Rise of industrial trade along with interstate and intrastate movement of goods and trade has resulted in the rise of freight movement. While passing through the highway, one would have certainly seen a long queue of trucks going to their destination.
A good portion of goods are transported through trucks apart from other ways of transport. The job of these trucks is to load the freight and then ship it to the required place. In this whole business, there are certain parties involved.
The first is the shipping company that has to ship a good from one place to another. The second are the transportation service providers who actually transport goods. Lastly, the person or group of persons who match the shippers with transporters are called freight brokers.
Who are Freight Brokers?
As mentioned above, the freight brokers are the persons who are responsible for matching the designated good with the transporter who will carry it to the destined location. In simple words, there are certain goods that need to be transported to a particular place.
The customer will hand over the good to the shipment company who will later handover the good to the transporter who will carry it. The whole dealing between the transporter and shipper is done through these freight brokers.
There is some specific job that these brokers do. For shippers it is not that easy to manage shipment transportation on their own. They need to rely on someone who can find them the best and efficient transporter. This is where brokers come into play.
Some responsibilities of freight brokers are as follows:-
Deals with price negotiation and contract with carriers
Preparing carriers for loading
Scheduling orders with carriers
Scrutiny, locating and selecting carriers for loading based on efficiency and safety
Marketing in order to generate leads and increase sales
Quoting shipping estimates for clients
Managing every aspect of loading, drop-off, notifications and conversation with clients
Career Prospects of Freight Brokers
The early few years of a broker remains challenging and mostly average given the wide scale learning and making of networks. Early times go much with seniors from whom you will learn. Later as you flourish, you start to make money.
Average salary is close to $60000-1200000 annually in various experience groups. In order to earn more, one needs to get independent and start his own brokerage firm. With experience and hard work, one can make great returns.
Here’s How to Become a Freight Broker for Trucking Companies
In order to become one, you need to obtain the required qualification. The first step towards this is getting informed about this field of work. What exactly it is to work as a broker on ground.
There are certain necessary steps. Here are they:
Gaining Experience about Broking through Study and Work
Preparing your Business Module and getting Registered
Meet the Legal Demands like Licensing
Choose the Right Carrier
Obtain your Freight Broker Bond of $75K
File your BOC-3
Marketing and Business Growth
#1. Gaining Experience about Broker through Study and Work
Obtaining a formal education through regular classes definitely works. It gives you more in-depth knowledge on various topics related to broking. You will also get a certificate of the course.
Some institutes offer more of a practical approach to the course with the majority of on-field training while some invest in the theoretical part through online classes. You can take a call on the institution that best fits your interest.
There are certain skills that require a boost like speaking skills, negotiation, verbal communication, mathematics, know-how, information related to the freight broking industry and much more.
Secondly, it is also important for you to spend time in the industry by working. Though this may not be compulsory but gaining a real time experience really opens your thinking perspective towards the issue in hand.
It will also help you in establishing your business. You will gain new friends, network of people, knowledge, experience and confidence.
#2. Preparing your Business Module and Getting Registered
The next obvious step is to prepare your business plan extensively keeping in mind all the minute details. Your business plan should have a step-by-step guide on how to start your brokerage firm.
The legal status of your business, the requirements for license, hiring staff, your office, making business networks and getting clients. Everything should be planned and executed meticulously.
Register your business with a name which you will make a brand in times to come. Get yourself a logo of your business. Based on which you will do marketing of your business.
Register as a taxpaying entity along with all required permits.
#3. Meet the Legal Demands like Licensing
Being a broker requires you to obtain a license in order to work in the field. This is something which is mandatory. Just like any other professional requires a license to practice, so is the case with broking.
You need to apply in the US Department of Transport for your USDOT number. You also need to fill an OP-1 freight application with a cost of $300. This takes 3-4 weeks’ time to process.
This is a prerequisite condition before you apply for your freight broker license in Federal Motor Carrier Safety Administration (FMCSA) which will give you your Motor Carrier Operating Authority license. This takes ten days time before getting final approval.
#4. Obtaining Freight Broker Bond
In order to show your standing in the business regarding your financial backing in the broking business, you need to obtain a freight broker bond of $75000. This is called BMC 84-85. It can also be termed as a form of insurance for your business.
This bond is approved keeping in mind your business finances, stability of your business and personal credit. The premium percentage depends on your business credit. The high the credit, less is your premium.
#5. File your BOC-3
BOC-3 gives you a blanket coverage of your business. You will need to file this in each state where you will be operating your business. You also need a process agent in each of these states. Such a process agent deals with the legal aspects of your business.
All the above legal formalities are mandatory and necessary for you to start as a broker in the business.
Apart from that, your personal capacity, your office, your business firm and your network will do the rest.
#6. Choosing the Right Carrier
The right career choice gives you a long and lasting client base. Your USP lies in the performance of your carriers who you will allot for your clients. If your carriers aren’t up to the mark then no matter how good your office is or how much qualified you are, things won’t go well for you as a broker.
So, what should be the preferred steps for you to select the right carrier for freight services?
A carrier who is reputable by name
The carrier must also be reliable. This reliability comes from various reasons. Some of them can be the punctual nature of the carrier service.
Being on time is important since clients expect the delivery to reach on time
Safety is also important. The consignment should reach the destination safely without damage and in reported theft.
Rate of transportation also matters. A balanced rate for transportation makes both the sides happy.
Now, how will one find the right carrier service?
The best way is through networks. Network is best built when you are into this field for some time. You should have worked in the broking field under someone who has spent years. Later on, when you start your own business, you can take help from this network.
You can also take help from other brokers and directories along with the internet to get to the right carrier services.
#7. Marketing and Business Growth
Business like broking is a close end business limited to the people and stakeholders involved. People who require help from brokers are generally those who need regular carrier services.
Your clients will rely more on their friends and people in this field. Therefore, the chance of getting new clients is because that someone may recommend you to your client. The way ahead is word of mouth appreciation that comes from your services.
You need to learn the art of being an effective broker. Your client must be trusting you and has confidence in your abilities. Other ways of marketing are obviously distribution of pamphlets and targeting those who require regular carrier services.
FAQs
Time required for training as a broker?
It generally takes 40-45 days to get trained and obtain certification.
Is Broker License mandatory?
No. You can still work as an employee under some brokerage firm. But in order to operate as an independent broker, you need the license.
How can one get new customers?
You can either advertise with your brokerage firm or you can build networks with people who require shipping goods on a daily basis. Word of mouth appreciation drives this kind of business. A good reputation of your business will increase the chance for recommendation.
Conclusion:
Freight brokerage is not that easy business. It requires a lot of devotion and dedication. You need to really push a lot to gain access to the market. Hard work, smartness and due diligence is an important aspect of this business. Experience matters a lot in this field.
With proper business plan and thorough implementation, you can really succeed.
