Now Is The Time!
How To Become A Freight Broker
Freight Brokerage or Freight Broker Agent?
First you have to decide if you want to begin as a freight brokerage or freight broker agent.
Freight Brokerage – Is the actual company that holds the license, bond, UCR, and BOC-3.
Freight Broker Agent – Contracts to the freight broker to work under their license, bond, UCR, and BOC-3.
If you’re new, with little to no experience in commercial transportation, our advice is to begin as a freight broker agent. This will allow you begin your freight broker operation focused on gaining experience and building your customer base without the initial start-up costs that would be required if starting as a freight brokerage company.
Regardless if starting as a freight brokerage or freight broker agent, both must go through the start-up period. This is the period of time where one would begin their broker operation and the time they begin to make money. This period of time can be weeks or even months. Our recommendation is to err on the side of caution by assuming it could be months.
There is of course a third option, become a salaried employee of a freight brokerage as a freight broker. As an employee you would have the same responsibilities as a freight broker agent but guaranteed a paycheck. The pay can be a straight salary or a salary plus commission. Salaries vary company to company but may range from $40k per year and up. This may seem ideal, but to be hired you must have experience and a proven track record. The money may sound good, but a true freight broker agent has the potential for an unlimited income once they have built their business. It’s not uncommon for freight broker agents to earn 6 digit incomes.
Freight Brokerage
The freight brokerage is responsible for billing the customer and paying the carrier. The burden of paying the carrier is on the freight brokerage regardless if the customer has paid their invoice. A new brokerage should pay carriers quickly to build up their credit score. The quicker the better but as a rule, under 30 days.
Start-Up Costs
Mandatory To Be Legal
License, UCR, BOC-3 (using an agent) — $650
$75K Property Broker Surety Bond — $1000 to $6000+
(credit & experience determine the cost of the bond)
Optional
Contingent Cargo Insurance — $950
Errors & Omissions Insurance — $4k+
Contingent Auto-Liability Insurance — $5k+
Other
Office (rental or home office) — TBD*
Internet — High Speed A Must
Telephone — TBD
Load Boards — TBD
Utilities — TBD
Staff — TBD
Marketing — TBD
*TBD – To Be Decided
Freight Broker Agent
The freight broker agent only needs to be contracted to a licensed freight brokerage in order to begin their broker operation. The freight broker agent obtains their own customers, loads, and trucks to move the loads. The freight broker agent earns a commission on each load successfully moved. Most freight broker agents work from home.
Start-Up Costs
Mandatory To Be Legal
Contracted to a licensed freight brokerage
Optional
Staff — TBD
Marketing — TBD
Other
Office (rental or home office) — TBD*
Internet — High Speed A Must
Telephone — TBD
Load Boards — TBD
Utilities — TBD
*TBD – To Be Decided
Freight Broker Income
A freight brokerage and a freight broker agent earn their money from the profit on the load moved. This can be referred to as load net, gross profit, load profit or a number of different terms meaning the same thing, the profit earned from the load.
A freight brokerage obviously will earn 100% of the profit on every load. Paying expenses out of the profit earned.
The freight broker agent will earn a commission from the profit on each load they successfully moved. Agent commissions, on average, is 60%. This means if the profit on the load was $1,000 the agent would earn $600.
FAQ’s
As a freight broker agent, or even as a freight brokerage, could I do this from home?
Yes. As a matter of fact most freight brokers work from home. Keep in mind that if you are working from home, a percentage of your utilities, space used, internet or whatever else you may use becomes tax deductible.
How long before I can start making money as a freight broker?
The only one that can answer that question is you. A freight brokerage is it’s own business as is the freight broker agent. As it’s own business, success or failure is determined by the principle. It really boils down to you. Are you working as you should be working? Are you doing the things that are needed to have success.
I Don’t have any experience in the trucking industry, does that matter?
Absolutely not. Experience is not a requirement to be a freight broker. Although if wanting to start your own freight brokerage we do recommend that you begin as a freight broker agent. This will allow you to gain experience as well as build a customer base before taking on the responsibilities of a full fledged freight brokerage.
Are taxes held out of my check if I’m a freight broker agent?
No. As a freight broker agent you are an independent contractor, meaning you are essentially your own business. The freight brokerage will provide you a 1099 for tax purposes. In short, if you make a $1,000 this week you’ll be paid a $1,000.
How hard is it to get a customer?
A common misconception is that getting a customer is difficult, when in reality obtaining a customer is the easy part about working as a freight broker. If you think about it, a company that has freight to ship obviously will need trucks. A freight broker is able to assist that company to procure trucks for their loads, free! A freight broker earns their money from what the customer is already paying to move the load.
What is the difference between a freight broker and a dispatcher?
A dispatcher is one that works for or is contracted to a trucking company to get loads exclusively for that trucking company and then dispatch those trucks on loads they have obtained, more often that not, from a freight broker. A freight broker has their own customers and able to work with any licensed motor carrier. As of late, the FMCSA has been taking comments and reviewing independent dispatch services with plans to regulate or to implement rules that would essentially force these services to obtain their own freight broker license.
Should I have an LLC set up before I start working as a freight broker agent?
That is up to you however, we recommend discussing this with your tax professional before setting up an LLC. Most often your tax professional will recommend that you start your business as a sole proprietor. When you begin producing an income or decide to start you own freight brokerage they would then normally recommend that you set up an LLC for tax purposes.
Is this business recession proof?
No business is really recession proof. However, recession or not, trucks will still be on the road hauling the commodities so that people can eat, have medicine, clothing, tools, parts, materials…. Freight brokers will be the ones helping companies get these trucks loaded and keeping the country supplied.
Do I need training to be a freight brokerage or freight broker agent?
The short answer is no. But, why would you want to start a business without training? Training get’s you ahead of the curve allowing you the opportunity for not only success, but success quicker.
I am a carrier and want to start my own freight brokerage, can I add the brokerage under my carrier corporation?
This is not recommended due to liability issues. If something was to go wrong on the carrier side, or vice versa, both would be liable as they were housed with-in the same corporation. Having them separate protects the other should a situation occur.
I have more questions, who can I contact?
Please feel free to call TALTOA with any questions you might have. TALTOA is a freight broker training & consulting firm in business for more than 20 years. TALTOA can be reached by calling (479) 668-0838.
We’d Love To Help You Achieve Your Dreams!
TALTOA has freight broker training and consulting packages available for every need and budget. Each full training and consulting package includes essential freight broker training (live & on-demand), guaranteed placement in our mentorship program, and continued consulting following completion of your mentorship.