5 Tips For Carriers Thinking of Adding a Brokerage

As VP of Sales for DAT’s transportation management software for freight brokers, I talk to a lot people who want to start up a freight brokerage business.

One of the most common calls I field is from carriers who want to add a brokerage to their carrier business. Often they have overflow freight and, to keep their shipper customers happy, they want the ability to broker loads to other carriers when they’re out of capacity.

For any carrier thinking of adding a brokerage, I’d like to offer these 5 tips:

1. Operate the brokerage as a separate company

This can be important from a legal perspective. Any barriers you can place between the two operation’s assets can prove valuable in the case of any legal issues. Best practice is to treat the brokerage and the trucking company as if they are in separate buildings by issuing invoices and printing checks between the two companies as if they are completely unrelated.

2. Understand the steps involved in set-up

There are a number steps you’ll need to take before brokering freight. You’ll need to get a separate broker authority, acquire a $75,000 surety bond or trust fund, and register your new business. You’ll find a good overview of the process by reading DAT’s Freight Broker Start-up Guide.

3. Hire an experienced broker

See what happened when temperature-controlled carrier KLLM added a brokerage to its carrier operation: Carrier Expands Business by Adding Brokerage.

Rather than starting from scratch, consider hiring an experienced broker. Running a brokerage is completely different than running a carrier operation. It will be helpful to have someone who knows the business and can show you the ropes.

4. Get freight rate guidance

Before you commit to moving a load for a shipper, you need to know what the market is currently paying for that lane. If you quote too low, you’re going to lose money. If you quote too high, you’re going to lose the customer. For pricing guidance, check out DAT RateView. It has current and historical rates on more than 65,000 lanes. For more info, see our blog post He Who Knows the Rates Wins.

5. Use software designed for brokers

It might be tempting to run your brokerage using the same software you use in your carrier operation. However, the financial and operational details you need to track as a broker are much different than those a carrier is concerned with. Make sure you use transportation management software (TMS) for brokers. Of course, I recommend DAT Keypoint, which was designed exclusively for freight brokers. There’s even a new, entry-level version called DAT Keypoint Ops, which is an economical choice for new and small freight brokers.

If you’d like more information on the tools that can help you succeed as a freight broker, send us an email or call us at 800-728-7305.

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