The global shipping industry features some of the most complex logistics you'll find anywhere. It's a symphony of moving parts, all of which must operate in concert to keep goods moving at all times.
Managing such an operation isn't easy. It requires the skills and expertise of specialists at every level. Freight brokers are some of the most essential among those specialists.
Freight brokers, also known as transportation intermediaries, are the go-between serving shippers and freight carriers. It's their job to help carriers operate at maximum carriage capacity while guiding shippers to the most appropriate, cost-effective shipping solutions.
Freight brokers occupy a unique position within the global supply chain in that they neither own trucks, ships, or cargo planes nor ship any of their own goods.
How Do Freight Brokers Operate?
Freight brokers either work as independent contractors or as employees of a freight brokerage firm. They technically work both for shippers and carriers. To shippers, they offer their expertise in navigating the maze of freight carriers, freight forwarders, and freight transportation networks that make up the global supply chain.
To carriers, they provide the valuable service of helping to make sure they'll never have any empty space within a truckload, planeload, or shipload of goods. That helps eliminate waste and keeps transportation networks operating efficiently.
For their efforts, freight brokers earn money by charging shippers a premium over carrier costs. The industry term for the difference between those two numbers is the spread. After the freight broker covers their operating costs, the remainder of the spread for each shipping job is theirs to keep. That's how freight brokers and freight brokerages make their money.
Essential Skills of a Freight Broker
Freight brokers must call on a variety of traits, knowledge areas, and skills to do their job well. These include:
- Thorough and working knowledge of the global shipping industry, including the trucking industry, air freight, and sea freight sectors
- A well-developed contact network within the global logistics and transportation industry and the people skills required to nurture and expand it
- Excellent judgment to choose the best trucking company, freight carrier, or network of carriers for a given job
- An understanding of the dynamics that determine freight rates, including fuel costs, capacity, currency valuations, and other relevant factors
- Attention to detail to keep multiple moving parts of the freight shipping process coordinated and working as expected
- Detailed knowledge of the various types of freight and the appropriate carriage methods for each
- Knowing the answers to questions like "What is a surety bond?" and being able to qualify for the necessary freight broker bond to comply with Federal Motor Carrier Safety
Administration (FMCSA) regulations
- Knowledge of the relevant regulations set forth by the FMCSA
- Familiarity with the use of major freight load boards to find carriers with appropriate capacity for shippers' needs
- Excellent customer service and people skills to do a great job of handling customer needs and goals
A good freight broker must possess all the above and have the ability to use their skills together to complete their work successfully at all times.
How Much Do Freight Brokers Earn?
According to data compiled by Indeed.com, the average base freight broker salary in the United States is $65,645 per year plus benefits. However, a successful freight broker can earn many times that amount. This is especially true for positions at some of the larger firms within the freight brokerage industry, which often offer a higher starting freight broker salary.
Depending on the freight broker company, individual brokers may also earn commissions on their sales that can increase their earnings substantially. Also, because there's more demand for a freight broker's services the closer you are to a major city or port, brokers in those areas tend to earn more. So, too, do brokers with years of experience and/or excellent reputations within the industry.
The Steps to Becoming a Freight Broker
If you're wondering how to become a freight broker, you should know that it's a multi-step process. It takes time, dedication, and a desire to learn. The process of becoming a licensed freight broker boils down to these steps:
- Attend a training course to acquire the knowledge you'll need to be a freight broker.
- Register for a USDOT number and freight broker authority from the FMCSA.
- Obtain the appropriate freight broker bond for your planned operation.
- Apply for Unified Carrier Registration (UCR) in the state where you'll operate or in the nearest state that participates in the UCR program.
After you've completed those steps, you'll have a broker license and can start looking for clients.
When & Why Do Businesses Need a Freight Broker?
Without detailed knowledge of the global shipping industry, businesses are at the mercy of carriers who may or may not live up to their obligations.
Freight brokers can leverage their network of carrier contacts to assure businesses that their freight will arrive on time and in pristine condition. They help businesses to manage the shipping process in a way that reduces risk and overall expense.
Freight brokers are especially useful for businesses that require frequent less-than-truckload (LTL) freight services. They're able to leverage their direct relationships with carriers, from management through the dispatcher level, to find available freight space at a price their clients can afford.
If it means getting in touch with individual truck drivers to confirm available capacity, they'll do that, too. In other words, they take all the hassles out of moving freight where businesses need it to go.
How to Select the Right Freight Broker
Top-notch freight brokers take great care to protect their reputations in the industry. A great freight broker should be easy to find because they'll have a long list of satisfied clients to vouch for them. Besides reputation, there are a few criteria you can use to choose the right freight broker. They include:
- A current, verifiable FMCSA license
- Experience dealing with the type of freight you'll be entrusting to them
- A clear and transparent carrier vetting and selection process
- Provision of multimodal freight options that fit your business needs, like rail, air freight, flatbed trucks, vans, or whatever other mode of transport you prefer
- Excellent credit and a history of paying carriers on time
- Adequate insurance to meet both their regulatory obligations and the specific demands of your freight needs
- Clear, specific contracts for their services that spell out the details of the work you hire them to perform
Generally speaking, a freight broker that meets the above criteria is one you can trust. Of course, the best way to know you've made a good choice is to judge your freight broker on the quality of the services they provide once you've started working with them.
The Takeaway
Now you should have a clear idea of what freight brokers do and how they facilitate the movement of goods around the world. You should also know how freight brokers can assist businesses with their freight operations, saving them time and money in the process.
They're an indispensable part of the global supply chain whose work contributes to the economic prospects of individuals, businesses, and national economies everywhere.
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