Whether you’re new to the shipping industry and are eager to learn a new business, or you’re a truck driver looking to get away from those long hauls away from your family, the job of freight broker is an exciting option. As a freight broker, you work for yourself, create your own hours, and depending on your dedication to the job, you can make a great deal of money.
What is a Freight Broker?
When a company has a shipment they need to make, they pay a freight broker to move the freight. The freight broker then pays a carrier to ship the product for less than what the original company paid. This is the freight broker’s “spread” or his profit. This profit, minus the operating costs is the salary of the freight broker. A freight broker is the crucial link between shipppers and carriers, sort of a matchmaker between the two.
Freight brokers are also involved with the logistics of shipping. They negotiate shipping rates, track shipments, and keep track of deliveries and pickups. They must make sure everything goes off without a hitch and is done in accordance with all laws and procedures.
How Do I Become a Freight Broker?
Being a freight broker takes dedication and the desire to work on your own. To become a freight broker you must:
Register your company. You must register as a business or fill out a DBA (Doing Business As) form.
Make a plan. To obtain any kind of financing, you usually need to show the lender a business plan. A business plan also helps guide you through the early stage of your business.
Get a USDOT number. This is a requirement if you want to operate as a freight broker. You do this by filling out an application with the Federal Motor Carrier Safety Administration, or FMCSA, form OP-1. There’s a fee, usually around $300.
Get a surety bond. A surety bond is a type of insurance. It guarantees that carriers will be paid for their work. If for some reason, a shipper refuses to pay a carrier, you would be responsible for paying it. If you can’t pay it, the surety bond will.
The bond company will check your credit and perform a background check before issuing the bond. You pay a percentage which is dependant upon your credit.
Obtain a legal process agent. This is also required by the FMSCA. There needs to be a legal process agent in every state you do business in. There is usually a $50 fee.
Get insurance. Once you’ve filled out all of the appropriate paperwork and have obtained your Motor Carrier Number, you must get general liability and cargo insurance. They are both required.
Of course, taking a training course is not required but will help you get a leg up in the industry and earn the most money for each shipment.
What is a Freight Broker’s Salary?
A freight broker’s salary can vary greatly. Indeed.com puts the average at $51,032, Linkedin puts it in the range of $30,000-83,000, and Careeronestop.org has it at $25,000-65,000. Payscale.com has it at the highest with a range of $41,940-143,000 but all of these ranges are dependant on several factors including experience, skills, and knowledge of the industry.
Above and Beyond
Having a large database of contacts is important to earning a higher salary as a freight broker. Being able to provide your clients with excellent service with affordable rates will build lasting working relationships. Some states bring in a higher salary for freight brokers than others, the highest ones being CT, WA, OR, NE and Washington D.C. The salary for these states is higher than the national average.
Typically, freight brokers who make the highest salaries are those who have freight agents working for them. A freight agent is an independent contractor who coordinates shipments with carriers but they aren’t required to have the insurance that a freight broker does. They work for the freight broker who carries all of the insurance and business licenses and expenses. The more shipments made, the more commissions are earned which is why the most successful freight brokers hire freight agents to work for them.
Being a freight broker can be a lucrative job for the right person. The freight broker industry is expected to remain strong. More and more people rely on online shopping each year which means more trucks on the road. Even if those trucks eventually become self-driving vehicles, freight brokers will still be in high demand.
JW Surety Bonds, America’s #1 volume surety bond service, has a comprehensive guide that can take you from the planning stages to running your own successful freight brokerage company. If you’re interested in starting your own freight brokering business, you can find the guide here.
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