Freight Broker Business Startup: Introduction to freight brokerage, application processes, and business training requirements

By Randy Russell

This comprehensive guide serves as your essential roadmap, meticulously crafted to demystify the complex landscape of freight brokerage, providing aspiring entrepreneurs with the foundational knowledge and practical insights needed to launch a successful venture.

Within the pages of "Freight Broker Business Startup," you'll explore:

- Introduction to Freight Brokerage: Gain a comprehensive understanding of the fundamentals of freight brokerage, from the role of a broker in the supply chain to key industry terminology.

- Application Processes: Navigate the intricacies of applying for and obtaining the necessary licenses and permits. This guide provides step-by-step instructions to streamline the application process and ensure compliance with regulatory requirements.

- Business Training Requirements: Delve into the essential training needed to excel in the freight brokerage industry. From negotiation skills to customer relations, this guide covers the foundational aspects that will set you on the path to becoming a successful freight broker.

- Insider Tips: Benefit from insider insights and practical tips from industry professionals, offering valuable perspectives to guide you through the early stages of your freight brokerage business.

- User-Friendly Format: Designed with clarity in mind, the user-friendly format makes complex concepts accessible to beginners, ensuring a smooth learning curve for those entering the world of freight brokerage.

Whether you're a novice entrepreneur eager to explore the possibilities of freight brokerage or an industry enthusiast seeking to refine your skills, "Freight Broker Business Startup" is your comprehensive guide to success. Empower yourself with the knowledge and training required to confidently navigate the application processes and training requirements of freight brokerage.

Embark on your entrepreneurial journey in the logistics industry—pick up "Freight Broker Business Startup" and lay the foundation for a thriving career in freight brokerage.

• Language: English
• Publisher: Publishdrive
• Release date: Jan 27, 2024

Book preview

FREIGHT BROKER BUSINESS STARTUP

Introduction to freight brokerage, application processes, and business training requirements

TABLE OF CONTENTS

Chapter 1 -

Why to grow a freight brokerage company?

Another Ways for Freight Brokers to Grow Their Business

The TMS Decision

Understanding the ongoing changes in the freight industry

Grow your freight brokerage business – step by step

Step 1: Identify your target audience

Step 2: Outline their needs and requirements

Step 3: Improve your technology so that it can facilitate the needs of your customers

Step 4: Tackle marketing with due care

Step 5: Set up performance metrics and keep track of your endeavors

Final thoughts

US Freight Brokerage Market Definition

US Freight Brokerage Market Overview

US Freight Brokerage Market: Segmentation Analysis

US Freight Brokerage Market, By Commute

US Freight Brokerage Market, By Service

US Freight Brokerage Market, By End-Use

Key Players

Report Scope

A Brief History of the Freight Brokerage Industry

The history of freight shipping timeline.

Chapter 2 - What is a freight broker?

When do I need a freight broker?

1. Cost reduction

2. Capacity

3. Time and quality

Freight agent vs. independent freight agent

Benefits of working with a freight broker

How much can a freight agent make?

How are freight agents paid?

Use a load board to find freight carriers.

Defining the Role of Freight Forwarder

History[edit]

Document transfer fee/document handover fee[edit]

National variations[edit]

Australia[edit]

Bangladesh[edit]

Canada[edit]

India[edit]

Ireland[edit]

Kenya and Tanzania[edit]

Nigeria[edit]

Pakistan[edit]

United Kingdom[edit]

United States[edit]

References[edit]

Chapter 3 - 4 reasons to become a freight broker

How Much Do Brokers Make Each Year?

Top 10 freight broker salaries by state:

Bottom 10 freight broker salaries by state:

Anyone Can Do It

How To Become a Work From Home Freight Broker

Minimal Cost to Get Started

Understanding Cost-Benefit Analysis (CBA)

The Cost-Benefit Analysis Process

Limitations of the Cost-Benefit Analysis

How Does one Weigh Costs vs. Benefits?

What Are Some Tools or Methods Used in CBA?

What Are the Costs and Benefits of Doing a Cost-Benefit Analysis?

