What is a freight broker? Logistics and transportation is a very cool industry to work in and brokers are essential part of the business.
A freight broker is an agent who acts as a go-between for shippers and carriers. The broker negotiates shipping contracts and ensures that shipments are delivered in a timely manner. In addition to handling logistics, brokers also provide other services such as insurance and potential customs clearance.
But what does the job entail – what do they actually do?
How much do they make?
Is there any demand for this job in the shipping industry?
How long does it take to get started as a freight broker?
In the rest of this post below I answer all these questions and more, so let’s jump in.
What Does A Freight Broker Do?
Freight brokers negotiate shipping contracts and rates with carriers and shippers.
This includes arranging shipments from one location to another, coordinating pick ups and deliveries, and ensuring that the cargo gets delivered safely.
They work with the trucking company to make sure they’ve got full loads to carry and they work with shippers to handle all the arrangements so the customer doesn’t have to worry about all the headaches that come along with their shipments.
In most instances brokers for for freight broker companies, but there are also numerous successful independent brokers too.
The freight industry can be complex and confusing so the freight broker company navigates all the details.
In the freight brokerage business a lot of brokers get started as freight agents so they can learn the business and then move into management roles.
How Much Does A Freight Broker Make?
Location plays a crucial role when determining a freight broker’s salary.
In general, people who live in large urban centers tend to earn more than those living in smaller towns. Freight brokers who have a good reputation and years’ worth of experience can often earn more than novices.
For example, a freight broker living in Orlando, Florida makes on average around $62,000 while a freight broker in Louisville, Kentucky averages around $45,000.
According to a report by Texas Tech University, they reported that freight brokers make on average around $45,000 per year and more experienced brokers can make more than $65,000.
According to PayScale’s analysis of U.S. Bureau of Labor Statistics (BLS) data, the median annual income for a freight broker is $43,240.
Freight brokers also are paid commissions in many situations, so if you are willing to put in the hard work and hustle, you can really increase your earnings.
When you factor in commissions the median pay freight brokers make $52,430, and the top 10% make more than $75,000 on average.
Salary and commissions aren’t the only thing that go into compensation plans though.
Freight brokers working for companies also enjoy benefits like health and dental insurance, paid time off, 401k or other retirement plans, professional development opportunities, and flexible schedules.
One big benefit that many freight brokers find attractive is the ability to work from home.
How Much Do Independent Freight Brokers Make?
Independent freight agent earnings are a little bit different than those of their colleagues working for a company.
Brand new agents can typically earn between $30,000 and $50,000 per year.
Obviously, this is all commission-based, as there is no one to pay you a salary when you’re independent.
That said, being an independent freight broker has lots of potential.
Experienced successful freight agents may be able to earn up to $100,000-$400,000 or more annually.
There is a lot more risk involved with being an independent freight broker, but there is also an enormous opportunity that’s not capped.
If you want to become a successful independent freight broker, you’ll need to put in some serious hours.
You will need to learn how to market yourself effectively, build relationships with clients, and manage your inventory.
These skills alone can lead to higher earnings, but it takes a lot of effort to get there.
The best way to start earning money as a freelance freight broker is to sign up with a reputable brokerage firm.
This gives you access to a network of clients and allows you to grow your business quickly.
Once you’ve built a solid client base, you can begin to focus on building your own brand.
This means getting out there and meeting face to face with prospective clients.
It’s important to develop your personal brand and reputation before you try to sell anything.
As an independent freight broker, you have to do everything possible to stand out among the competition.
Whether you choose to work with a brokerage firm or set up shop independently, you should always keep these tips in mind:
1. Networking is key
2. Be prepared to pitch yourself
3. Don’t forget about customer service
4. Always ask for referrals
5. Keep learning
6. Have fun!
What Are The Benefits Of Being An Independent Freight Broker?
Becoming an independent freight broker offers several advantages over working for a brokerage firm.
For starters, you don’t have to deal with office politics.
Working at a brokerage firm often involves dealing with managers who are rightly pushing the agenda of the company you work for.
This scenario isn’t a good fit for everyone – this can create tension and reduce satisfaction with your work.
However, if you’re an independent freight broker, you won’t have to worry about being micromanaged by someone else.
Instead, you’ll have complete control over your schedule and your workload.
Being an independent freight broker also gives you the flexibility to travel and work anywhere you’d like.
Many freight brokers work from their home office, which means they can spend time with friends and family while still bringing in income.
Is There A Demand For Freight Brokers?
Yes – there is definitely demand for freight brokers! The BLS reports that as of May 2018, there were over 1 million freight brokers employed across the United States.
This number has been growing steadily since 2010, and it’s expected to continue to grow at an even faster rate through 2028.
According to the Bureau of Labor and Statistics the job outlook for freight brokers is very positive with lots of opportunities.
The expected growth over the next 10 years for freight brokers and related logistical types of jobs is projected to be a 30% increase.
