The very first thing you’ll learn in freight broker training school is distinguishing between the different players in the logistics and transportation industry. Some of the major players include freight brokers, freight agents and freight forwarders.
At first, all three may look and sound the same. After all, they do almost the same thing, have the same freight training, know all there is to know about brokering, and have been trained by people who have the same experience and knowledge in the industry. But when they hunker down to work, there are noteworthy differences in what they do.
Teachers in freight broker training schools worth their salt will tell you that there’s a definite distinction between the freight broker and the freight agent.
The freight broker runs the brokerage firm. For starters, s/he must have a property broker’s authority from the Federal Motor Carrier Safety Administration (FMCSA), carry a $10,000 surety bond, and have designated agents in the states they’ll be operating in for legal claims purposes.
Freight brokers can be self-employed full time and work from home. Having the profits from brokering arrangements between shippers and truckers all to yourself doesn’t hurt either.
But freight brokers must divide their time between running an entire business and the all-important, enterprise-boosting activity of finding new shippers and carriers. They have to think about cash flow, billing and collection, marketing, networking, and all the “backroom” grunt work that goes into running a going concern. At the end of the day, they may not have the time to do the important things that need to be done to increase revenues.
And this is where freight agents come in handy.
Many fresh graduates from freight broker training schools sometimes start their brokering career as freight agents. Being a freight agent allows them to hit the ground running, recoup their training investments quickly, and at the same time, get the knowledge that only a hands-on exposure to freight brokering can give.
Why start as a freight agent straight out of freight broker training school? For the main reason that freight agents (or freight broker agents) do not need the authority, surety bonds and insurances that come with a full freight brokerage business.
As a freight agent, you work under a freight broker so there’s no heavy financial pressure to give your career start a hiccup. You can jumpstart your earning potential quickly with just a computer, fax and phone line, and internet access right from a home office. That’s a very low-cost start-up indeed.
Your main responsibility is getting new customers and drivers. You’ll spend most of your time marketing your freight brokerage services, networking to find shippers and carriers, doing reference or background checks on them, making sure that your loads get to where they should go on time, and troubleshooting load problems, to name a few. In short, you’re more into the operational side of freight brokering rather than on the strategic management side.
The upside to this arrangement is that you won’t need to worry about invoicing, billing, collections, cash flow, payroll and all that jazz that goes into directing a brokering company. Your freight broker takes care of that entire headache. Your business is getting more business, period.
The downside to this arrangement is that you’ll have to share your earnings from commissions with your freight broker.
To the freight broker training school freshman, the freight forwarder and the freight broker is often interchangeable. That’s easy to understand since to a layman there’s somewhat of a similarity to what they do. But to old hands in the freight industry, there’s a considerable distinction between the two.
While freight brokers typically move loads from shippers to carriers without even seeing the freight they’re moving, freight forwarders directly handle the goods that must be transported to different destinations. Most importantly, they transport cargoes and shipment internationally.
To ship loads overseas, freight forwarders have to receive smaller cargoes and combine these into one big shipment. That means they’ll have to possess the goods physically, consolidate them (often according to a single destination), and then decide on what method of shipping they’ll use—whether they’ll move the cargo by land, air or water.
For a freight forwarder, moving cargoes and shipment internationally means additional knowledge and experience beyond being a domestic freight broker. You’ll need to have a solid grounding in customs—laws, procedures and practices, and have experience in vessel requirements and loading. Fluency in one or two foreign languages won’t hurt either.
There are many more players in a freight brokering industry. For now, if you’re following your own curriculum, it’s best to know the difference between freight forwarders, freight agents and freight brokers so you’ll have a good grounding while you progress in your self-paced freight broker training.