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Starting a Freight Broker Business

By Greg Brown
Business.com / Education / Last Modified: February 22, 2017

Railroads once owned U.S. commerce, but with the rise of interstate highways in the 1950s, it has been trucks every since. The ...

Railroads once owned U.S. commerce, but with the rise of interstate highways in the 1950s, it has been trucks every since. The government figures that, on a typical day, roughly 43 million tons of goods worth $29 billion move on highways in the United States.

The ebb and flow of demand, plus the sheer chaos of managing loads in many directions, creates an opportunity for freight brokers, individuals who help shippers find empty trucks and truckers find loads to move, all for a cut of the deal.

Covered in this guide:

1. Basic qualifications and licenses for being a freight broker
2. Insurance and other costs of doing business as a freight broker
3. Financial credibility as a freight broker
4.Getting your feet wet in freight brokerage at a large shipper

Getting started being a freight broker

Online courses on being a freight broker claim all it takes is fax machine, phone and time. Not quite. You'll need a federal license and insurance at a minimum to be a freight broker.
Federal Motor Carrier Safety Administration manages licensing for freight brokers. Price freight broker contingent cargo insurance with Navigators, Gales Creek, Allianz Global Risks, CNA Financial, and Travelers Companies.

Establishing credibility in the market as a freight broker

Other than a license, you won't be really required by law to do much more. But shipper won't touch you with a 10-foot pole unless you can show you have broker authority and a surety bond.
FMCSA site. Find a surety bond provider at the Surety & Fidelity Association of America, a trade group of bond companies, or consider creating a trust-fund agreement, which allows you to put up your (higher) own cash bond instead.

Before becoming a freight broker, get your finances in order

Shippers are very wary of seat-of-the-pants freight brokers who take over their logistics but might not make it to the end of the week financially. Establishing financial credibility is as important as professional credibility as a freight broker.

Experience the industry first hand to build contacts as a freight broker

One way to build a future business as full-fledged freight broker is to learn the ropes as an agent for a larger logistics provider.
LTL (less than a truckload) shipping.
  • Being a freight broker sound like a lot of trouble for a startup business? Consider working as an agent -- a freight broker representative -- until you feel you have a command of the freight broker industry.
  • Watch out for expensive online freight broker schools. The information they offer may be legit and even worthwhile, but short-course freight broker programs are in no position to place you in a job any more than you would find one yourself.
  • Be ready for an immediate hit to the wallet: New freight brokers scramble to survive for the first two years or more, until clients begin to trust them. If you aren't ready to finance that curve, reconsider.

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