How to Become a Freight Broker
Freight brokers play an important role in the transportation industry. Over the years, there has been an increase in goods being transported or shipped across countries. Freight brokers ensure that the process is smooth. If you have been thinking of becoming a freight broker, here is a step-by-step process for becoming one.
Roles of a Freight Broker
There is a lot involved when you ship goods to another country or area, and many things could go wrong, there could be miscommunications, delays, and not to mention damage.
Freight brokers act as a go-between the shipper and the carrier. Their responsibilities include:
- Negotiating the price with the carriers.
- Responsible for communications between the carriers, shippers, and dispatchers regarding the collections and drop-offs of goods.
- They update their clients on the progress of the shipment.
- Keep clear records of activities surrounding the business.
- They are responsible for marketing and coming up with new strategies that will improve sales.
- Conduct thorough research on different shippers and determine the safest and most efficient.
- Provides the customers with the shipping prices.
What is Their Salary?
Like any other job, the salary depends on experience, geographical location, and employment status. A freight broker can work either full-time or part-time. For a freight broker working in the US, the most common salary is $61,891 per year. While other salaries will range from $43,000-$108,950.
7 Steps to Follow to Become a Freight Broker
Before getting into this industry, there are important factors you need to understand like how various trends are emerging daily. And this will only happen when you learn about the shipping industry.
There are different ways to follow to achieve this goal. Below is the most common:
1.Enroll in a Freight Broker School
Though this is not legally required, it is highly recommended. Here is where you will learn the tools required to start and run a freight broker business. In most cases, these schools offer physical classes which provide the trainee with hands-on experience.
But if you are looking for schools that offer online courses, some googling and research will assist you in finding the best. These schools are where you will learn the latest trends in the industry, various technological tools, and how to prevail once you’ve started a business in this field.
So, whether you attend physical classes or participate in online forums, by the end of the course, you should be one step closer to becoming a successful freight broker.
2. Register your Business and Come up with a Business Plan
The best chance of making it in this field now that you are new in the sector is by working for a freight broker company. You will not only build your portfolio, but you will also gain experience. This will come in handy if you decide to start your own company.
Start by looking for a name for the business, and register it with the licensing department in your area. Since there are different ways in handling the legal framework, ensure you choose the one that goes with your business.
In most cases, freight brokers choose the Limited Liability Corporation. Once the registration process is complete, you will get a tax I.D. number from the IRS. Design a plan that will clearly state how you intend on capturing your audience.
3. Look for Reliable Carriers
To have a successful brokerage business, find reliable, reputable, and safe carriers. Also, the more experience they have the better.
You need a carrier that will have expertise in your field. Use online searches to look for one, and look for the carriers that are respectable by going through some of the feedback they receive from their clients. Another way to get carriers is by getting recommendations from other brokers.
4. Ensure you Have the Right Licenses
Before getting started, ensure you meet all the legal requirements. A broker is required to have a license. Apply for a USDOT number from the Department of Transportation in your local area. Then fill out an OP-1 form which will take approximately 4 weeks to be processed. You will be required to have $300 for the whole process.
Once the application has been approved, you will receive an email from the Federal Motor Carrier Safety Administration (FMCSA) giving you a motor carrier number. Note that it takes up to 10 days for the registration process to be completed and to receive the motor carrier authority. Once everything is completed, you can commence the operation.
5. Get a Freight Broker Bond
The next step is to apply for a freight bond or BMC-84 bond. This bond is something to show companies and carriers that you have the financial capability in case something goes wrong.
Normally, the bond requirement is $75,000. A bond acts as insurance for your business.
Before the bond is provided, the surety will take a close look at your finances, how stable the business is, and the finance of the business. They will ascertain if you are eligible for the bond. The premium percentage will depend on the credit score.
6. File Your BOC-3
A BOC-3 also acts as a cover for your business. Since you will be operating in different states, a BOC-3 is required in each state you will be operating. Before filing, get a process agent to assist in the legal process in each state you will be operational.
7. Come Up with a Marketing Strategy
Once everything is completed from the registration, getting the necessary documents, and ensuring the business, develop a plan that will ensure that the business will keep running. Come up with a strategy that will attract new clients.
Finally, create a website where carriers and shippers can get in touch with you. Creating awareness through social media and other platforms is a crucial part of the freight brokerage business.
Frequently Asked Questions
If you still have questions regarding this venture, here are the most common questions people ask. They will provide information that can be useful.
How Long Does the Course Take?
The normal training period is between 30-45 days. However, this does not mean you have to follow the said period strictly. Other schools will allow you to take the course at your own pace.
Where Can I Get the Customers?
Start with people close to you. This includes friends and family. Since most companies require shipping, the people close to you can recommend you to their bosses. Get in touch with companies through the phone, or email and send them your portfolio.
Ensure that your work is outstanding. Once you’ve worked with satisfied customers, the chances of getting referrals will be high.
Is Licensing Required for A Freight Brokerage Agent?
You can still work as a broker even without a license. You can work for a brokerage company as a sales-person associate. Here you will assist clients to connect with carriers.
Do I Need to Take a Loan to Start the Business?
You will likely need a loan to run the operations of the business especially if you don’t have the capital to pay the carriers.