Freight Broker License
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In our day and age, freight brokers are an important link in the logistics industry.
They are the ones who connect cargo owners with carriers and make sure the freight safely reaches its destination.
If you want to become a freight broker, there are a few things that you should know before starting this journey.
In this section, we have included important information about this career path.
By reading further, you will find out more about salary expectations, education, licensing requirements, and more.
What Does a Freight Broker Do?
In short, Freight Brokers match goods that need to be shipped with companies that do the shipping.
Their job description usually includes taking orders from customers, arranging the pickup of the freight, and making sure that it safely reaches its destination.
Freight brokers also determine shipping charges and tariffs by preparing and examining bills of lading.
They act as middlemen between shippers and authorized motor carriers, which makes them an indispensable part of the movement of cargo in the United States.
They are responsible for the entire shipping process, and because this profession involves a lot of responsibility, you need to have a license before starting a career in this field.
Freight brokers are the ones who make sure that the shipment goes smoothly and the freight arrives safely, on time.
Usually, they are responsible for:
- helping shippers find the most reliable motor carriers
- helping motor carriers maximize their loads
- finding the best shipping rates
- finding the fastest delivery options
- tracking the freight
- making sure the legal requirements are followed
Although freight brokers need to undergo a lengthy licensing process, this profession has a huge advantage because it allows you to work from anywhere as long as you have a working internet connection.
Freight Broker Salary
According to the Bureau of Labor Statistics, the median annual wage reported by cargo and freight agents was $43,770.
This number shows us that half of all workers in this profession earned less than this amount while half earned more.
Annual earnings are dependent upon many factors, including the experience level, the region of employment, the local economy, and more.
Licensed freight brokers who work for themselves have a high degree of independence in the sense that their earnings depend on their efficiency and business skills.
If they are good at their job, freight brokers can make much more than the national average.
But this can also mean financial instability and periods of low income.
Freight brokers who are employed by other licensed brokers usually earn a compensation package that includes a salary plus commission.
The numbers published by BLS show that the lowest 10 percent for all cargo and freight agents made less than $27,780 per year, while the highest 10 percent made more than $69,890.
The top-paying state for this profession is Rhode Island, where the median annual wage reported by freight brokers was $57,580 as of May 2020.
Those who worked in Nevada, on the other hand, made a little over $36,000 per year, on average.
Work Opportunities for Freight Brokers
As mentioned in the salary section, freight brokers can work either as independent licensed brokers or salaried employees.
Licensed freight brokers may also work as independent contractors under a licensed broker.
The United States transportation industry is worth more than 700 billion U.S. dollars, according to statista.com
According to Wikipedia, in the United States, trucks transport approximately 60 percent of all freight.
Manufacturers are always looking for freight brokers to help them find reliable and efficient carriers for their products.
Experienced freight brokers are in high demand, and those who are motivated and good at their job can make a six-figure salary per year.
Freight Broker Education
As a freight broker, you need good communication and people skills, because you will often have to negotiate with clients directly.
Having some experience in the transportation industry is a huge plus because it helps you become connected with potential clients, while also giving you a better understanding of the industry.
Besides these personal skills, you will also need specialized training in how a freight broker business works.
Freight broker schools teach you how to set up, open, and operate a freight brokerage.
During training, you will also learn more about the licensing process.
Many training programs combine classroom knowledge with hands-on experience.
Classes are available online and in-person, and some schools offer flexible schedules that allow you to keep a full-time job while completing your training.
Intensive classes that last only a few days are also available at some schools.
Costs usually range between a few hundred and a few thousand dollars, depending on the program and its duration.
Online classes are also available, and costs for these types of programs start at less than $200.
Other types of classes usually range between $1000-$5000.
Although a high school diploma or GED is usually enough for a career as a freight broker, a degree in business or logistics may help.
Licensing Requirements for Freight Brokers
The freight broker profession is regulated nationwide by the Federal Motor Carrier Safety Administration (FMCSA).
