What Is a Freight Broker Agent?
The freight broker agent is a logical first step in a rewarding career of freight brokering.
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The Role of the Freight Broker
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To understand the role the freight broker agent plays in the (as of 2009) $400 billion+ shipping industry, it is useful to first look at the function of the freight broker. The freight broker is the middleman between a company--the shipper in need of having its goods transported--and the carrier that does the actual transporting.
As the transportation intermediary, the freight broker works with shippers to identify dependable carriers willing to pick up freight at a point of origin and deliver the freight to a specified location for a predetermined fee. Conversely, the freight broker works with carriers to find shippers who can keep their trucks loaded and rolling at a profit.
The freight broker works on commission, a percent of the fee the carrier charges the shipper for carrying the freight from Point A to Point B. Unlike freight forwarders, freight brokers never physically handle or take possession of the freight. Therefore, freight brokers do not need warehouses or other physical infrastructure as a requirement for conducting their business.
Licenses and Insurance
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Because freight brokers play such a vital role in interstate commerce, they are regulated by the federal government, as are all other players in interstate commerce, from the shipper down to the driver of the truck. Freight brokers are required to obtain a license, known as a Broker's Authority, from the Federal Motor Carriers Safety Administration (FMCSA), a part of the U.S. Department of Transportation.
Freight brokers also need insurance to protect their clients and customers from loss. Many states also require freight brokers to carry surety bonds to provide shippers with an added layer of protection.
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Good Credit and Experience
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Having a good credit score is essential for success as a freight broker. You will need a minimum commercial line of credit in the range of $250,000 to $300,000 to pay your carriers on time before you collect payment from the shipper.
Education, setup and licensing requirements are minimal (estimated at $10,000 to $20,000 total cost) to start a freight brokerage company. However, many successful freight brokers strongly recommend future freight brokers get some experience by working in the industry prior to setting out on their own.
The benefits of working in the industry prior to going solo are twofold. First, you acquire precious technical expertise to do your job competently and efficiently. Second, you build valuable contacts among shippers and carriers that will serve you well in your solo career.
The Freight Broker Agent
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The routes to industry experience are employment with a shipper, a carrier, a broker or some combination of the three.
Many successful freight brokers start their careers as freight broker agents. The role of the freight broker agent is essentially identical to that of the freight broker. The freight broker agent calls on shippers to get loads; calls on carriers to carry the loads; does the paper work and forwards the paper work on to his broker for processing for payment.
The only difference between the freight broker and the freight broker agent is the broker agent operates under the authority of the broker's license, insurance and surety bonds. Consequently, the broker agent has no financial risk at stake. Like the broker, the broker agent is an independent contractor who works on commission. He shares his commission with his sponsoring broker for the privilege of working under the umbrella protection of the broker's licenses and insurance.
Education and Training
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Many resources are available on the Internet to get educated as a freight broker and as a freight broker agent. Prior education, from online sources or from other sources such as-on-the-job training, is essential to a full understanding of the nature of the business. However, education does not supplant the valuable training you get from the hands-on experience of doing. Unless you have prior experience in the industry, you may want to consider becoming a freight broker agent as the logical first step toward launching a freight brokering career.
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References
- Photo Credit Image by Flickr.com, courtesy of James Bowe
