Freight brokers play a crucial part in the billions of dollars worth of annual shipments that pass through their hands, in the United States’ $43.33 billion freight and shipping industry. Companies that specialize in freight brokerage help shippers get the best price for their shipments while also providing reliable work for truck drivers. Being a freight broker may be a rewarding and flexible profession, but it also demands networking and time management abilities.
Increases in both the need for carriers and the complexity of the logistics industry provide real opportunities for a skilled freight broker to carve out a lucrative career. If you have an interest in logistics, an aptitude for problem-solving, and a well-rounded set of people, freight brokering might be the right field for you. There are several profitable opportunities for freight brokers, including the ability to operate independently from home during flexible hours.
Freight brokers play an important role in the logistics industry, and help coordinate and keep tabs on deliveries. If you want to start your own business you’ll need to construct a proper freight broker business plan that will outline the vision of your company and how you plan to achieve your goals. Read on to learn more about how to become a freight broker and establish a business.
Table of Contents
What Does a Freight Broker do?
A freight broker is a middleman facilitating the movement of goods by connecting shippers with carriers. Shipping agents have the option of working with an established company or striking out on their own. A freight broker is responsible for the following duties:
- Marketing to obtain new leads and prospects to enhance sales;
- Determine and choose reliable freight service providers;
- Customer delivery cost estimation;
- Plan orders with carriers;
- Keeping tabs on operations by noting critical data;
- Responding to customer questions and concerns and updating them on the progress of their purchases;
- Arranging pick-ups and deliveries with shippers, couriers, and drivers;
- Doing the necessary preparations to load carriers;
- Discussions with carriers about prices and contracts.
Steps to Becoming a Freight Broker
Make a Brokerage Account
Launching a new company is an exciting endeavor, but it also requires careful forethought and preparation. Picking between a private company, a partnership, and a limited liability corporation is an important first step in establishing your business legally.
When entering into a business alone, a sole proprietorship is the simplest company structure to establish. However, you are personally liable for any and all business-related financial obligations under any agreement.
Next, you’ll need to give your business a name. Go with a name, slogan, or another identifier that both describes your business clearly and is easy to promote.
Register for Broker Authority
Apply for broker authorization. Get in touch with the Federal Motor Carrier Safety Administration (FMCSA) to submit an application for a motor carrier permit. Financial advisors must fill out the OP-1 form. There are two distinct filing costs that truck drivers must pay while transporting either domestic goods or other goods.
It will cost you $300 for each application. Both forms may be submitted on the same form; however, the total cost is still $600. You may get a grant letter and a membership card (MC) number right away if you apply online and submit form OP-1. These papers will alert the appropriate authorities that an application for a freight broker license has been filed, but they will not give you the green light to begin doing business. Getting your insurance and surety in order and choosing process agents in each state where you want to do business are prerequisites to starting your own freight brokering business.
Obtain Liability and Excess Cargo Coverage
Even though the FMSCA doesn’t demand it, most companies won’t let a broker handle their business unless they have both contingent cargo insurance and general liability insurance. If anything unforeseen happens while you’re doing business, both your customers and your own physical property will be protected by this insurance.
Check the State’s Business and Tax Laws
If you run a freight brokerage and have a freight broker license, you still need to follow all applicable state regulations. This might involve tax and business registration rules. Research the filing and record-keeping requirements in your area of operation to determine what kinds of documentation you’ll need to keep.
Final Thoughts
Acquiring this information is essential for anybody looking to launch their own freight brokering company. There is a growing need for training and expert advice in the logistics sector, which might make or break an individual’s chances of success at their new broker business. If these things sound interesting to you, the steps required to launch a freight broker company will be easy to follow.