Recently legislation was passed that increased the bond requirement for freight brokers from $10,000 to $75,000. While the new bond requirement does not take effect until July of 2013 there are a lot of mixed feelings. Some people are upset about the increase but for many others they believe the increase is long over due. The stated goal of the increased bond is to help fight fraud and to protect motor carriers from incurring loses that the bond was designed to protect.
As for me, I believe more than ever that now is the best time to become a licensed freight broker or a freight agent. Why? It all comes down to SUPPLY AND DEMAND! In my previous blog titled, “Timing is everything, why become a freight broker today?” I talked in detail about 3 major factors (CSA 2010, Fuel Prices, Baby Boomers) that are driving the demand for good freight brokers and freight agents. The higher bond requirement is now the 4th major factor that is going to increase demand for good freight brokers.
Estimates show that there are somewhere between 14,000 and 16,000 licensed freight brokers in the U.S. depending upon who you talk to. The fact is, this new bond requirement is going to cause some brokers to 1) sell their businesses, 2) close their doors or 3) partner with another brokerage that can has the financial resources to afford the additional bond cost. Regardless of which direction they choose there are going to be LESS licensed freight brokers in the United States starting in July 2013 than there are today.
So what does this mean for the remaining freight brokers and freight agents? Less competition means the opportunity for freight brokers and freight agents to make money just got better!!! How? That’s easy, the economic principle of supply and demand says that if the supply of freight brokers goes down and the freight demand remains the same or goes up then THE DEMAND FOR FREIGHT BROKERS/AGENTS WILL GO UP!
So if you are considering becoming a licensed freight broker or starting a freight agency don’t let the new bond requirement scare you away. Let it be your launching pad because the opportunity to be successful as a freight broker/agent is better than ever. Particularly when you consider the fact that there will be less competition once the new law takes effect in July 2013.
Advantages to becoming a freight agent versus a freight broker
- Freight agents do not need to get a broker bond.
- Freight agents are able to focus on making money as opposed to back office administrative functions including credit management, billing customers, paying carriers, collections, claims and software development all of which are typically handled by the licensed broker.
- Agents are not typically liable for BAD DEBT if a customer goes bankrupt or decides not to pay their bills.
- Agents can work from home and do not have to hire, manage or pay employee
Sorry for not posting more often but between the family vacations and the fact that my brokerage business is growing by leaps and bounds and is currently projecting over $42 million in sales for 2012. I look forward to your feedback and questions.
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To your success!