Explaining Freight Broker Services

March 8, 2023

There are many professional services and moving parts in the trucking industry, and those unfamiliar with the industry may need clarification about the different roles. A freight broker is one such role that is unique to the industry.

What is a Freight Broker?

A freight broker is a transportation intermediary. Essentially, freight brokers coordinate between shippers and carriers. Rather than transporting cargo, freight brokers connect shippers with carriers who can physically move the shipments. They can also plan the logistics of a load. 

To complete these tasks, freight brokers spend much time communicating and excelling at customer service. Brokers are a primary point of contact to ensure that goods arrive safely and on time. For shippers, this benefit means they don’t have to spend time hunting down carriers who can take on jobs. They can also save time as the freight broker plans transportation, routes logistics, and tracks freight. Carriers and independent contractors also benefit when working with freight brokers because it can ensure a steady stream of work, optimize routes, and supply loads to prevent deadhead miles. 

What Does a Freight Broker Do?

Freight brokers complete many tasks throughout the process to optimize the process of shipping. For example, they connect shippers with carriers that can meet shipment deadlines. They can also contribute to the following tasks:

Freight brokers function as the middleman between the carrier and the shipper. While carriers make less from a load with a broker involved, working with a broker can also optimize routes for efficiency and reduce deadhead time. Carriers can also save time by working directly with a freight brokerage, eliminating spending hours on time-consuming tasks, such as finding shipments. The time saved can be used to boost productivity. And finally, freight brokers can help carriers grow and scale their operations with the time is right. 

Freight brokers are great for shippers, too, since working with them often results in an increased ability to meet deadlines, less risk of damage to the product, and greater customer satisfaction. 

The job of a freight broker requires many key talents, such as excellent communication and organization skills. Freight brokers earn according to their skill level and the brokerage firm that employs them. While the average salary is between $42,971 and $66,845, brokers can earn commissions as high as $30,000 on top of their salary. 

Steps to Becoming a Freight Broker

Becoming a freight broker is relatively straightforward and includes the following key steps


Complete freight brokerage training

Freight broker schooling can prepare you for the actual job. While there are no legal training requirements, this training can give you insight into the industry, which is often vital in securing clients. Classes can be completed in as little as a few weeks. 

Choose your company name and register the business

During this process, you will develop a business plan, determine the entity type you want the business to be (e.g., sole proprietorship, partnership, LLC, corporation), and register your business in the home state. 

Apply for a USDOT Number and get broker authority

Before starting as a freight broker, you need a freight broker license from the Federal Motor Carrier Safety Administration (FMCSA). This license may also be referred to as your Motor Carrier Operating Authority. There is a one-time application fee of $300. Once the application has been approved, the FMCSA will send you the MC Certificate by mail. However, you must wait until your MC number is active on the FMCSA SAFER website. There is a 20 to 25-day period where others may protest your registration. Most are active after 21 calendar days. If no protests are received, and all other requisite filings have been completed, the authority is granted. 

Acquire a surety bond

Like many other industries, freight brokers are required by the FMCSA to obtain a surety bond. Current bond requirements are at least $75,000 in coverage to ensure high standards and accountability. The surety bond serves as a guarantee that the broker will comply with all regulations and pay any fees or penalties owed to shippers and carriers. The purpose of a broker surety bond is to protect the interests of the shippers and carriers that work with the broker. If a broker fails to pay a carrier for services rendered, the bond can be used to cover the costs. Surety bonds are also a way for the FMCSA to hold brokers accountable for any violations of federal regulations.  

Find the right shippers

Now you are ready to start shipping freight, but you need to find shippers to do so. Finding shippers and developing relationships is the most important step once authority is granted. Most brokers post their loads to a load board or use the load board to find carriers.  

Follow state tax regulations

Owning a business - in any industry - requires paying the appropriate taxes. Failure to do so can quickly put your business in jeopardy. Therefore, ensure you understand what you will owe and the payment schedule before launching.

Develop broker contracts

Your experience or education can help you succeed in freight brokerage, and you must create and maintain contracts with shippers and carriers across your network. You will also need to maintain detailed documentation. You may want to work with a business attorney and identify tech tools to help you operate efficiently. 

Working as a freight broker can be a highly lucrative and rewarding career. But to do so, you must ensure you meet all applicable laws and regulations. Once this is in place, you can start working to connect shippers and carriers!

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