How to Become A Freight Broker in 7 Simple Steps [Updated 2021]

The primary goal of this website is to teach people how to become a freight broker or a freight agent.

There are a variety of resources including both free freight broker training videos and articles. As well as my online freight broker and freight agent training program, know as Freight Broker Boot Camp.

This post is designed to help guide you through 7 simple steps to become a freight broker.

Before we go into the 7 steps to become a freight broker, let’s quickly define what is a freight broker and the difference between freight brokers and freight broker agents. 

What is a freight broker? 

A freight broker is a licensed “property broker” who helps shippers manage and move freight from point A to point B. To become a freight broker, you need to be licensed by the FMCSA ( Federal Motor Carrier Safety Administration ).

Freight brokers are sometimes referred to as truck brokers, trucking brokers, shipping brokers, logistics brokers, and/or transportation brokers. 

It’s important to note that freight brokers are not motor carriers or freight forwarders because freight brokers do not take possession of and/or physically transport the freight themselves. Instead, they hire trucking companies to pick up and deliver the freight for their clients.

The main tasks of a freight broker include finding carriers, dispatching drivers, providing shipper freight quotes, invoicing shippers, paying your motor carriers and the list goes on.

Here’s an example of how freight brokers make money. 

A widget manufacturer hires a licensed freight broker to move widgets from Buffalo, NY to Atlanta, GA for $1,800. 

The freight broker then finds a trucking company willing to transport the load for $1,500. This leaves a gross profit of $300 for the freight broker. Although profit margin varies in most cases it ranges from 10-20% of the overall shipment value.

As you can see a freight broker business can be a very lucrative business. Here’s a post and video sharing how much top freight brokers make per year.

If you aren’t quite ready to get your freight broker bond and/or freight broker authority, you should seriously consider starting as a freight broker agent. 

As a freight broker agent, you don’t need to be licensed and there are no tests to qualify. Your main tasks would be to find shippers, rate shipments, source carriers, dispatch drivers, and make sure everything happens on time. 

Independent freight broker agents typically earn between 50-70% commission on the profit from any load they originate. 

Example: Shipper pays $1,000, the broker pays $800 to the carrier. Leaving $200 in profit. The freight agent would get paid between $100-$140 on that one load.

In this article, I will mostly talk about how to become a freight broker but if you are unable to get started as a freight broker, it’s important to note that top freight agents do extremely well as seen in this freight agent success interview.

Now, let’s dive into the 7 steps of how to become a freight broker with no experience. 

7 steps to become a freight broker with no experience

Step 1 – Get trained as a freight broker or freight agent

The first step to becoming a freight broker, especially if you have no prior experience, is to get trained. 

There are 3 primary ways to learn how to become a freight broker: 

They include on-the-job training, live classroom training, and online training (which is usually self-study)

Fact is, not everyone learns the same and each has its pros and cons.

On-the-job freight broker training, for example, has the advantage that you earn while you learn. But it also takes the longest and has the least amount of flexibility.

Classroom freight broker training courses are perfect for anyone who likes to learn from a teacher, however, classroom training can be more costly, can require travel, and lack scheduling flexibility. Sometimes referred to as a freight broker school.

Online freight broker training can be done online, at your own pace, and is usually the least expensive training option. A great example of this is an online freight broker course. 

Before deciding which is the best for you, take a deeper dive and look at the pros and cons of all of them. 

Not long ago I wrote an article that has become very popular that might help.

Freight Broker Training – 3 Winning Strategies For Becoming A Freight Broker in 2021

Step 2 – Get your freight broker authority / freight broker license

To become a freight broker and legally broker freight in the United States you will need to get your freight broker authority.

But don’t worry, it’s an easy and painless process that does not require a college degree, any testing, or certification to qualify.

In fact, all you need are 4 steps.

Step 1 is to complete and file your FMCSA OP-1 Form. 

Step 2 is to fill out and file your BOC-3 Agent Processing Form. 

Step 3 is to get your freight broker surety bond (also called BMC-84 bond) or your freight broker trust (BMC-85).

Step 4 is to complete your Unified Carrier Registration / UCR

For further information, check the registration page of the FMCSA: https://www.fmcsa.dot.gov/registration/broker-registration

During this process, you’ll also receive your motor carrier number (MC) and USDOT number.

When it comes to freight broker surety bonds, people sometimes ask me if their credit score will have an effect on their premiums. The answer is yes, your credit score can affect your premiums.

Read the full article on 5 things you need to know about freight broker bonds. 

Keep in mind that there are costs involved to get your freight broker authority and the processing time can take 4-6 weeks.

First you will need to form a Corporation or LLC but that can all be done online.

LLC stands for limited liability company and it’s a recommended business type for any freight broker company.

Other than that, you don’t need much to get started as a freight broker. Both general liability insurance or contingent cargo insurance are optional for startups. When you are in the logistics industry, having some kind of insurance is a good idea, in case anything goes wrong.

While getting your freight broker authority is crucial to becoming a freight broker, it’s not needed to become a freight agent.

That’s why many people decide to start as independent freight agents first and then become a freight broker later. 

NOTE: As a part of my online Freight Broker Boot Camp online training course we teach you how to apply for your freight broker authority plus we train and support you on how to start making money as a freight broker.

Step 3 – Find your freight broker niche

Riches are in niches when it comes to becoming a freight broker.

There are many niches to pursue as a freight broker, so finding your niche is a critical step to becoming successful. 

I’ve told the story many times about how I found my freight niche and how I was able to generate over $1.2 million in sales my first year in business. 

Keep in mind that you aren’t bound to just one freight niche forever. Once you are successful in a niche, you can expand to others. 

But when you are just starting out picking a niche will significantly increase your odds of success.

