Being a freight broker is a rewarding career path in the trucking industry. Freight brokers are important in connecting shippers with cargo and carriers who want to haul loads. Freight brokers are one of the fastest growing businesses in the logistics industry. To legally operate as a freight broker, you are required to obtain multiple permits. This guide will walk you through the process of obtaining your freight broker authority.
What is a Freight Broker?
A freight broker is a 3rd party intermediary that helps connect shippers who have many loads to move with carriers who are looking for work. A shipper hires a freight broker to move their loads and the freight broker uses their network of trucking companies to move those loads. This helps the shipper save time and be more efficient in moving their loads- especially if the shipper does not have their own in-house logistics department. Some freight broker industry leaders are Total Quality Logistics, Tri Star Freight System Inc, and Landstar.What Does a Freight Broker Do?
A freight broker’s job is to take care of the headache of logistics for the shipper.
They essentially manage two tasks:
Vetting the most reliable trucking companies to move the loads.
Not every motor carrier is equal. Good motor carriers are on time, strict about safety, and have good integrity. The freight broker’s job is to vet the motor carrier to ensure they can complete the job properly and without any claims. They check the trucking company’s permits, insurance, and safety history before they issue any loads to the trucking company.
Managing the entire logistics of each shipment
A good freight broker manages everything about the load. The freight broker arranges pickup and delivery times, provides updates in transit, solves problems during pickup and delivery, and essentially works hard as possible to ease the burden of logistics from the shipper.
Required Permits for a Freight Broker
MC Number
A MC number(Motor Carrier Number) is a unique number issued by the Federal Motor Carrier Safety Administration(FMCSA) to identify companies who serve as motor carriers, freight brokers, or freight forwarders. Your MC number goes along with your USDOT number. It is essentially your freight broker authority to operate in the United States. This ensures compliance with the federal regulations governing the transportation industry and also establishes the legitimacy and credibility of your freight brokerage firm. The MC Number gives freight brokers the ability to connect shippers with carriers, making the movement of goods across state lines.
USDOT Number
An USDOT number is a unique number issued by the FMCSA to every transportation entity in the United States, including freight brokers, motor carriers, and freight forwarders. Every freight broker is required to obtain a USDOT number.
UCR Filing
A Unified Carrier Registration is essentially a tax that every motor carrier and freight broker is required to pay every year. It’s a way for the government to collect taxes from motor carriers and freight brokers engaged in interstate commerce.
BOC-3
Form BOC-3 is also called a Designation of Agents for Service of Process. This is a filing that assigns a process agent to accept legal documents on behalf of motor carriers, freight brokers, and freight forwarders. A BOC-3 is required for every freight broker to activate their MC number and to operate.
Freight Broker Bond
A freight broker bond is also known as a BMC-84 bond. This is a type of insurance that all freight brokers are required to have to obtain their freight broker license(MC number). The bond is issued by an insurance company to the freight broker to ensure that the freight broker complies with regulations and makes their required payments to motor carriers for their work. The bond is meant to protect shippers and motor carriers from dishonest freight brokers. The minimum freight broker bond amount is typically $75,000.
How can I get a freight broker bond?
Getting a freight broker bond is similar to getting insurance. You can apply with an insurance company who checks multiple factors to determine your rates. Usually insurance companies check credit, your previous experience and other factors when determining freight broker bond rates.
How Do I Get Customers For My Freight Brokerage?
Starting a new freight brokerage can be difficult. You have challenges getting customers and motor carriers to haul for you since you have no credit yet. Shippers are weary to see if you have the experience to handle their loads. Motor carriers are scared to haul loads for a new freight broker because they fear not getting paid.
A few ways you can get customers are:
Building an Online Presence: Creating your freight broker website can help build credibility for your company’s brand. It helps show that you are reputable and can help communicate the advantages of working with your company over another freight broker.
Aging Your Freight Broker Authority and Building Credit: Many factoring companies and motor carriers will not work with new freight brokers. Due to the rising fraud in the trucking industry from double brokering, many trucking companies are careful when working with a new freight broker. Many factoring companies and trucking companies have minimum requirements on the age of your MC number and credit before they work with you. One way to build credit is to make sure your invoices days to pay are being reported to trucking credit agencies such as Ansonia Credit Data and Transcredit.
Cold Calling Shipper Lists: Cold calling is a strategy of contacting potential customers by calling them directly to offer your freight brokering services. This strategy can be effective if you don’t have your own customer base already. You can research potential customer targets online and call them directly to offer your services and explain the benefits of working with your company.
Get Started!
Becoming a freight broker can be lucrative yet also a very challenging job. You need guidance to make this career the right one for you.
In this article, we explained to you about the requirements and process of starting your own freight brokerage. We also provided a quick explanation of the permits required in order to guide you in the right direction to becoming a successful freight broker.
If you are ready to start your freight brokerage, we can help you! Our team at USA Truck Permits can help you obtain all the permits you need to open up your freight brokerage. You can always reach out to us and we will be more than happy to assist you on giving more information and getting the permits you need! Call us at 832-787-2111 or fill out our Contact Us Form!
