Freight brokers enjoy schedule flexibility, the ability to work from home, bonus potential, and more. However, to become a freight broker in Alabama—or anywhere in the United States—you need a freight broker license from the Federal Motor Carrier Safety Administration (FMCSA). This license allows the holder to legally work as a freight broker.
A freight broker's job entails finding transportation for shippers (those with cargo that needs to get from point A to point B). This task includes not only finding suitable carriers through load boards or other means but also:
- Verifying commercial driver's licenses (CDL) and other qualifications.
- Tracking shipments.
- Acting as an intermediary between shippers and carriers.
- Negotiating pricing for both parties.
- Keeping records and generating invoices.
- Working within the confines of shipping industry laws and transportation laws.
In Alabama, you can work as an independent freight broker or join an established freight brokerage. However, every brokering career path starts with getting a freight broker license. Below we dive into the details of just that—covering everything from licensing prerequisites to Alabama freight broker school options.
Requirements to Become a Freight Broker in Alabama
The application fee for a freight broker license is non-refundable (currently $300), so you want to ensure you have everything you need before getting started. Criteria for a successful application includes:
- Age: Be at a minimum of 18 years of age.
- Education: Have a high school diploma or equivalent.
- Surety Bond: Obtain a freight broker bond (BMC-84 bond).
- Insurance: Be insured with cargo liability insurance and/or bodily injury and property damage insurance.
- Criminal History: Not have any disqualifying convictions.
Step-by-Step Guide to Obtaining a Freight Broker License in Alabama
All US freight broker licenses are issued nationally through the FMCSA, regardless of state. In order to make a license valid in Alabama—also referred to as an Alabama freight broker license—you must enlist a process agent qualified to work in AL. We cover this in Step 7 below.
Step 1: Decide Your Employment Goal
You can join an existing freight brokerage or open your own freight broker business. If you choose to start your own business, you must choose a business structure (sole proprietorship, partnership, LLC, etc.). Once you have done so, register your business with:
Note: The Employment Identification Number (EIN) you receive from the IRS is required for your licensing application.
Step 2: Pick Your Operating Authority
Your operating authority dictates which types of freight you can broker. There are two options, and you may choose one or both.
Broker of Household Goods: arranges the transportation of household goods belonging to others using an authorized Motor Carrier (often a moving company). Household goods are personal items and property that is used in a home.
Broker of Property: arranges the transportation of property (excluding household goods) belonging to others using an authorized Motor Carrier.
Step 3: Get a USDOT Number & PIN
All Alabama freight broker license applications require a United States Department of Transportation Number (USDOT Number) and a USDOT PIN.
- USDOT Number: Apply through the FMCSA's Unified Registration System (URS). The URS will guide you through the process and determine if you need additional permits or registrations to qualify. This registration will also generate a USDOT PIN. However, if you don't receive one or lose it, you can request a new one through the FMCSA website.
Step 4: Apply for an MC Number
Use your USDOT PIN to apply for a Motor Carrier Number (MC Number). This is also known as a broker authority or operating authority. You must include your $300 application fee and an OP-1 application for this step.
If you apply through FMCSA's URS online, you can get your broker authority immediately. Mailed applications take approximately 4 - 6 weeks.
Step 5: Get a Freight Broker Bond
All US freight brokers must have a $75,000 freight broker bond (BMC-84 bond) or trust fund agreement. Many opt for a surety bond since it doesn't tie up $75,000—instead, it costs a small percentage of the bond amount.
Ex. An applicant with a good credit score only pays approximately 1% - 5% of the $75,000 ($750 - $3,750) to get bonded. However, those with bad credit can often still obtain this bond at a higher bond premium.
For more information and answers to FAQs for surety bonds, visit our guide: What is a Surety Bond?
Step 6: Get Insurance
The insurance you need will depend on your business operation plans, but policies commonly required include:
- Bodily injury and property damage insurance (Form BMC-91 or BMC-91X)
- Cargo liability insurance (BMC-34)
All proof of insurance forms must be received within 90 days from the filing date of your application, or your application will be void. Your insurance company can complete these insurance filing requirements at your request. But it is ultimately up to you to ensure they get filed on time.
Freight Broker Bonds vs. Insurance
Freight broker bonds protect shippers/motor carriers, not freight brokers.However, freight broker insurance does protect freight brokers.
Many new freight brokers that invest the bare minimum on insurance coverage quickly realize they are disqualified from working with larger shippers. Each year, more freight brokers are pulled into litigation, and ultimately go out of business due to huge judgments and legal fees they can’t afford.
Although insurance is not required to operate, the most important reasons to have it in place are to:
- Protect your bottom line
- Create increased security around your bond, and avoid leaving yourself open to paying legal fees by not purchasing insurance.
- Increase top line: by having insurance, you become more attractive in today's marketplace to shippers and wholesalers.
Freight Broker Insurance Types
There are several types of insurance coverages that are recommended for freight brokers; please see the list below:
- Business owner’s policy (BOP)
- General liability
- Workers' compensation
- Commercial auto
- Professional liability/errors and omissions (E&O)
- Contingent cargo
- Contingent auto liability
If you’d like to learn more about all of the insurance coverages available to you, please read our freight broker insurance guide.
Step 7: Find an Alabama Process Agent
An Alabama process agent (also known as an Alabama processing agent) is required for you to work as a freight broker in Alabama. This individual will get served the legal paperwork if a claim is ever made against you.
You must designate a process agent for each state where you write contracts or have an office. If you plan to work in multiple states, you may want to consider a blanket company (a company with process agents that work in each state).
- Submit form BOC-3 (Designation of Process Agents) to the FMCSA.
Alabama Freight Broker Training Programs
Beyond having a high school diploma or equivalent, there is no education requirement to become a licensed freight broker. In fact, you can become a freight broker with no post-secondary education or experience. However, taking a freight broker training program is highly recommended.
Freight broker training courses are invaluable for teaching everything from the basics of freight brokering to how to run a freight brokering business. Beyond the wealth of knowledge, they also offer a credential that shows prospective clients and employers that you are a professional.
Top Alabama freight broker schools include:
- Calhoun Community College: An online course with open enrollment offering freight broker and freight broker agent training. It includes marketing strategies, licensing, transportation law, and more.
- Shelton State Community College: This online freight broker training course is run by Brooke Transportation Training Solutions. This top educator in the transportation industry offers an online, self-paced course that takes an average of six months to complete.
- The Transportation Intermediaries Association: This training program is for new freight brokers. Those who pass the final exam get their Certified Transportation Broker (CTB) credential—the industry's most recognized broker certification.
Career Growth and Salary Expectations of a Freight Broker
With the volume of goods shipped increasing and companies demanding supply chain efficiency, the need for freight brokers is on the rise.
According to Zippia, the state of Alabama had 83 freight broker jobs in 2023, and that number is expected to increase in the coming years. The U.S. Bureau of Labor Statistics (BLS) projects that overall employment in transportation and material moving occupations will grow 6% from 2021 to 2031—resulting in approximately 861,800 new jobs over that period.
When it comes to freight broker salaries in Alabama, the prognosis is also good. The average freight broker salary in the US is $52,000, with Alabama's average freight broker salary coming in just under that at $47,700. Keep in mind that larger cities often offer higher wages, such as Huntsville, Montgomery, Birmingham, Mobile, and Tuscaloosa
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