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What Does It Take To Become A Freight Broker?

05/07/09

Permalink 04:17:26 pm, Categories: starting , Tags: brokerage authority, starting a freight brokerage

What Is A Freight Broker?

A “Freight Broker” is a person who sells transportation, without actually providing it. They typically act as an intermediary between those who have freight to be transported, and freight transportation providers, whether by air, sea, or land. Freight Brokers earn their money by effectively utilizing contact networks they have established, normally charging a percentage of the gross transportation cost.

The Federal Motor Carrier Safety Administration (FMSCA) calls them “Property Brokers”, which they define as transportation intermediaries who procure the services of motor carriers to transport property.

From the standpoint of an entity that has freight to be transported, a freight broker can serve as a single point of contact to a multitude of transporters, usually at no extra cost to them. From a freight transportation provider’s standpoint, a freight broker can be a consistent source of (discounted) freight, useful in a pinch.

Why Would I Want To Be A Freight Broker?

Regardless of the state of the economy, people need to eat, and sellers need to deliver their wares to buyers. To varying degrees, goods are therefore constantly being transported across the country. This situation results in continual business opportunities for a well connected freight broker.

The limited requirements for becoming a freight broker make it quite appealing to many, from displaced workers, to stay-at-home mothers, to truck drivers that want to remain in the industry but stay closer to home.

Entrepreneur Magazine rated a freight brokerage as one of the top 5 businesses to start in America. The Wall Street Journal recently recognized freight brokering and logistics as the largest growing sector of the transportation industry. It’s an ideal home based business for a self-starter who enjoys fast paced work.

The number of active property brokers registered with the FMCSA had increased from 16,930 in April of 2006, to 20,268 in April of 2008, a 15% increase in two years. It’s likely that a similar growth rate has been sustained in the year since these figures were published.

What Do I Need To Become A Freight Broker?

The FMCSA requires freight brokers to file Form OP-1 (“Application For Motor Property Carrier and Broker Authority”) along with a $300 fee.

You must also obtain a Surety Bond or Trust Fund from a bank or bonding company for a minimum of $10,000. The cost for this will vary depending on your credit rating. Form BMC-84 (“Property Broker’s Surety Bond”) or Form BMC-85 (“Property Broker’s Trust Fund Agreement”) must be filed with the FMCSA.

The final FMCSA filing requirement prior to receiving authority to operate as a freight broker is Form BOC-3 (“Designation of Process Agents”).

A fax machine and a multi-line phone with inexpensive unlimited long distance are arguably the next most important items on the list.

Although you may be able to initially get by without it, a computer will become essential for a freight broker. An investment in a good freight brokerage software system will greatly enhance your efficiency, and should be pursued as soon as revenues allow. TruckMaster would be happy to provide this to you when you’re ready.

Alternatively, you could become an “Agent” for a freight broker that provides these items for your use, typically for a share of your commissions.

Although definitely not required, there are a myriad of trade schools and local college programs that could give you training and credentials. Google for “freight broker training” to get started searching, should you decide that this would be advantageous for you.

What Revenue Opportunity Is There For A Freight Broker?

As with most businesses, there will be a build-up period where you will initially have to “hit it hard” and establish contacts. If you’re lucky enough to come into it with some good contacts, it may take you much less time to get established, but you should otherwise plan on 6-10 months to get off the ground.

Individual earnings for a full-time determined freight broker with good contacts and some luck could range anywhere from $40,000 to $200,000 per year or more.

Should you not be in a position to risk the time and money that it may take to get the business off the ground, starting off as an agent for an established brokerage may allow you to learn more about the business while saving up money to branch out on your own.


More information can be found all over the web with regard to the challenges in starting a freight brokerage, or feel free to contact TruckMaster with your questions, we have experienced ex-brokers on staff that would be happy to answer your questions.

Greg Dodson
TruckMaster Logistics Systems, Inc.
TruckMaster Your Freight Brokerage

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