The freight and shipping industry is a multi-billion dollar field that handles various transportation projects, including heavy and oversize transportation. Major industry-leading trucking companies offer exceptional trucking services, primarily through freight brokers.
Let’s say you are looking to join the dynamic commodity brokerage industry. In this case, you are opening your business to multiple opportunities in this busy but lucrative field.
What is a freight broker?
Although you need to know how to become a freight broker or the steps to take, first understand who they are and their responsibilities. Freight brokers are an integral part of the shipping industry that facilitates and tracks shipments.
Freight brokers are usually brokers or middlemen between shippers and carriers who handle and handle millions of cargo and loads annually and facilitate communication, ensuring your cargo is delivered safely and on time.
Shippers hire freight brokers to link them and facilitate transactions with reliable carriers to transport their cargo efficiently. It is vital to note that freight brokers do not take actual possession of the shipment, but only facilitate the actual shipping process.
Established trucking companies know the critical role freight brokers play in streamlining supply chain operations, ensuring they work with the most qualified and experienced professionals. As a legal freight broker, you must remain neutral and have a fair and impartial relationship with suppliers and carriers.
As demand for carrier services continues to grow, freight brokers have an opportunity to build a successful long-term carrier. If you enjoy solving logistical problems and have professional organizational skills, freight brokerage is an excellent opportunity.
Here’s a breakdown of what freight brokers do
- Connecting customers with reliable and efficient operators
- Networking with transport and logistics companies
- Ensure compliance with all national and state regulations
- Negotiating affordable rates and contracts
- Monitor shipment progress from point of origin to destination
- Updating customers on shipment status
- Maintaining and updating records for accuracy
6 steps to becoming a freight broker
In the United States, freight brokers must be licensed and regulated by the Federal Motor Carrier Safety Administration (FMCSA). Before becoming a freight broker, you need to understand and have reliable experience in the shipping and logistics industry and the various trends or configurations of the trucking industry.
You must also acquire or develop vital skills to navigate the dynamic field of shipping and logistics. If you need to know where to stay or how to become a freight broker, follow these steps.
Step 1: Get proper training and industry experience
The vast field of freight and logistics requires excellent knowledge to navigate the complexities and growing demand. Although no statutory training program is stipulated, relevant knowledge and experience as a dispatcher, logistics or shipping manager, supervisor or truck driver are significant advantages.
If you don’t have these, consider taking a reputable online course or face-to-face classes.
Step 2: Register your business name
Plan and register an appropriate business name with the US Patent and Trademark Office. Decide whether you want to run your business as a sole proprietor, partnership, or limited liability corporation (LLC). Consider the benefits and drawbacks of all three before making your final decision.
Step 3: Obtain broker authority and USDOT number
This step involves using the Unified Registration System to acquire FMCSA broker authority. You must pay the application processing fee and complete Form OP-1 to obtain the broker authority and USDOT number.
The process of acquiring these numbers is about four to six weeks.
Step 4: Choose a process agent
Every reliable freight broker should have a process agent to facilitate operations in each state. This authorized person works on legal processes and documents on behalf of your brokerage. The process agent must also have a physical location.
Step 5: Secure a trust fund or bond
For freight brokers, this bond is called BMC-84. Federally, the bond requirement is $75,000. Maintains and ensures accountability and high industry standards. This bond guarantees that its operations will adhere to all necessary rules and regulations.
Step 6: Get liability and cargo insurance
Get contingent cargo and general liability insurance after setting up your freight broker startup cost. Although this is not a mandatory requirement of the FMSCA, most companies will only agree to work with a broker with contingent cargo and general liability insurance to protect cargo from customers.
When you become a licensed freight broker, you can work full-time or part-time, and salaries or earnings depend on years of experience, geographic location, experience and industry knowledge. Although it is a lucrative career, your path to success can be complex and long without proper guidance and legal compliance.
