1. What is a Freight Broker?
A freight broker is legally a property broker, which is the term established by the Federal Motor Carrier Safety Administration (FMCSA), a division of the United States Department of Transportation. It describes licensed individuals or corporations that help make a shipper and an authorized motor carrier successful in the transporting of freight.
2. What are the requirements to be a Freight Broker?
The legal documents needed to operate as a freight broker are:
- A Broker’s Authority, available through the FMCSA for a $300 fee. You fill out Form OP-1 and file for your authority to operate as a broker.
- A Surety Bond or Trust Fund, which you can obtain from a bank or bonding company. The cost varies depending on your personal credit. You’re required to carry a $75,000 bond or trust. The form filed with this is BMC-84 or BMC-85.
- Processing Agent, which runs approximately $50, with form BOC-3.
- File a Unified Carrier Registration (UCR)
3. Is this a growing field? Is it in demand?
As of this writing, there are approximately 15,000 licensed transportation brokers in the nation, but a large number are inactive. This is still a relatively new industry, as there were only around 70 brokers in 1970. It’s estimated that freight brokers accounted for over 10% of the shipping industry, or roughly $60 billion out of $600 billion, in revenues. A recent article in the Wall Street Journal cited freight brokerage and logistics as the fastest- growing sector of the transportation industry.
4. Is there another way to get into the industry without having to get a bond and license?
Yes. You can open a freight agency or become a freight broker agent with little risk and without obtaining your own licensing. In that case, you’d operate as an agent, under the umbrella of another broker’s authority, and you would do a split with the broker on your profits.
5. What equipment will I need to get started?
If you want to open a freight brokerage or agency, you’ll need a computer with high-speed Internet, a fax/copy machine, a telephone, and phone service with inexpensive unlimited long distance.
6. Is this a job that I can do from home?
Absolutely. The majority of agents and many brokers work out of their home offices.
7. How long will it take for my business to become profitable?
It will take some time to build up your customer database, just as with any business that you start. Typically it can take three to six months of disciplined work to show a substantial profit. Sometimes it takes much less time, sometimes more, but once you begin securing the right customers, they normally have residual shipping, so the sale repeats itself over and over – and you don’t need hundreds of customers to make a great living in this field. Your level of success depends on many factors, such as your level of determination, your tenacity, and your genuine desire to help your customers succeed.
8. How much money can I make as a freight broker or agent?
Again, your individual earnings will depend on your personal abilities and how determined you are to succeed. As a full-time broker or agent, you can make from $40,000 to well over $200,000 or more. The potential is virtually unlimited as you grow – there are many multi-million dollar producers built up over time.
9. How do I find customers?
In the program, we go into detail on this subject, showing you many different tools for locating and developing your shippers, such as publications, reference sources, and Internet sources.