Starting off an exciting career in the freight industry, either as an agent or broker, is a great way to supplement your income. As either an agent or broker you’ll discover that the post doesn’t require that much from you, while at the same time rewarding you with a series of prizes that might make all the difference in your professional life.
Benefits of becoming a Freight Broker:
- 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 licensed individual or company, that serves as a middleman between a supplier of goods and a shipper. His job as go-between is to form a temporary relationship between both parties, handle logistics and BROKER a deal; a beneficial bond where cost and benefits are perfectly aligned.
A Freight Broker’s revenue and source of income comes from earning a percentage of the value of the merchandise being shipped. This percentage is constantly in flux, between one deal and another, but it normally ranges from a 10% to 35%.
In essence the idea might sound simple, being a middleman, but in order to start operating you will need a series of certifications and licenses. And, once you’ve began, there are mountains of logistical nightmares involve, yards and miles of bureaucratic red-tape, olympic level financial hurdles, and the ever worrisome human-factor.
Hence, this is the reason I highly recommend getting a hand a from a pro’. As so such, and I can’t underscore this enough, is why I plead with whoever wants to truly operate as a freight broker to go on down to FreightBrokerBootCamp.
“What do you need to become a freight broker?”
The answer can be best summarized down to two points, don’t worry we’ll expand on each: LOGISTICS and FINANCE.
Logistics and Financial
In this section we are going to talk about those two key figures together. In order to grasp the magnitude of the different requirements and truly understand how they operate together, we will need to examine them as a whole and not as separate entities.
- In order to be 100% legit and to work within the boundaries of the law you will have no other choice but to get a different series of certifications from the government; each of them cost money and take their time to fulfill.
- If you want to actually prosper and grow, you’re going to need some hardware. Your base of operation, wether it’s a rented office or your living room, needs to have a proper setup that allows you to exercise your new profession. That retrofitting comes with a price-tag.
Licenses and Certifications
Freight Broker License:
In the US of A, a legally approved and sealed Freight Broker’s license is needed in order to operate. It’s a simple process that only requires an internet connection, a valid Government issued ID and half an hour of your time. The cost, as of 2017, is a fee of $750.
Apply online at the FMCSA’s website, pay the fee and receive an approval as well as a federal motor carrier number.
Freight Broker Bond
Also known as the BMC-84, this is a legally required stipulation put in place by Congress in the 1930’s. It’s a way to protect shippers who do business with brokers.
Since the mid 70’s this bond was set at $10.000 annually. Until 2015 it stayed at 10k then – on that year – Congress passed the “Moving Ahead For Progress in 21 Century” Act (MAP-21) and the bond was updated to 75k.
This is the client’s insurance; a way for him to be certain that if any calamity befalls his shipment – no matter how small – he will have a level of financial safeguard.
There are two ways to fulfill this requirement, that is a necessary step to becoming Freight Broker.
- Deposit the whole amount in an escrow account.
- Employ a Bond Agent or Broker.
There are dozens upon dozens of Bond Agents out there that are willing to front you, for a small price and a handsome collateral.
If you decide to get a bank loan or have the cash in hand, you will only have to deposit this bond into a government protected escrow account once in your professional lifetime. If, you decide to quit as a broker, you can withdraw this amount.
If, on the other hand, you’ve decided to contract a Bond Agent, he will invoice you once a year. You will have an annual cost, depending on his prices, that ranges between 1k to 10k; it all depends on the arrangement and the percentages he’s charging you.
It’s imperative that you get a clear idea of what each of the Bond agents ask in return for their product. Once more, I can’t stress this enough, waltz on down to FreightBrokerBootCamp and get a glimpse of their approved Bond Broker’s list.
Nowadays you need all sorts of insurance. Your premiums will depend on the size of your operation, of the manpower employed and the initial investment.
Present all your paperwork at the local FSCMA’s and get a your local Port Authority’s seal of approval. You will need their OK in order to operate within their region and in their shipyard. Each Port Authority charges 300 dollars for this license.
The number of mainframes you’ll need depends on how many are in your staff, and how many agents you have working for you.
The necessary everyday equipment (staplers, desks, company pens, mugs, coffee makers, rubber bands, etc) that a normal office needs to get through the day.
Printer, fax, scanner, phones, cellphones, boards.
Quicken, TurboTax, Microsoft Office Suite, Cellphone Apps, etc… You’ll need a bevy of milage softwares to start your business and keep everything on track. Try to find software that keeps everything in synch on different cloud services.