Flexible Scheduling

Better Work-Life Balance

More Development Options

Greater Sense of Being Valued

Better Health

Advantages of a Flexible Work Schedule for Employers

Increased Employee Morale and Engagement

Better Recruiting

Better Retention

Greater Productivity

Reduced Tardiness and Absenteeism

Minimal Monthly Overhead

No Territory Restrictions

No Education Required

No Commute! Work from Home

Work-Life Balance

Don’t Answer to a Boss

Independence and Control

Financial Rewards

Flexibility

Opportunity for Innovation

Chapter 4 - How to become a freight brokerr?

Get a Freight Broker Bond

Get Industry Experience

More and more people choose to become freight brokers

Getting into the Freight Brokering Business has become cheaper

Demand for freight moved by trucks remains strong as ever

Freight broker salaries have been going up

Carriers and shippers are using LTL

Get On-The-Job Freight Broker Training

Take a Freight Broker Class

Gain Industry Insights

Develop a Solid Business Plan

Choose the Right Legal Framework

Decide on a Location

Find Your Carriers

Incorporate Technology

Calculate Your Start-Up Costs

Start brokering freight.

Designing a successful Freight Business Plan

#1: Let Your Executive Summary and Mission Statement be Your Guide

#2: Use Real Market Research to Define Your Target Market

#3: Write One Sentence that Says How You are Better/Different from Your Competitors

#4: Map Out Your Long Term Goals Too

#5: Describe the Type of Business You Ultimately Envision Having

#6: Explain How You Will Finance Your Freight Business

Free Business Plan Tools for Freight Agents

Chapter 5 - RUNNING THE BUSINESS

Target Market

Startup Costs

Operations

Income & Pricing

Marketing and Resources

TRANSPORTATION-FOCUSED CONTENT

#2 – INDUSTRY-FOCUSED CONTENT

#3 – BLENDING THE TWO TOGETHER

SHARING YOUR NEW CONTENT

#1 – EMAIL MARKETING

#2 – PODCASTING

#3 – SOCIAL MEDIA

HOW SONAR AIDS FREIGHT BROKERS

1. Uncover all shipping locations for current clients.

2. Make cold calls.

3. Ask for referrals.

4. Make a warm call.

5. Prospect similar businesses.

6. Get on the reserve list.

7. Contact the customers of your customers.

8. Create a loyalty program.

9. Send direct mail.

10. Use shipper lists.

11. Find the competitors of large industry players.

12. Use a load board.

Keep a List of Go-To Shippers

Ask for Referrals

Look for Comprehensive Transportation Services

Secure, Reliable Trucking Services in Portland & St. Louis

Review Your Purchase History and Compare

Use MacRae’s Blue Book and Other Shippers Lists

Livestock, Produce and the USDA

Brokers Make it Easier

What Customers Are Looking For

1. Proper licensing –

2. Multiple modes –

3. Choose the carriers you work with carefully –

4. Use e-mail to stay in touch with drivers –

5. Good credit counts –

6. How long you’ve been in business matters –

7. Join professional associations –

Chapter 6 - What type of legalities and formalities are required?

Overview

S corporations vs. C corporations

Eligibility

Shareholder requirements

Stock requirements

Distributions

While an S corporation is not taxed on its profits, the owners of an S corporation are taxed on their proportional shares of the S corporation's profits.

Conversion from C corporation

Federal tax

State tax

Corporation

History

Mercantilism

Development of modern company law

Ownership and control

Formation

Naming

Personhood

Partnership

History[edit]

Partnership agreements[edit]

Partner compensation[edit]

Equity vs. salaried partners[edit]

Law firms[edit]

Taxation[edit]

Common law[edit]

Forms of partnership[edit]

Silent partners[edit]

Oceania[edit]

South Asia[edit]

North America[edit]

East Asia[edit]

Europe[edit]

Sole proprietorship

Advantages and disadvantages[edit]

Rules for sole proprietorships in different countries

Netherlands[edit]

Ireland[edit]

Malaysia[edit]

New Zealand[edit]

United Kingdom[edit]

United States[edit]

Other countries[edit]

Limited liability company(LLC)

History[edit]

Flexibility and default rules[edit]

Income tax[edit]

Advantages

Disadvantages

Broker Registration

Overview

New Applicants:

Existing Brokers or Carriers:

24

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Chapter 1 -

Why to grow a freight brokerage company?

