Freight Broker Training – Start a Great Career
The United States trucking is a $700 billion industry. 70% of all US merchandise moves on container ships. 5 million tonnes of goods are moved every day on the US freight rail network. Air delivery services add another $87 billion of goods in motion. Brokerages connect loads with container, trucking and shipping companies to get goods in the right place on time, and they can earn a good living doing it. You can become a freight broker, run your own brokerage and become a key player in the transportation industry by getting yourself to the best school you can find.
What is a Freight Broker?
Freight brokers and agents are responsible for matching a shipping company with the ground transportation company – a trucking company or other carrier – that will move the goods to its destination. In return for their services, they charge a commission. As such, they form an integral parts of the logistics system that is responsible for moving millions of tonnes of merchandise every day. They are responsible for many financial aspects including invoicing shippers, paying trucking companies and agents, assistance claims, extending credit. Many brokerages are one person operations, but others are large multinational operations with revenue in the billions. Brokers must be licensed by the FMCSA (Federal Motor Carrier Safety Administration) which is part of the U.S. Department of Transportation. (Agents do not require licensure).
Many professionals become specialists in certain types of cargo such as truckload of full truckload (FTL) or less-than-truckload (LTL), or specific hauling types such as lowboys, flatbeds, drop deck or oversize. Increasingly, larger brokerage and agency operations will offer extended services that overlap with those services offered by larger third-party logistics (known as 3PL or TPL) or Logistics Service Provider (LSP) organizations. Excelling in any of these niches requires the right training combined with solid brokerage experience.
What does a Freight Broker do?
The primary function of the brokerage is to match a shipping company with the appropriate ground transportation carrier for a specific load. This will mean understanding what is required to haul the load, contacting and negotiating with appropriate truckers. It requires research and a lot of communication.
Brokers/agents will contact ground transportation operators to identify one that is suitable for the load, available at the right time and travelling on the right route. This is complicated due to the huge number of motor carriers. According to the United States Department of Transportation, the transportation industry incorporates over 700,000 trucking companies in the country, with 91.0% operating 6 or fewer trucks and 97.3% operating fewer than 20 trucks. The best training and experience will help you navigate a way through the options.
They will then negotiate the price for the service between the trucking company and the shipper, ensuring there is enough profit for the carrier. These professionals organize the many logistical aspects of the transportation of the goods such as pick-up times, delivery dates and handling on arrival. They will also address any problems that arise during transportation such as damaged goods or goods that have gone missing. Some of this work may be handled by a freight agent. Brokers are responsible for hiring only trucking companies that meet FMCSA guidelines including authority, indemnity and safety standards, and, at the same time, for ensuring that payments due to the carriers are not unreasonably withheld. They will track shipments, ensuring that goods arrive on time at the agreed destination, checking for missing and damaged goods.
Brokerage provides value to both shippers and carriers. For the shipper, the save the time and expense required to locate an appropriate carrier for the load, offering guarantees over the quality of the haulage service and thus reducing the risk of loss. For the trucking company or carrier, they offer a route to a steady stream of contracts, helping to keep trucks fully loaded and on the road, and thus making more money. The broker/agent model is thus invaluable to the logistics, supply chain management and transportation industry.
How to Become a Freight Broker
If you’re looking for a solid career with the offer of excellent opportunities, you could do a lot worse than becoming a broker or agent. The steps to get started in becoming a well-equipped professional are as follows:
- Get Freight Broker Training
If you want to be a great professional, you need to get the right training from one of the better schools. This site provides lots of information on classes and training in every state. Some of the classes are online, so students can study at home at their own pace. While there are many technical and legal aspects to learn, you need to learn how the industry works, its principal players, and to develop a practical knowledge of the day-to-day work of a brokerage. You will also need to learn how to get to work with shippers and shipping rate negotiations – the point where brokering begins. You can also boost your knowledge by reading some quality professional books. Through the classes, and the contacts you make, you may be able to find opportunities for entry-level jobs in brokerage, trucking or agent offices, that will provide you with your first hands-on experiences and where you can learn on the job.
