How to Start a Freight Contracting Business
A freight contractor serves two kinds of customers: the truckers who rely on the contractor to find jobs and the businesses who turn to contractors to find qualified truckers to successfully haul their loads. Some contractors charge a percentage to the truckers for their services, while others work on retainers for large corporations that use only brokers for their trucking needs.
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Instructions
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Develop a business plan that spells out the procedures your company will follow, the amount of financing needed to get the business off the ground, lists of trucking industry contacts that are potential clients and goals that determine the pace of growth over one, three and five years. Hire a consultant well versed in the freight industry to develop the initial plans to make sure you have all your bases covered.
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Invest in training courses designed to teach all the ins and outs of the freight brokerage industry. Programs such as those from the DOT Authority can show you how to develop clients, write contracts, negotiate fees and apply for a freight broker license and processing agent documentation (BOC-3) for every state in which you will operate.
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Design a website or hire a company familiar with job boards and bidding sites to create a site that you can market to truckers. Use search engine optimization techniques to attract visitors. Begin to market your services through truckers associations, radio stations, industry associations and trucker publications.
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Apply for the three legal documents you need to operate in the U.S.: a freight broker license, from the Federal Motor Carrier Safety Administration (FMCSA, $300); a minimum $10,000 bond to protect your contracts; and processing agent documentation from the FMCSA ($50). The latter document designates who will act as your processing agent in case you are served court papers while doing business as a freight broker.
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Purchase freight broker software to manage your accounts and tap into the many job boards and carriers who are available for work. Systems provided by companies such as Load Pilot provide brokers with access to Internet-based job boards where they can post jobs, check on truckers' credentials and manage agents.
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Tips & Warnings
Start out as an agent and split your commissions with a licensed broker. Many brokers utilize agents who do not have all the insurance and licenses but who are proficient at landing loads from organizations or who may have trucking contacts that can bring haulers to their site. Use a bond company such as JW Surety that specializes in freight broker contracts to make sure you receive the proper coverage.
Don't make promises for truckers without their permission. A broker can get a bad reputation in the trucking community by promising companies certain prices or timelines without previous approval by the trucker.
