How to Start a Freight Brokerage

Freight Broker Start-Up Guide

Although many shippers have contracts with trucking companies to transport their goods, a significant amount of truck transport in North America is handled by freight brokers. A freight broker is an intermediary between a shipper who has goods to transport and a carrier who has capacity to move that freight. Below are steps you’ll need to take to successfully launch your freight broker business.

Set up and register your business

  1. Select a legal structure for your business 
    Decide if you want to operate as a sole proprietorship, a partnership, a limited liability corporation, or a number of other options. Speak with an attorney or accountant to discuss the pros and cons of each option.
  2. Apply for operating authority
    Freight brokers involved in interstate commerce must apply for broker authority from the Federal Motor Carrier Safety Administration (FMCSA) using the Unified Registration System. The FMCSA is the division of the U.S. Department of Transportation that regulates interstate commerce and enforces safety rules. There is a $300 application processing fee and it takes 4 to 6 weeks for processing. DAT Solutions can help you get your authority.
  3. Designate a process agent
    A process agent is a representative to whom court papers may be served in a legal proceeding brought against a broker or carrier. Brokers must designate a process agent in each state where they maintain an office or establish contracts. Some companies offer “blanket coverage” that designates a process agent in every U.S. state. Submit form BOC-3 to the FMCSA.
  4. Arrange for a surety bond or trust fund
    All freight brokers are required to have a $75,000 surety bond or trust fund. If a freight broker does not live up to contracts with the shipper or carrier, this bond assures that the broker has the cash or assets to cover the amount. Surety bonds can be obtained from an insurance company, which will file the appropriate paperwork with the FMCSA. DAT Solutions partners with an insurance company that offers a broker bond with a special rate for DAT customers.
  5. Register your business 
    All carriers, brokers and freight forwarders must complete the Unified Carrier Registration and pay an annual fee. The current fee for brokers is $76 per year.
  6. State requirements
    Be sure to check with your state regarding requirements to establish and operate a business in your state.
  7. Set up your office
    This can be a home office or commercial office space. At minimum, you’ll need a phone, fax and computer. Be sure to budget for recurring costs, such as:
    • Utilities (heat, electricity, water)
    • Phone and internet charges
    • Insurance & Taxes
    • Rent (if not a home office)
    • Payroll and benefits (if you have employees)
    • Subscription fees for load matching, rate benchmarking, and transportation management software

Conducting business

  1. Get needed paperwork 
    Freight brokers are required to keep records of each transaction. This includes contracts, bill of lading, payables, receivables, carrier qualifications, and more. The Transportation Intermediaries Association’s New Broker Course includes a kit with sample contracts that can be used immediately.
  2. Find shippers
    Contact shippers who need the services you provide.
  3. Find carriers  
    Identify carriers ready and willing to transport freight. This can be accomplished using a load board to post your loads or search for trucks.
  4. Set rates 
    Determine an appropriate rate for each load. Rate benchmarking software can help you see current rates for both the contract and spot freight markets.
  5. Move freight
    Now you’re on your way to a successful freight broker business!

Additional Resources

The Transportation Intermediaries Association offers a New Broker Course

Start Your Own Freight Brokerage Business: Your Step-by-Step Guide to Success
, by Jacquelyn Lynn. Entrepreneur Press, 2014.

Broker Operations Manual, by David G. Dwinell. LoadSchool.com, 2007.

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