Being right on the border, Michigan is no stranger to freight—upwards of 660 million tons flow through the state yearly, with a total value of over 1 trillion dollars [ Source: Bureau of Labor Statistics ]. To ensure that freight gets from point A to point B safely and efficiently, Michigan freight brokers are often employed as intermediaries.
Freight brokers in Michigan are highly sought after by shippers (those with cargo to ship) for their ability to locate reliable transporters (transportation companies) that can take on freight quickly, competently, and at a low cost.
In order to perform this main task, a freight broker must be able to:
- Find and assess potential transporters using load boards and outreach.
- Negotiate pricing between shippers and transporters.
- Coordinate freight movement with shippers, carriers, and dispatchers.
- Track shipments from their departure to destination.
- Update all parties on shipment status.
- Effectively deal with unforeseen shipment issues.
- Fill out shipment paperwork and invoicing.
- Stay up to date with supply chain happenings and transportation industry laws.
On top of these skills, an MI freight broker must also have a freight brokering license from the Federal Motor Carrier Safety Administration (FMCSA) to operate legally in Michigan. This is sometimes referred to as a Michigan freight broker license. However, this license is transferable to other U.S. states (providing you get a process agent for said state.)
Our guide below covers process agents in more detail, along with the rest of the steps to get a Michigan freight broker license.
Licensing Requirements for a Freight Broker in Michigan
There is no state-specific licensing required to become a freight broker in Michigan. All licensing is done at a federal level through the FMCSA. To get this professional licensing, you must be 18 years or older with the following:
- High school diploma or equivalent, such as a GED.
- No disqualifying criminal convictions.
- U.S. Department of Transportation Number (USDOT Number).
- Motor Carrier Number (MC Number).
- Insurance & a BMC 84 Bond (Freight Broker Bond) or Trust Fund Agreement.
- Michigan process agent.
Read on for more details on how to get requirements 3 – 6.
Steps to Get a Freight Broker License in Michigan
Step 1: Set Up Your Freight Brokerage (Optional)
Running your own freight broker business comes with additional liabilities and risks compared to working at an existing brokerage. However, it can also be more lucrative since you aren't splitting your commission. If you do decide to start your own business, you must:
Choose a Business Structure – sole proprietorship, partnership, corporation, or limited liability company (LLC).
Register with the Internal Revenue Service (IRS) – for Employment Identification Number (EIN).
Register with Michigan Treasury Online (MTO) – for state sales tax number and an online account.
You may need additional permits and registrations depending on your business structure and the city/county you plan to operate. Note that some Michigan cities levy city income tax.
Step 2: Determine Your Operating Authority
Your operating authority dictates the type of freight that you can broker. It is a self-classification, and the two types you can choose from are:
- Broker of Property: arranges the transportation of property (excluding household goods) belonging to others using an authorized Motor Carrier.
- Broker of Household Goods: arranges the transportation of household goods (personal items and property that is used in a home) belonging to others using an authorized Motor Carrier.
Important: You can choose both types of operating authorities. However, you must pay the application fee (currently $300) for each operating authority you apply for.
Step 3: Apply for a USDOT Number / Operating Authority
Apply online through the FMCSA's Unified Registration System (URS) to get your United States Department of Transportation Number (USDOT Number) and operating authority. An operating authority is commonly referred to as a Motor Carrier Number (MC Number).
To complete this application form, you will need:
- Employer Identification Number (EIN) or Social Security Number (SSN).
- Dun and Bradstreet Number (if available).
- Company Officers with Titles.
- Credit card to pay the application fee. Each authority you apply for has a fee (currently $300).
If your application is successful, you will receive a USDOT Number, USDOT PIN and MC Number.
Note: This step was formerly done with an OP-1 form. However, OP-series forms can now ONLY be used to apply for additional authorities—all initial registration must be done through the URS.
Step 4: Get a Freight Broker Surety Bond
Within 90 days of filing your application, you must obtain one of the following:
- $75,000 trust fund agreement (form BMC-85)
- $75,000 freight broker bond (form BMC-84)
Many freight brokers opt to get bonded since it doesn't tie up $75,000 in cash—it only costs a small fraction of the total bond amount. Those with a good credit score pay approximately 1% - 5% of the $75,000 ($750 - $3,750) to get bonded. Those with bad credit can often still secure this bond at a higher rate.
Get a free freight broker bond quote to see your qualifying rate. With our online application, you can get bonded in as little as 1 - 2 business days.
Step 5: File Your Insurance Forms
Many of the FCMSA's operating authorities also have insurance filing requirements that must be completed within 90 days of submitting your license application. If they are not received on time, your application will be void.
Common insurance policies required include:
- Bodily injury and property damage insurance (Form BMC-91 or BMC-91X)
- Cargo liability insurance (BMC-34)
See insurance filing requirements for more information.
Step 6: Designate a Michigan Process Agent
A process agent, also known as a processing agent, is a legal representative who will get served the paperwork if a claim is filed against you.
You must designate a process agent for the State of Michigan and any other state where you plan to write contracts or have an office [Subtitle B, Title 49 Code of Federal Regulations]. Working with a blanket company—a company that provides process agents that work in every state—is often helpful if you plan to operate in multiple states.
- Electronically file a designation of process agent (Form BOC-3) with the FMCSA. If you're working with a blanket company, they can complete this step on your behalf.
Important: evidence of filing a process agent designation is required before FMCSA will complete your operating authority registration.
Freight Broker Programs in Michigan
Two easy ways to earn a higher freight broker salary in Michigan is to:
- Work in a Michigan city with a larger population, such as Detroit or Grand Rapids.
- Take a freight broker training course. While it isn't a freight broker licensing requirement, it offers a considerable advantage—giving you accreditation, which leads to better employment opportunities.
While you can certainly do both to maximize your earnings, if you opt to take a Michigan freight broker program, you should consider:
- Mott Community College: This online and self-paced course is offered through Brooke Transportation Training Solutions—a highly respected freight broker school. Their course provides all the knowledge you need to become a successful freight broker, including modules on freight brokering basics, freight broker software, shipping industry laws, starting your own business, and more.
- Monroe Community College: This Freight Broker/Freight Agent Training course will help you stand out in this growing industry. Beyond teaching you everything you need to know about this career and the transportation industry, they also provide graduates with a monthly Resource Day where brokerages conduct presentations regarding opportunities with their company.
Continued Reading: How to Become a Freight Broker with No Experience