Attend Training School
Once you get your GED and you decide you want a career in freight brokerage, the next step is to apply to join a freight brokerage training school.
Why Should You Do This?
It is not a legal requirement to attend a training school to become a freight agent. However, it is recommended that you go to a training school to become a good agent. Getting training will give you the necessary skills to run a brokerage company efficiently.
Some training schools have online classes, but many have physical classes where you can get hands-on experience.
These training schools will teach you how to run your business, how to be successful, and industry trends, amongst other things. You can also learn more about the industry by finding and joining online communities and reading up on any relevant information.
Step 3: Get Experience
You can get experience as a freight broker or through other roles in the industry.
- Working as a truck driver gives you an understanding of what they experience every day while delivering shipments.
- You can also work as a dispatcher and coordinate driver routes and schedules.
Step 4: Starting Your Business
The first step is to name your business and then find out how to register it with the local authorities. You need to decide whether your business should be a sole proprietorship or an LLC. Most freight agents choose to make their business an LLC. You should also develop a business plan to help you run your business efficiently.
Step 5: Find the Best Carriers
Finding the best carriers will ensure your business prospers. You must choose reputable truckers that have experience transporting the type of goods you want.
Step 6: Meet the Licensing Requirements
All freight brokers must get a license before they start working. The first step is to apply for a USDOT number with the local Department of Transportation. After that, you need to fill out an OP-1 freight broker application, which will be processed in about a month. Submission costs add up to $300.
Once you are cleared for the next step, the Federal Motor Carrier Safety Administration (FMCSA) will send your motor carrier number via mail. It takes ten days for the registration to be complete, and then you can open your business.
Step 7: Obtain a Freight Broker Bond
The next step is for you to apply for a BMC-84 bond. Before you are approved, they will need to access your financial records and credit score to determine whether it is worth it to issue the bond. You will need $75,000 to acquire the bond to show prospective clients that they are covered in case of an issue. The bond is like an insurance policy for your company.
Step 8: File Your BOC-3
BOC-3 ensures your business is covered. You will be required to apply for this form in every state you do business in. Before filing, choose a process agent. The process agent will help you apply for the form in each state.
How Much Does It Cost To Become a Freight Broker?
Each freight broker training school has different tuition costs. Programs can cost anywhere from $500 to $3,000, which may or may not include the cost of study materials. Some institutions will offer financial assistance in the form of scholarships and loans.
How Much Does it Pay, on Average?
How much a freight agent earns will usually depend on the number of years they have been active, the state they’re working in, and their knowledge of the industry. The salaries of freight brokers range from $45,000 to $109,000 per year.
- Honesty: Even though honesty can make things hard for a freight broker, it can be worth it in the long run. When communicating with carriers and shippers, being honest and transparent will eventually allow you to gain their trust. It would be best if you were honest about the conditions of the cargo and about what is possible and what is not. Try not to make empty promises.
- Flexibility: Being a freight broker can be tiring. Freight brokerage is a very fast-paced and stressful career, and if you don’t have the resilience to deal with the stress, you may quit. Freight brokers should be able to keep their cool to become flexible enough to make decisions quickly and try to make as many people happy as possible.
- Quick thinking: Problems are a huge part of being a freight broker, and a good broker should be quick on their feet.
- Multitasking: Freight brokerage can be a fast-paced environment, meaning a broker sometimes has to carry out multiple tasks simultaneously. A good freight broker should be able to multitask. They flourish in a busy environment and can juggle many responsibilities at once.
- Self-motivated: Apart from experience and knowledge of the freight industry, the most prosperous freight brokers are usually self-motivated. A good freight broker has an inner drive to do their job well and help shippers and carriers. Being self-motivated means that your motivation does not come from your paycheck, but from your passion for the job.
- Proactive: Being a good broker requires anticipating changes and challenges and constantly learning new things. This means networking with new people, taking courses, and trying out new approaches.
Skills of Freight Brokers
- Organizational skills: Many freight agents work independently. This means that you will be your own assistant, booker, strategist, accountant, and scheduler on top of managing requests. You cannot be successful in this industry with poor organization. Strong organizational skills will allow you to provide quality customer service.
- Management skills: Successful freight workers should be able to manage requests and employees if they have any. Being a good manager starts with having the right people in place, whether you are your own manager or you have your own employees.
- Customer service skills: Having customer service skills is about how well you connect with people, from your employees to clients. Ask yourself if your daily interactions are fraught with tension and mix-ups.
- Business skills: Once you’ve started your own business, you need to make it grow and thrive. Some business skills include negotiating, financial planning, and marketing skills.
- Networking skills: Growing your client list requires strong networking skills. Be strategic when making connections. Just because you have your own business doesn’t mean you don’t need other people to succeed.
Frequently Asked Questions About Becoming a Freight Broker
How long does it take to become a freight agent?
Freight agent training typically lasts anywhere between 30 to 45 days. However, you should plan for a year or more to get your license and start your business.
How do I get clients?
If you want to look for customers, start with the people you know. Ask your friends and family members about their places of employment and their shipping needs. Also, once you get customers and satisfy them, you can ask them for referrals.
Do I need loan capital?
You will likely need to take a loan to get your business off the ground unless you already have enough capital.
In a nutshell, a freight broker’s career can be lucrative, given the increased demand for efficient transport services. In addition, network with others pursuing this career to build your overall industry knowledge.
According to the Bureau of Labor Statistics, freight workers should expect a 5% growth in employment from 2020 to 2030. This growth can be attributed to the growth of the economy and an increase in online purchases, which leads to an increase in shipping.