There are 4 primary ways to find your niche for your freight brokerage business:

1) Equipment type

Niching by equipment type can mean to only work with vans or refrigerated trucks for example. Or to focus on vans, reefers, flatbeds, step decks, as well as many other specialized types of trucking equipment. 

2) Product type

Product types could mean steel, produce, gas and oil, bottled beverages, heavy equipment, and the list goes on. 

3) Based on geography/lane

You can also specialize and niche down by geography, region, or even specific freight lanes or corridors. For example Chicago outbound freight, northeast outbound freight, or cross border freight.

4) Hybrid approach

The hybrid approach combines two or more of the 3 strategies identified above. For example, your niche could be Northeast outbound van freight or CA to TX flatbed freight just to name a few.

Here’s a very comprehensive and popular article/training I did on how to find your freight broker niche!

Step 4 – Set up your freight broker home office

freight broker home office

One of the best parts about being a freight broker is your ability to work from home.

There are no long commutes back and forth to work. You get to spend more time with your family and be more productive as a home-based broker or agent.

I’ve been an entrepreneur for about 25 years and during my career, I have worked from home for almost half of that time and I love it. 

I truly enjoy working from home and while it’s not for everyone, I think the pros far outweigh the cons.

Pros of working from home as a freight broker or freight agent include: 

-More independence

-Fewer expenses

-No commute

-Increased productivity

-More work flexibility

-Fewer office distractions

-Increased job satisfaction

-More work-life balance

-Work on your own hours

Cons of working from home as a freight broker or agent including: 

-Increased isolation

-Risk of overworking

-Distractions at home

-Workplace disconnect

-Self-management can be hard work

If working from home is absolutely not an option for you, you could rent a small office space. 

Once you become a freight broker, you are in charge. So, it’s your choice where you work from.

But most freight brokers startups decide to work from home. That’s why I wrote a full article on how to set up your home office that might be helpful.

Click here to learn the 6 steps of how to set up your freight broker home office.

Step 5 – Leverage freight broker software

You do not need to be a “techie” to make money as a freight broker but there are a few ways to leverage technology to increase your profits.

They fall into 3 different categories: 1) transportation management software (TMS), 2) internet load boards, and 3) customer relationship management software (CRM).

A freight broker TMS will help you to keep track of all your loads, orders, rates, carriers, and more.

A freight broker CRM is a place to manage all of your customer and prospect data. 

Internet load boards are online hubs where motor carriers share truck capacity and freight brokers share load capacity and then collaborate and work together to create mutually beneficial relationships. 

That’s why load boards are invaluable when you become a freight broker with no experience. It helps you to find and develop relationships with carriers that you can partner with to move your customer freight.

There are countless load boards out there that’s why I collected my top 5 load boards in an article below.

As you can see, to become a freight broker startup you really don’t need much technology other than an internet load board or two. 

But as you begin to ramp up your sales efforts and move more freight, you are definitely going to want to embrace technology.

The good news is, there are tons of options when it comes to freight broker software. See the links below to get into more detail based upon your specific needs.

 Top 10 Freight Broker Software For 2021

 Top 5 Load Boards For Freight Brokers in 2021

 Top 5 Sales CRM’s For Freight Brokers in 2021

Step 6 – Partner with a freight broker factoring company

Do you want to become a freight broker but don’t have a lot of money to get started? 

become a freight broker with little money upfront

Don’t worry, as a freight broker you can use OPM – also known as “other people’s money.” 

That’s why factoring is so popular with freight brokers. Factoring companies help freight brokers by advancing them money to pay carriers before they get paid by shippers. 

Freight broker factoring is a form of financing where you sell a shipper invoice to a factoring company, which then advances you up to 95% of the invoice to pay your motor carrier and basic operational cost.

Without factoring most freight brokers would never be able to scale their business to 7 figures because in many cases trucking companies will require payment from the freight broker before the shipper actually pays the broker.

This is often the case in business and while I don’t recommend factoring as a long-term strategy, it is a powerful strategy for startups until you can acquire bank financing.

More details on how freight broker factoring works and where you can find a freight broker factoring company below.

What is freight broker factoring? How to use OPM to grow your freight broker business!

Step 7 – Start selling and marketing to shippers

The final step to becoming a freight broker is to start selling and marketing your services. 

There are many ways to acquire shipping customers today. Cold calling, social selling, referrals, online advertising, content marketing, trade shows, and more.

Most freight brokers start with cold calling as their primary strategy because it’s the fastest way to start having conversations with potential shippers. 

But it definitely isn’t the only way.

Those who have industry experience and contacts like to get their first shipping clients from referrals.

Regardless of which channel or strategy you choose, learning how to sell is one of the most valuable skills for a freight broker or freight agent.

Fact is, there are top salespeople and freight agents that make more than owners and CEOs in the freight industry.

Why?

Because they understand how to get and retain clients and without that there is no business.

Here are some freight broker sales training links that I think you will enjoy.

Freight Broker Sales Training – 8 Killer Sales Questions that Every Freight Broker Needs to Know

Freight Broker Sales Training – How to Overcome the Price Objection

7 Freight Brokers Sales Tips on How to Get Past the Gatekeeper

Freight Broker Sales vs Freight Broker Marketing

Freight Broker Sales Training – Turning 1 Customer into 10 Customers

I’ve said it before and I’ll say it again. Learning to sell is the most valuable skill in the world for the average person to earn a 6 figure income. 

There are many other important facets to becoming a successful freight broker but sales are definitely high on the list.

To sum up, becoming a freight broker isn’t rocket science.

So let the 7 steps guide you to get started. 

If you are curious and want to learn more about my online freight broker training CLICK HERE! 

Cheers,

Dennis Brown

7X Fastest Growing Freight Broker & Top Freight Broker Trainer

 

 

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