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The shipper and provider of a freight service require a ‘middle person’ to handle the specifics of a load.
That person is known as the freight broker.
Freight brokers have specialties in the following areas, such as freight type, and hauling equipment on lowboys.
They also specialize in auto, tanker, and several other kinds of transportation in regards to freight.
If considering becoming a freight broker, the following is a lowdown on the pros and cons of the business.
Article Table of Contents
Pros of Being a Freight Broker
Making More Money
The best part about becoming a freight broker is the money you have the potential to make!
You are about to embark on an industry that is popular worldwide.
With a professional network valued at thousands of dollars, you can have a secure index of consignees and shippers.
Do not permit your bottom line to be damaged by other freight brokers.
Streamline business by taking a training designed to augment customer service and increase the amount of turnover which embellishes overall business.
Low Monthly Overhead Costs
This is another perk to being a freight broker.
Low overhead costs each month translates to a bigger take-home net amount!
All you will be required to do as a freight broker is negotiate with carriers and shippers via telephone.
Occasionally, you might need to go online to track or research a shipment.
Therefore, making the only cost of doing business your telephone and internet provider.
Allows You Complete Autonomy
You can relish complete flexibility and freedom when you work as a freight sales agent.
As a Freight broker you will be able to work independently, perhaps have a couple of employees on the payroll.
You can run the business the way you want to run it.
No bosses to answer to, because you are the boss!
No More Long, Tiresome Commutes
The American dream for many is to make a decent living and do it while working from home.
Who would not love to ditch the alarm clock?
Wake up when you want and go to the “office” in your PJs.
If you are a Freight Broker you can do just that!
No more long, tiring commutes, battling with rush-hour traffic will be a thing of the past.
This can all become a reality if you start your own business after completing the training to become a professional freight broker.
A Low-Cost Investment to Ensure a Brighter Future
What other business can you establish for less than a $5000 start-up cost?
Not many are as lucrative as being a professional freight brokerage agent.
All that is required is about $3500 to start your new career.
This price includes all the necessary training as well as what you will need to set up and start working.
The best thing about this career, you can start out in a small space.
If you like, you can expand the workspace to accommodate your business needs.
Limitless Opportunities
When you get into the freight broker business, you will find your services are needed in more areas than your home state.
A service for container freight shipping is offered throughout the entire country.
Continue adding to the framework to boost your image within the shipping industry.
This will increase your contacts within your personal network.
There are unlimited opportunities and no boundaries for growth!
A Business to Involve the Whole Family
The business of being a freight broker is something you can bring the entire family into.
Once your freight broker business takes off and shows signs of success you can expand by creating new positions.
New positions open up, creating opportunities for several professionals to work as the business grows.
Something to Leave for Future Generations
Your freight broker business is something that is owned and operated by your and the family.
However, why stop there?
You can set it up to allow future posterity to savor in this valuable asset you created.
Get the youngsters involved in the family business so when they are old enough they can take over.
Cons of Being a Freight Broker
Becoming a freight broker is an exciting, lucrative business.
Yet, there are reasons people fail at it, and the primary one is poor planning and lacking expertise or knowledge.
Although the business appears like a simple one, like any other business it takes serious planning and commitment.
Below are some of the cons of becoming a freight broker.
Expensive to Start and Maintain Business
When beginning a freight broker business there may be several costs you might find expensive.
Some of these fees can go upwards of several hundred thousand dollars.
These start-up and maintenance costs may include the following:
- Taking out a loan to start the business
- A flow of cash to cover claims, bad debt, and expansion
- Annual maintenance costs for startup of TMS software
- Wages to pay staff needed in marketing and accounting
- Many kinds of insurance coverage
- Management of claims
- Management for risk assessment
- Web development and designing
- Legal fees and lawyers
- Fees charged monthly for board posting services
A Big Investment of Time
Starting any new business is time-consuming and takes extreme commitment to be successful.
There are several costs involved in the start-up of a freight brokerage.
Additionally, it requires discipline to be able to manage the many activities involved in entrepreneurship.
You will be required to handle several duties, in both the front and back office.
From customer service and reception to approving and setting up carriers.
You will also have to handle all receivables and payables for the business.
If you have employees, there is payroll and time management (scheduling) to handle.
Then there are the more stressful areas of the business.
Such as maintaining licensing, hiring monthly technical support, funding, and infrastructure.
A Lot of Hard Work
Do not let anyone fool you.
Starting up and maintaining a successful freight brokerage business is a lot of hard work.
It might take longer than originally anticipated for your business to gain footing and show signs of success.
Handling general freight takes longer than auto transport does to become successful.
Difficulty Building a Network of Clientele
This might appear to be an easy task, yet creating a trustworthy network of clients is hard.
Particularly if you are a broker that is considered asset-light.
Your clients will need reassurance that you are reliable and they can depend on you hanging around.
The clients in your network want assurance you will be able to provide them with assistance.
Not just today, but in the coming weeks, months, and years.
In addition, they need to trust you will not leave them hanging should the business close.
No Control Regarding Carrier Priority
As a freight broker, you cannot control how a carrier prioritizes shipments without knowing the manager.
This can be very frustrating if you are not covering the entire United States.
Another major frustration is having to file clients’ claims through a third party.
This requires more steps, and additional avenues, which results in the procedure taking longer.
Be Wary of Non-Competitive Clauses
You might have a concern regarding your contract with carriers and any non-competing clauses.
For example, when customers call you for a quote and then call another shipper and get a quote from them.
This might cause you to decline the customer’s shipment altogether.
In relation to this scenario, a few employees might be resentful of the 3PL’s for their price undercutting techniques.
However, the same amount of physical work must be done for less money.
The carrier then takes it out on the freight broker even though it is between their corporate sales and local sales.
Can Be Very Stressful
The business of being a freight broker can be a very stressful job.
When shipping and transport deadlines get tight, stress levels begin to elevate.
Attempt to lower these stress levels by maintaining organizational practices that are sound.
Should You Become a Freight Broker?
If you are ambitious, well-organized, and motivated, then becoming a freight broker might be the career for you.
In the past, the idea of being an entrepreneur might have seemed outrageous.
Too expensive and high-risk of an enterprise to risk.
Yet, you can become a freight agency operator with a few hours of training, most schools also have online training programs.
If you do not have the money to start your own agency, you can work as an independent contractor for another agency.
Once you have established the experience and can qualify for a small business loan, then branch out on your own.
As we mentioned earlier, becoming a freight broker is a rewarding, lucrative business.
It just takes time and commitment to be successful.
Pros and Cons of Being a Freight Broker – Summary Table
| The Pros to Becoming a Freight Broker | The Cons of Being a Freight Broker |
|---|---|
| Making More Money | Expensive to Start and Maintain Business |
| Low Monthly Overhead Costs | A Big Investment of Time |
| Allows You Complete Autonomy | A Lot of Hard Work |
| No More Long, Tiresome Commutes | Difficulty Building a Network of Clientele |
| A Low-cost Investment to Ensure a Brighter Future! | No Control Regarding Carrier Priority |
| Limitless Opportunities! | Be Wary of Non-Competitive Clauses |
| A Business to Involve the Whole Family | Can Be Very Stressful |
| Something to Leave for Future Generations |