A Freight Broker's Guide to Success: How to Become a Broker

Are you intrigued by the fast-paced world of logistics, where every shipment represents a puzzle waiting to be solved? If you thrive in dynamic environments and possess a knack for negotiation and problem-solving, a career as a freight broker might be your calling. In this edition of A Freight Broker's Guide to Success, we'll embark on a journey together,  learn the ins and outs of becoming a freight broker and lay out a roadmap to help you kickstart your career. So, buckle up and prepare to dive headfirst into a career filled with opportunities for growth, innovation, and impact in the global supply chain.

What is a Freight Broker?

A freight broker acts as an intermediary between shippers (those who need freight moved) and carriers (those who move freight) within the logistics industry. Brokers facilitate the movement of freight by sourcing carriers, negotiating the best rates and ensuring that shipments reach their destinations safely and on time.

Step 1: Understand the Industry

While it's not required to have prior experience, it's essential to familiarize yourself with the logistics industry. Before diving into the world of freight, take the time to research the field. Consider looking at market trends, various modes of transportation (such as trucking, rail, air, and ocean freight) and regulations governing the freight business. Having an understanding of the industry will not only help you build the knowledge to run a successful business but also attract and retain customers.

Step 2: Gain Industry Knowledge and Skills

Formal education is not required to become a freight broker, but it can be useful. Having a well-rounded understanding of logistics principles and business practices can give you a competitive edge when starting your new business venture. Consider taking courses or obtaining certifications in areas such as supply chain management, transportation logistics and business administration. Additionally, honing your communication, negotiation and problem-solving skills will be invaluable in this field as most issues that arise from this profession require quick responses and discerning judgements.

Step 3: Develop Your Business Plan

Like any entrepreneurial venture, becoming a freight broker requires careful planning and strategizing. This is a good time to consider what salary you may expect to earn. Freight brokers make money through commission on delivered loads. Typically a successful brokerage has a profit margin of about 12% - 18%, but this can vary widely depending on the amount and type of business your firm engages in. Take time to develop a detailed plan that will help outline your business's path to success. Check out our previous entry "A Freight Broker’s Guide to Success: Developing a Business Plan" for a more thorough exploration of this step.

Step 4: Set Up a Business

Before applying for your brokerage authority, you'll need to set up a business. This can be completed on your own, but you’ll need to research specific regulations as they vary from state to state. Alternatively, you can utilize a service company that will help you set up your business without getting into the nitty-gritty of state regulations. 

The FMCSA allows multiple types of business formations including Corporations, Limited Liability Companies, Partnerships, Limited Liability Partnerships, Sole Proprietors, Trusts, or other. There is a wide range of pros and cons to each and we highly suggest taking your time to research and decide what works best for you and your upcoming business.

Step 5: Applying for Brokerage Authority

To legally operate as a freight broker in the United States, you'll need to obtain broker authority from the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA has updated the application process for brand new brokers that have not been assigned a USDOT number. For new brokers, you’ll need to apply using the Unified Registration System (URS). Be sure to have the following documents/information ready to submit: 

1. An EIN (business formation other than Sole Proprietor) or SSN number (Sole Proprietor) 
2. Information on company officers with titles 
3. Optionally, a Dun and Bradstreet number. 

Applying does take some time and can be complex, so consider consulting resources provided by the FMCSA.

There is a $300 application processing fee when submitting an application, and the processing time can range from four to six weeks. Once your application is processed and accepted by the FMCSA, you will need to obtain a Surety bond and a BOC-3 Process Agent to have your authority activated.

Thankfully, Jet Surety can help you obtain the BMC-84 bond. We offer the best rates and have monthly payment options for this bond. You can apply online here or call our freight unit at 855-470-3773.

After you’ve completed the steps above and secured your surety coverage with Jet, you’re ready to begin growing your business and developing connections with carriers and shippers.