Difference Between a Freight Agent and A Freight Broker.

Difference Between a Freight Agent and A Freight Broker.

Deciding wether to pursuit a career in the freight industry as either an agent or a broker is one of the many decision every individual eventually has to make. Two distinct figureheads that work side by side but with a varying degree of differences that separates them.

At a first glance their jobs might seem the same but on further inspection they greatly diverge.

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The best way to get a a handle on the real differences between both is to examine the fantastic website FreightBrokerBootCamp and it’s equally majestic product; professionals in the field that are more than willing to give you a hand with all your questions. Give you the inside scoop as far as the Freight Business is concerned.

The benefits of becoming either one are:

  • Being part of a $400 billion industry that is constantly evolving and growing.
  • Huge income potential.
  • Very low start-up cost as a Broker and almost none as an Agent.
  • The possibility of running your own business from home.
  • Easy to relocate.
  • An international business that can do trade in not only the U.S and Canada, but the rest of the world.
  • The possibility of expansion.
  • Zero experience necessary to get started.

What is a Freight Broker:

A freight broker is a person whose sole job is to help shippers move freights/containers/goods from one point to the other. They help BROKER a deal between a shipper and a carrier.

Trying to find the best price in the shipper’s favor. In essence, they forge the relationship between the current shipper and a carrier who’s willing to haul the freight for slightly less than the competition.

Freight Brokers earn their pay from commissions. Depending on the contract or the deal previously reached between the parties, this percentage can range from a nice 10% to a 35% profit per shipment.

Websites like FreightBrokerBootCamp give advice on who to broker these percentages and even have realtime examples of profit margins being used in the business.

Their day consist of not only doing the minutia of joining shippers with carriers, but also spearheading a work force of agents, maintaining the company financial afloat.

In order to work as a Freight Broker you will need to apply for a series of certificates, bonds and licenses.

Freight Broker License:

In order to legally operate as a freight broker in the United States and in Canada you are going to need a certificate from the government. You have to apply for this license (only through the FMCSA website) and pay their fee. As of 2017, cost of said license was 750.

Freight Broker Surety Bond:

In addition to the government approved license, you will also need a Surety Bond (BMC- 84 Freight Broker Bond). This item can end up costing you up to 75k annually.

Websites like FreightBrokerBootCamp offer lists of active trusted Bond Agents in the field. Corporations that are willing to front you the cost of the bond for an annual percentage of your earnings.

Insurance:

There are 4 types of insurance you’ll need to take into account: Contingent Broker Auto Liability; Contingent Broker Cargo Liability; General Liability and Property Insurance; Worker’s Compensation.

Authority Cost:

Once you’ve fulfilled every all the bonds, licenses and insurances you will need to pay an Port Authority Cost in order to operate within your region.

Responsibilities of a Freight Broker:

  • Financial security for his company and employes.
  • Legal responsibility for everything that happens within his scope of influence.
  • Manager of a workforce that can consist of one or dozens of agents.
  • Extending credit to shippers and carries.
  • Initial costs.
  • Getting the FMCSA guidelines and safety standards.
  • Claim assistance.
  • Liability for any problem that might arise.

What is a Freight Agent:

These are typically individuals, or independent contractors, that act as salesperson for the freight broker. They also work on a commission, the main difference being that they have to split it with the Freight Broker.

The main reason why these freelancers are willing to divide the profits while doing most of the work, is mainly because of the license and cover the broker ends up affording them; they can’t legally operate without the other.

As a freight agent, you have a greater deal of freedom and independence. In essence a freight agent is a freelancer that has no license, no insurances, no bonds, and no real overhead. They are responsible for sales and matching carriers with customer needs.

Most work straight from their own home and backyard; their initial cost being a new cellphone, downloadable software and a computer. They have little to no liability and earn most of their income (which is significant, although MUCH less than a freight broker) from their customers of the month or day.

Their main task is simple: interact with the shipping costumer and the motor carrier, making sure the shipments arrive on time and without any problem. They negotiate, outsource and solve problems that would otherwise endanger, delay or damage the goods.

But, in order to operate, they need the Broker’s help and ultimately his approval. They need a broker that’s willing to employ them in order to work.

The broker giving them an umbrella of legal cover they lack. That’s mainly why a portion of the freight agents gross revenue is given out to their broker.

They tradeoff a nice percentage of their livelihood in exchange for the administrative support, flow, insurance, liability, credibility and reputation that an established freight broker brings to the table.

In order to work as an agent you’ll need.

  • Software and hardware to keep track of your clients.
  • Modes of communications to reach your clients.
  • Training in the field.
  • A Freight Broker.
  • You don’t need a FMCSA license.
  • You don’t need any other type of insurance except your personal insurance.
  • You don’t need surety bonds.
  • You don’t need approval from the Port Authority.

Responsibilities of a Freight Agent:

  • Financial security for himself.
  • No real legal responsibility for everything that happens within his scope of influence.
  • No initial costs.
  • Helping out in claim disputes but he has no liabilities. All responsibility falls on the freight broker’s shoulder.
  • Abiding by the FMCSA guidelines and safety standards.

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