How Long Does It Take To Become A Freight Broker?
The good news is that you can get started with your freight broker career pretty quickly.
Most freight broker training schools take roughly 30 to 45 days to complete.
Some courses are self-paced so you can choose to take courses at your own pace, as needed.
There are also a variety of online courses available.
How Do Freight Brokers Get Paid?
The best freight brokers integrate themselves into their customer’s supply chains and become and invaluable part of their entire logistics operation.
Ultimately, the most successful brokers save shippers money and help carriers stay busy and earn.
Freight brokers charge fees based on the distance traveled, the type of shipment, and the size of the load.
Freight brokers are providing a value-added service, so the amount they charge the shipper is more than the amount they pay the carrier on each shipment.
In general, successful freight brokers usually charge a net margin of three to eight percent for every shipment they handle.
Can A Freight Broker Work From Home?
Yes! Freight brokers can work from anywhere, including their homes. In fact, many choose to start out working from home before moving into offices.
There are some key differences between working at home and in an office though.
For example, if you work from home, you won’t be able to interact with clients face-to-face, but you will still be able to communicate through phone calls, emails, and text messages.
Also, you may not want to spend hours commuting every day, so it might be worth considering whether working from home is right for you.
Independent freight brokers are usually self-employed contractors who work out of their homes.
Brokers working for one of the big agencies go in to the office like anyone else.
What Do I Need To Become A Freight Broker?
Freight brokers must know how to read shipping manifests, understand the different types of shipments, and have knowledge of international trade regulations. They should also be able to communicate well with clients, carriers, and suppliers.
Those things are just the basics you’ll learn in your freight broker training.
Once you’ve completed your training and received your certificate you’ll then need to get your broker authority submitted.
Broker authority is a grant of permission from the U.S. Department of Transportation (DOT) allowing brokers to act as middlemen for moving shipments. Both brokerage firms and trucking companies are required to have MC numbers for their business to commence operations.
You need to register with the Federal Motor Carrier Safety Administration (FMCSA) which can be done online, and will run $300.
One of the requirements of your broker authority is to have a surety bond.
A broker must post a surety bond for at least $75,000 before he/she may begin brokering shipments. You don’t need to raise all that money by yourself. There are a variety of surety bond companies that you can work with.
A process agent is required state where you write broker contracts so you’ll need to have these in place too.
A process agent is someone who agrees to accept any legal papers being served on your behalf in the event there are any legal proceedings are brought against your business. You can choose from either an independent broker who uses local agents or one that provides nationwide service.
Finally you will need to complete the process by registering with the FMCSA.
This sounds like a lot, but it can be done pretty quickly with all of the online resources available.
Is Freight Brokering A Good Career?
Job satisfaction with freight brokers is reported as about average in terms of meaning and satisfaction according to surveys.
Job security is always a concern for people getting into any field of work, but for those that are committed to being good at their work, they’ve got nothing to worry about.
Being a freight broker is a great career because it puts you right in the middle of the logistics and supply chain world which can connect you to all kinds of great people and locations.
But that’s not all.
Being a freight broker is a job where the opportunities for advancement are enormous.
And while the basics of the work remain the same, every shipment is different.
It’s definitely not a super-repetitive type of mindless job. It takes strategy, focus and concentration to produce the kinds of results your freight clients are looking for.
Are Freight Broker Courses Legit?
There is no formal training required to get started as a freight broker – taking a freight broker course isn’t required by law.
However, most brokers do take some kind of basic training. Some brokers go straight into the field without any formal training while others have taken college courses in logistics management first.
The majority of freight broker courses are provided by the big freight brokers themselves. However, there are also plenty of smaller freight brokers out there offering their own courses.
The best way to find out if a particular freight broker course is legitimate is to check out reviews of the company on sites such as Google, Yelp and Angie’s List.
If you’re going to enroll in a freight broker course, make sure you know what you’re signing up for. Don’t just sign up for anything. Take the time to really research the company you want to work with.
How Much Does It Cost To Become A Freight Broker?
Outside of the fees you need to pay to FMCSA, to get set up with your surety bond, and getting set up with a processing agent, which we’ve already covered, the only real cost is the training you choose to get to do the job.
A freight broker training course isn’t required by law to become a freight broker, but it will help you move along the process quicker.
If you’re becoming an independent freight broker, you can add to those costs the costs associated with registering your business, setting it up as an LLC, sole proprietorship, or a kind of corporation.
All in, your startup cost for starting out as a freight broker can vary widely depending on where you live, but most start at between $4,000 and $5,000.
Some of those expenses are one-time costs, while others are renewed annually.
How Old Do You Have To Be To Be A Freight Broker?
There really isn’t any restriction on age to become a freight broker, however, in order to be successful as one you really need to have some experience and connections in the industry.
So, just because you can get started fresh out of high school, doesn’t mean that that’s the best path, unless you have connections.
Successful brokers are people who’ve got experience in the industry and have great connections.