- Develop your general skills
Brokers (and agents) will want to have solid math proficiency. This is one skill they will use these every day. Additionally, they will need good communications skills as they prepare to negotiate with shippers and carriers by phone and email, one key function in brokering. If you are weak on one of these abilities, you should search for schools that include these resources in their classes.
- Register your company and develop a business plan
To work as an independent broking firm, you’ll want to choose a company name – checking with the U.S Patent and Trademark Office that it’s not already in use – and register your freight brokerage at the local business license department for your state. Before taking this step you want to have a clear idea of how your brokerage is going to function – where it will find clients, how it will source carriers, what specialized areas your brokerage will focus on and how you will finance your cash flow. For this you will want to take the time to develop a full business plan – one of the key tasks – that will include all marketing and financial aspects of your company, setting objectives and a route map to get there.
- Get a Freight Broker License
All brokers need to be licensed by the FMCSA (Federal Motor Carrier Safety Administration), which is one of the bodies that oversees the transport industry. The appropriate license is called the Motor Carrier Operating Authority, or MC Authority. Businesses with MC Authority have an MC Number The steps to apply for the license are 1) Obtain a USDOT number , 2) Pay the $300 MC authority application fee, 3) Complete and submit the OP-1 form. These steps are now performed together under the Unified Registration System (URS). Note that no training is stipulated to get started in this career. The process of getting a license takes four to six weeks. The FMCSA will provide you with your MC Number by mail.
- Get a Surety Bond, and General Liability and Contingent Cargo Insurance
A requirement for gaining MC Authority is that you obtain a freight broker bond (a BMC-84 bond) of $75,000. How much does a $75,000 surety bond cost? The premium of the surety bond will depend on your credit score and will probably range from 1.25% to 5% of the principal. In other words, anywhere from $937.50 to $5,000.00.
Once you have your MC number, you may also need to obtain General Liability (Forms BMC-91 or 91X) and Contingent Cargo Insurance (Forms BMC-34 or BMC-83).
- Designate Your Agents of Service of Process
For each state in which you operate, you must to designate an agent of service of process via Form BOC-3, which must be submitted to the FMCSA.
With the above steps in place, you’re ready to get started in your new career and broker freight consignments. You’ll need the essentials of any trade to get up and running: the operational capital and other resources you specified in your business plan, computer equipment and a phone and marketing plan that can get you in front of new clients.
What Will I Learn on a Freight Broker Training Course?
The best freight broker training courses will provide students instruction on all aspects of the transportation industry and the resources they need to make it as a professional. There are no prior requirements to attend school. Students will need to know the following:
- Learn how to set up a brokerage, including how to set up and manage your office, be it at home or with a group of employees.
- Sales and marketing competencies. Learn how to find loads to move, identifying prospects, and get to know basic sales techniques and together with email and phone skills.
- Clearly one of the most important lessons is that you will learn how to broker load management deals: students learn how to calculate rates, the right way to negotiate the rates with shippers and carriers, find trucks, fill out load sheets and post loads, load-matching tools and boards, dispatch etc.
- Learn how to manage your brokerage: students learn daily accounting for billing, payables and receivables, know how to finance the brokerage’s accounts receivable and keeping your brokerage solvent, collections procedures, payments to trucking companies, working with software and other online tools to improve efficiency, employment options and claims handling.
- Learn about the documents and software that are common to the brokerage and transportation industry and know how to use them. Many brokers work with online load boards that allow them to see which trucking companies are available at a given moment, and so access hundreds of providers in an instant. It’s of enormous help if training can show students in class how to dominate these tools.
- Transportation industry law, indemnities, agreements and contracts.
A top training program will give students a profound understanding of the business. The school will share with them the perspectives of the business as seen by shippers, drivers and carriers. On such a training course, students will learn the daily routines that help put the basic parts of the business on autopilot, while you can get on with driving new business. Graduates of a top school will know how to win business through good sales training, the right way to run day-to-day operations using online tools, the right way to sign contracts to reduce risk and the right way to run company finance.
