Freight brokerage is an interesting and lucrative job that allows you to become an independent worker and earn good money. It also involves effort, knowledge, and compliance with the law. This article runs through the responsibilities of a freight broker and everything that you want to know about starting this career, whether as an independent broker or with a company.
What is a Freight Broker?
A freight broker is basically a matchmaker who brings together shippers in need of transportation services as well as carriers who have the capacity to transport those shipments. Being simply the intermediaries tailored to arrange the shipping, freight brokers do not tend to move the loads themselves but shall find the best offers and workouts targeting their clients’ needs and further cooperation. The contract, or any part of it, is the responsibility of the broker to organize the pickup and delivery of freight by securing a suitable carrier to assume the transaction.
Arising Obligations of a Freight Broker
A freight broker’s daily workday is filled with various and challenging activities, which entail organization and the ability to effectively communicate and solve problems. Here are some of the key responsibilities:
Finding and securing loads:
One of the factors that defines the freight brokers’ revenue is the ability to proactively acquire new customers and attractive freight loads to offer to carriers. This entails good sales skills, cold calling and the ability to cultivate good working relations.
Negotiating rates:
Brokers require to exploit the relationship with other networks and transportation understanding to get the best shipment charges for his or her customers to increase profit margins.
Dispatching trucks:
After loads are secured, brokers are to identify producers that possess the capacity and capability to move that particular type of goods. Dispatching refers to assignment of fleets and trucks to loads.
Managing paperwork:
It comprises of planning, organizing, detailing, documentation and record keeping. Brokers should manage the bill of lading preparation, rate confirmations, invoices and many other important document.
Maintaining relationships:
Shipper relations and carrier relations are key factors to consider for any broker intending to be successful. Interpersonal skills and especially more specifically communication and customer orientation are a significant factor.
Staying up-to-date on regulations:
The transportation industry is rather large and very dynamic with most activities being strictly regulated. This means that brokers must keep abreast with the federal and the state laws.
Advantages of starting a freight brokerage business
Becoming a freight broker offers several advantages, making it an appealing career choice for many:
High earning potential:
Trading skills by professional brokers can be paid an average salary of $ 70000 per year. This means that as brokers get more shareholders/ clients and linkages they are capable to earn much more because of the commission based compensation system entrenched in the business.
Flexibility and independence:
The brokers like the independence and autonomy associated with being self-employed people. Some choose to work virtually or remotely as a result. This often leads to being your own boss, and setting your own timings which enable one achieve a better work-life balance.
Job security:
There is always a need for the transportation of freights and hence the brokerage jobs are secure and stable in this market. It is expected that this industry will carry on growing.
Opportunity for growth:
The driven self starters or people with a risk taking appetite can cultivate clientele base over the period and can eventually move ahead to establish their own brokerage house. The potential earning capability is facing, effort and talent closely correlated to one another.
How to Become a Freight Broker
The path to becoming a freight broker involves several key steps:
Obtain a high school diploma or equivalent:
An academic qualification is not essential, though having at least a high school or GED is one of the requirements for becoming a freight broker as it allows people to see you as credible and capable of grasping the complex details of the position.
Gain experience in the transportation industry:
Gain experience by working for a brokerage or carrier, even if one starts as an employee at a junior level, it avails one with the idea of the industry, the logistics flow, and any lingua that is applicable in brokers. This hands-on awareness are particularly appreciated.
Meet the legal requirements:
You need to be licensed with the Federal Motor Carrier Safety Administration (FMCSA) to operate as a freight broker. The requirements include; acquiring a USDOT number, be of a clean background, get a bond and have the correct insurance.
Get the necessary training:
A basic understanding of the peculiarities of freight regulations, transportation, contracts, rates negotiation and other subjects, which are successfully covered in a typical broker training course, can be a decisive plus for future brokers.
Start your own brokerage or work for an existing company:
Once licensed and trained, there are two primary choices: gaining further knowledge within another mid-size and large brokerage or applying your skills and working hard to develop your own customer base. There are again advantages as well as disadvantages associated with each path.
Specific Licensing Required to Work as a Freight Broker
A freight broker license is important as it makes the freight broker a legal freight broker. Here are the key requirements:
Complete the OP-1 application:
Complete form OP-1 “Application for Motor Property Carrier and Broker Authority” to apply with FMCSA to become legally permitted to send out loads of freight.
Obtain a USDOT number:
As a legal and enforcement requirement fundamental to your fledgling brokerage business, your FIE Number represents the Unique Entity Identifier.
Pay the application fee:
It comes with a filing fee – $300 for a normal independent brokerage applicant.
Designate a process agent:
Every state in which your company intends to conduct business requires that you appoint a person for service of process.
Obtain a surety bond or trust fund agreement:
To help ensure that shippers are protected in the event that a load is not handled properly, brokers are required to have a surety bond or letter or credit in the amount of $75,000, which serves as a trust for shippers.
Pass a background check:
To get rid of immoral persons who may wish to join a company to become brokers, a criminal history background check of all company personnel should be conducted.
Meet insurance requirements:
It is worth noting that this is not a requirement. It is recommended for each broker to take $25,000 Broker & Bailee insurance with a view of compensating for lost, damaged freights or goods in transit
Beginning Your Own Freight Brokerage
The opportunity to have one’s own freight brokerage agency brings freedom to the business and the ability to earn lots of money. Here are some key steps to consider:
Develop a business plan:
I want you to plan your goals and vision and how to architect your initial startup with parts and components to resemble a well-oiled, highly profitable business more closely.
Choose a business structure:
Choose if intending to work alone, as a partnership, corporation or LLC depending on business and taxation factors. However, LLC is usually most flexible among all types of business structures.
Secure funding:
Determine your operating capital needs, arrange your funding and entrepreneurship support if necessary to sustain the initial capital of your brokerage firm until the receipt of a constant cash flow.
Set up your office:
Regardless of whether you work from home, or within open-space or co-working, you will, of course, require the proper communication tools that are a phone, a computer, internet connection and TMS software.
Build your network:
Begin forming positive carrier conversations with reliable shippers and qualified motor carriers operating in your service territory to establish a strong transportation spectrum.
Market your services:
Marketing and advertising urged for services with an emphasis of Broker Authority, insurance coverage, services available and specialty shipping targeting freight spots market.
Information on how to Succeed in Freight Brokerage
Freight brokerage is a tough business but is not impossible to run if one is serious about working it out. Here are some tips to keep in mind:
Build strong relationships:
Caring for the clients and carrier partners enough to go the next mile reaps richer benefits in the long haul since all partners can trust the future returns on their investments.
Stay informed about industry trends:
Regularly read trade magazines, hang out on LinkedIn with other professionals within the industry and listen to episodes of freight brokerage podcasts.
Utilize technology:
Master suggested software applications for anticipated load, shipment and documentation to improve, not to add burden.
Focus on customer service:
Markets will be secured with this phrase and referrals will result when people are applauded for being responsive, truthful and clear.
Continuously learn and improve:
Always strive to be developing more and still enhancing your talents. Soak up all you can from the experts or training to become an absolute asset to the organization and make yourself an encyclopaedia of knowledge in due course.
Conclusion
One can start a career as a fully licensed and fully knowledgeable freight broker for hire who benefits from the liberal entrepreneurial flexibility of being his or her own boss and the high-earning specialty power of a highly professional field. As with any other profession, motivation, relationship building and management, logistical and business acumen is all that is required for a satisfying career path in the dynamic freight brokerage segment.
