It’s no surprise that the trucking industry is booming. E-commerce has made it easier than ever to find and purchase anything that businesses and consumers could possibly imagine. The constant thirst for things brings the growing need for shippers and carriers.
For shippers to do their job effectively, they need to be like an octopus with many arms working independently. One arm to find a dependable carrier. One to negotiate rates. One to make the arrangements and another to track shipments and make sure they arrive on time. And several other arms to deal with any breakdowns, slowdowns, or other emergencies. That’s why, as the industry grows, more and more shippers are employing the services of independent freight brokers.
A freight broker works as a middleman between the shipper and carrier to ensure that the delivery of the freight is on time and on budget. For a motivated, self-starter, the freight brokering business can be a rewarding and lucrative career choice. While a background in the trucking industry is helpful to understand the business it can provide a boost from the start with already-made contacts. However, not having that experience is not a deal-breaker. Even industry outsiders can become successful freight brokers if they’re dedicated to learning the business.
How To Start Your Own Freight Brokerage
Get some training. There are lots of online or classroom classes available to teach the freight brokering business inner workings. By doing some training, you can hit the ground running instead of learning as you go.
Register Your Company. You must register as a business or fill out a DBA (Doing Business As) form. You can register as a sole proprietor, a partnership, corporation, or a limited liability company. The differences between them can be found here.
Make a business plan. Lenders will need to see a business plan before they provide any kind of financing. A business plan also works as a helpful guide to steer you through your business’ the beginning stages.
Insure yourself. Obtain the required general liability and cargo insurance. Most shippers won’t do business with an uninsured freight broker anyway, but you also need it before you get your freight broker license.
Get your freight broker license. You’ll need to obtain a USDOT or MC number and register with FMSCA. To do so, fill out an application with the Federal Motor Carrier Safety Administration, or FMCSA. More information can be found here.
Obtain a surety bond. This is a type of insurance. It guarantees that carriers will be paid for their work and that as a broker, you will follow the rules. Freight brokers are required to have at least $75,000 in a surety bond.
Get a legal process agent. This is an FMSCA requirement. There needs to be a legal process agent in every state you do business in case you are sued in that state.
Get money. You’ll need start-up money to begin operations. If you don’t have your own money, you’ll have to open a line of credit with a bank.
Equip yourself. You’ll need a computer, printer, copier, fax machine, phone (landline and cell), office supplies, and an internet connection.
Make a website. You need to begin marketing to clients right away so make sure your website looks great, has pertinent information, and is easy to navigate.
Once you’re all set up and legal, you can get to work. Just like the real estate agent’s motto is “location, location, location”, a freight broker’s motto is “contacts, contacts, contacts”. A successful freight brokerage relies on its contacts, quantity and quality. If you have a background in the transportation industry, you may already have a wealth of leads to pursue. Ask people you know where they work. Look for companies in your area that ship products.
Another great way for a freight broker to build their contact list is by using a load board. DirectFreight.com is an easy-to-use load board that allows you to find trucks and carriers. It also has useful tools such as mile calculators, fuel price data, and other useful features. Call Direct Freight Services today at (888)894-4198 or go to https://www.directfreight.com/home/ to sign up. With DirectFreight, your freight broker company will have the tools it needs to become a success.