Do I have to go to school to become a freight broker? The answer is no. There are no requirements for specialized training or education, no school provides officially recognized certification and getting time working in a brokerage will often provide the knowledge and teach the proficiencies you need to understand the world of brokering and become a successful professional. Indeed prior knowledge or training in the transportation industry may be sufficient to get started Nonetheless, in every competitive environment, it is the best prepared who most likely to succeed, so students of top training courses, having chosen the right school, have one more advantage. So, if in doubt, get trained from one of the top schools!
Employers may also look for graduates with training in related professions such as supply chain management or logistics. One strong industry trend that we see is the move towards full-service broker agencies, working to provide help end-to-end for their clients.
New brokers who wish to obtain additional certifications for a competitive advantage can take the Certified Transportation Brokers exam, which is administered by the Transportation Intermediaries Association.
Training for brokers and agents are broadly the same, as the principal difference between them is that a brokerage carries the liability for losses and compliance with transport industry regulations.
How can I find a freight broker school near me? Students will find details of training at schools in every state on this site with affordable online options at local community colleges. If you haven’t attended an online class, you have nothing to fear. Class software provides students with an intuitive way to interact with course materials and get support from the instructor. Instructors tend to be professionals with extensive experience. Have a question? We’re here to help with all the training information you need.
How much does freight broker school cost?
There are some short courses available online that involve no personal instruction. While these courses are very affordable, each class is a video that offers no opportunity to ask questions or learn from your fellow students. We do not recommend these courses for those with serious career ambitions.
For more involved courses, training tuition fees vary significantly from $600-$700 for a basic online course that will offer training over a few days, to over $2,000 for more complete instructor-led training programs that last in around six months will really set you on the road as a professional.
We recommend a training course that offers a solid basis in transportation law, quality standards and accounting, as well as practical training in sales and marketing. You should also get to know inside out the day to day operational aspects. We also believe training should be instructor-led as your strengths and doubts will not be the same as those of other students. As you identify the direction your business might take, you’ll be able to question your instructor on the aspects that are most important to you, provide feedback and seek help for specific issues. An instructor can offer support and help you learn the most important information, as they will recognize and know your specific needs and adapt training to meet them and turn you into a great professional. People who have become successful professionals generally have a instructor or mentor to thank.
Is certification required? No. However, if you plan to look for a broking job with a larger company it may be considered helpful. Employers value training as it demonstrates the commitment to the job they want to see in their employees. They may also look for school graduates as a demonstration of good general education.
Find freight broker training in:
How Much Does It Cost to Become a Freight Broker?
The cost of becoming a freight broker equals training tuition fees plus the $300 application fee and the premium of the $75,000 surety bond. As stated above tuition fees for classes is anywhere between 0, for those with existing knowledge and experience to, say, $2,000. The cost of the surety bond will probably lie between $937.50 and $5,000, depending on your credit score. Therefore, your total cost will lie between $1,237.50 and, say, $7,300.
If you want to set up your own freight broking operation from home, you should add the expenses for your home office, insurances, and also the working capital you need to get started that you know from the calculations in your business plan.
The cost of becoming a freight agent is less, as there is no cost for licensure or for the surety bond.
How Long Does It Take to Become a Freight Broker?
The length of time it takes to get up and running will equal your time spent in training plus the four to six weeks required to process your license application. Your time you need to spend taking classes will depend on your requirements. If you have previous knowledge of the industry, either because you have worked in a brokerage, trucking or agency, then you may feel you can apply directly for licensure, in which case, getting set up in your new profession will take the same amount of time as the license application process. If, however, you are a newcomer to the industry and need knowledge of how the industry function and its legal environment, then a six-month course may be more appropriate. Therefore, starting with no knowledge but lots of enthusiasm, you could be trained and licensed in as little as 7 months.