The licensing process is not a simple one, but it can be summarized as follows:
Step 1: Establish Your Business Structure
The first step in the licensing process is to decide how you want your company to be structured.
You have four options:
- Individual/Sole Proprietor
- Partnership
- Limited Liability Company
- Corporation
It is best to consult an attorney or accountant before deciding what business structure works in your case.
After deciding the type of business you wish to operate, you have to register your business in your state.
At this point, you will also have to find a name for your company and check with the Patent and Trademark Office if that name is available.
A business plan is also needed because it may help you obtain a line of credit from your bank.
Step 2: Obtain a Motor Carrier Number
After deciding what type of business you wish to conduct, it’s time to obtain a motor carrier number.
To get this, you will need to complete an OP-1 form and submit it to the FMCSA.
You can apply online to receive your motor carrier number, in which case you will receive it immediately.
This number will be posted on the FMCSA page and it can be contested for 10 days.
Step 3: Obtain A Surety Bond
This bond ensures that your company is compliant with all the rules and regulations relevant to this field.
Obtaining a surety bond is often considered the most difficult step because the federal freight broker bond is usually harder to obtain than other bonds.
In the approval process, your background will be taken into account along with many other factors.
You will also need to provide financial information.
A $75,000 bond is required to help you demonstrate your financial strength and reliability.
You don’t have to pay this sum upfront, but you will pay a premium rate which varies between $1,500-$4,000.
A surety bond will guarantee that your motor carriers and shippers are paid if you fail to comply with your contract.
Step 4: Choose a Process Agent
A process agent is a person who will act as your representative.
This is the person to whom the court papers are served in case a lawsuit is filed against your freight broker business.
You will need a Process Agent in each state in which you will have an office and write contracts.
At this step, you have to fill out another form and submit it to FMCSA.
Step 5: Register Your Freight Brokerage
All freight brokers have to participate in the Unified Carrier Registration- an agreement that establishes rules and regulations for this industry.
Keep in mind that, as a freight broker, you will need to familiarize yourself and stay up to date with local rules and legislations regarding interstate companies for every state in which you will conduct business.
Step 6: Get Your Equipment
Even if you don’t need a physical office, you will need to purchase some equipment to successfully manage your business.
Essential gear such as a computer, a printer, internet connection, and a phone number, as well as office supplies, are needed from the very beginning.
Step 7: Begin Conducting Business
Once you have obtained your license, you can start looking for your first customers.
Finding the right carriers for your field of operation is key.
There are many ways to find good carriers, such as online directories, direct references, or networking events.
Having some previous experience in the transportation industry may make this process easier.
Building a good marketing strategy and a strong social media profile can help potential clients find your business.
Creating a visual identity for your freight broker business by designing a logo, a website, and printed marketing materials can also help.
Some freight broker classes also teach you how to market your business and will help you find your first clients.
Frequently Asked Questions
Do Freight Brokers Need A License in the United States?
Yes, freight brokers need a license to operate in the United States.
The licensing process involves: establishing a business structure, submitting forms, acquiring a surety bond, and finding a process agent.
This profession is regulated by the Federal Motor Carrier Safety Administration (FMCSA).
How Long Does the Licensing Process Last?
While freight broker school can usually be completed in less than a month, the duration of the licensing process varies.
It all depends on the time it takes you to have all the paperwork in place and to complete all the requirements.
How Much Does a Freight Broker Make?
Salaries in this field vary depending on each freight broker’s skills and how many shipments they intermediate.
Some freight brokers work independently, in which case their earnings are directly influenced by their efficiency, reputation, and the number of clients.
Other freight brokers are employed by a licensed broker, which means that they earn a fixed salary plus commissions.
According to be Bureau of Labor Statistics, salaries for cargo and freight agents fluctuate between less than $30,000 and most $70,000 depending on skills, region, and a variety of other factors.
How Much Does Freight Broker School Cost?
Costs vary depending on the duration of the training and the school you choose.
Training costs are between less than $200 and more than $5,000, depending on the type of program and the duration.
Online programs are usually less expensive than traditional ones.
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