If you own a start-up freight brokerage, you’re aware of the risks and rewards that are part of growing your business. All businesses go through four distinct phases: startup, growth, maturity, and transition. In the first two phases, you pay out your time and money to the business. The payback comes in the second two phases, when you can distribute earnings and enjoy a more relaxed lifestyle.

During the growth phase, you’ll invest a large amount of both time and money. At that point, you’ll want to decide whether an agency or organic business model will best fit you and your circumstances. If you choose carefully and commit to the path, you’ll achieve success over the long term.

Model #1: Agency Growth

If you decide to be an agent-based business, your company will provide back-office support to brokers who don’t want to handle billing, accounting, carrier qualifications, insurance, and the like. The agent produces quick revenue growth on a commission-only basis, reducing indirect costs but diluting profit margins.

It helps to think of agents as customers rather than employees: They are generally aggressive, independent business people and you work for them. You need solid systems in place to ensure low costs per transaction and sound financial management to handle cash flow.

GT Worldwide Logistics, a brokerage in Monroe, IN, that specializes in heavy haul, uses agents as well as in-house sales people. GT started in 2006 with just my partner and me, doing about $1 million in business, said Clint Prosperi, service manager. By 2010, Prosperi and partner Rich Francis had grown the brokerage to 22 sales representatives and were on pace to do about $25 million. GT has agents across the country, including Texas, Florida, Saint Louis, Chicago, Los Angeles, and Washington.

We’re always looking for the next best guy out there who wants to get in this and start making some real money, said GT President Rich Francis. Every single one of our agents gets DAT Load Boards and Keypoint Software for free. It’s very easy to help them get set up, put loads in and move freight.

Model #2: Organic Growth

If you’re taking the organic approach to growth, you need to acquire personnel, choose a niche and geography, and determine equipment and mode types.

1. Hire personnel. You may think that hiring experienced transportation personnel is your best bet. These pros may cost more, but they can hit the ground running and bring a book of business and expanded knowledge. You may be able to expand into new segments or regions quickly. Of course, they may jump to another opportunity just as quickly, taking business with them.

The other choice is to hire employees new to transportation. Even with quality people, the learning curve will be steeper. You can make it easier by using a solid business model, with set procedures and formal training and promotion paths. Be careful, however: If you don’t handle this smoothly, you may be training your competitor’s next team.

2. Find your niche. Many start-up brokers haul truckload dry van freight, because it’s the simplest and most available freight. But it’s also price-driven, with large players and small margins. As a small, nimble brokerage, you should focus on a niche you’re uniquely suited for. Differentiators could include a high level of customer service, flexibility, and responsiveness or a particular type of cargo.

Byrne Transportation Services in Warrenville, IL, started up in 2008. Being veteran-owned gave Byrne a foothold supplying transportation solutions for Department of Defense contractors.

We handle big and ugly freight—the bigger and uglier, the better, said John Byrne, vice president of Byrne Transportation. We move tanks, helicopters, personnel carriers, propeller shafts, and propellers. Byrne also does heavy haul commercially for large chemical companies.

3. Choose a region. Regional markets can offer tremendous opportunities for growth, so choose one you know well. As you expand, you can smooth your transition by hiring regional experts or deploying a robust ratings tool, like DAT RateView™.

4. Decide on equipment and modes. You can also grow your business by moving similar freight using different equipment. You’ll need staff members with the expertise to expand into a new segment. Even better, you can hire personnel with a book of business. Get the right staff and you can move into flatbed, reefer, over-sized, or specialized freight.

GT Worldwide Logistics brought on a partner whose main focus was heavy haul. Prosperi said that he and Francis started