As agents require no license, the time required to become one is four to six weeks less. The training period for freight agent is the same as for brokers.
How much do Freight Brokers Make?
According to Indeed.com, the average salary for a freight broker as of January 2020, was $61,730, with additional average commission compensation of $28,400. Entry level salaries, for those with little training or experience, tend to be in the region of $30,000. They will be higher for graduates than for candidates with little or no college. The highest salary offered at this point was just under $170,000. Of course, these numbers are salaries for employees. Experienced, independent brokers with top sales capacity and reputation and quality of service that retains existing clients may make in excess of $400,000 per year. Clearly, the pay-off is good if you are prepared to take the risk and hard work of setting up your own brokerage. There are also franchise opportunities for experienced brokers to run their own brokerage office, managing other people or working from home, on behalf of a larger corporation. Compensation will depend on sales generated, but depending on volume, brokers can retain as much as 70-80% of the commissions and make between $125,000 and $250,000 per year.
Another factor which will influence the money you can make as a freight broker is your location and geographic reach. If you have freedom to locate yourself anywhere, you should know that Texas is the best state from which to broker cargo deals or act as an agent, posting more truck loads than any other state in the country for all three major categories of trailer: dry van, flatbed and reefer (a refrigerated van).
The amount of money you can make as a licensed freight broker may vary throughout the year. Freight rates will vary by time of year and the type of goods carried. For example, states with more agricultural economies will tend to have higher cargo rates per mile in the summer when truck demand is higher. States with large urban populations and high consumption, one such state being New York, have very high inbound rates per mile that only increase in higher consumption months such as the winter holidays. Higher rates will result in higher commissions for the brokerage.
A top freight broker will typically make twice as much money as an agent. A solid base of freight broker training, experience and hard work will help you exploit the opportunity to the maximum. A broker/agent may make more money more but holds all the risk, and responsibility for full freight brokerage service.
According to the United States Bureau of Labor Statistics, Cargo and Freight Agents as at May 2018 were earning between $25,970 and $66,920, the average being $46,070. Salaries will increase with training and experience. These amounts do not include commission payments which can be very significant.
What’s the Difference Between a Freight Broker and a Freight Agent?
A freight broker is required to hold an FMCSA license and a surety bond. They are responsible for meeting FMCSA guidelines, and assume the risk of granting credit to customers. In exchange for the shouldering responsibility for liability and holding a surety bond, a broker will tend to earn more than an agent. They can handle many more load transactions than the agent as they delegate most of the hands-on work associated with brokering the deal, managing the transaction, monitoring delivery and handling claims to the freight agent.
A freight agent acts as independent contractor salespersons for brokers. Such people work under the authority of a licensed broker and therefore assume little or no liability. Typically, an agent will work with a broker on a 75-25 split of the commission, with the agent taking the larger share for brokering the deal, handling more of the administrative work, such as communicating with shippers and ground transportation, providing rate quotes, managing delivery logistics, problem solving and handling claims. Freight agent training is therefore the same as that for brokering.
The licensed freight broker agent fulfils both functions, shouldering the liability and risks, while selling and delivering the service to clients as a full-service brokerage.
What are the Largest Freight Brokerage Companies?
In 2019, the largest U.S. freight brokering companies were, alphabetically: Allen Lund Companies (California), ArcBest Corporation (Arkansas), BNSF Logistics (Texas), CH Robinson (Minnesota), Coyote Logistics (Illinois), Echo Global Logistics (Illinois), England Logistics (Utah), GlobalTranz Enterprises (Arizona), Hub Group (Illinois), JB Hunt Integrated Capacity Solutions (Arkansas), KAG Logistics (Ohio), Landstar System (Florida), MODE Transportation (Texas), Redwood Logistics (Illinois), Schneider Logistics (Wisconsin), Total Quality Logistics (Ohio), Transplace (Texas), Worldwide Express (Texas), XPO Logistics (Connecticut) and Yusen Logistics (Americans) Inc. (New Jersey).