With freight volumes projected to expand in the years ahead while shippers place even greater emphasis on supply chain efficiency, there’s arguably never been a better time to become a freight broker.
Globally, the freight brokerage industry is expected to grow at a 6% compound annual growth rate from 2024-2032. By 2032, the market size is projected to reach $85.9 billion, according to Global Market Insights
Granted, the industry doesn’t always grow in a straight line upward. There have been some challenges in the past, such as with the pandemic throwing a wrench into supply chains and logistics globally. However, the long-term outlook looks bright, particularly for freight brokers, whose role has been growing for decades, as Statista reports.
Source: Statista
That’s where freight brokers come in. While middlemen are sometimes viewed by other parties a bit skeptically — hence the concept of cutting out the middleman — freight brokers can facilitate win-win situations.
Freight brokers use their expertise and relationships to help shippers find available carriers, which often saves shippers time and money compared to what they could find on their own. Meanwhile, carriers benefit from more easily connecting with shippers who want to buy space from them.
Part 1: Getting Started as a Freight Broker
Getting started as a freight broker depends on whether someone wants to start their own freight brokerage or join an existing one. Starting a freight brokerage is generally more involved than working as a freight broker within an existing brokerage, such as due to licensing requirements, but either way, it can help to have certain skills and training, as we’ll explore in this section.
What skills and strategies can help me succeed as a freight broker?
To succeed as a link between shippers and carriers, freight brokers should have diverse skills across areas such as:
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Logistical acumen: Freight brokers need logistical understanding, including transportation laws, shipping processes, and supply chain management, to efficiently solve problems and optimize delivery routes for shippers and carriers.
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Strategic negotiation: Solid negotiation skills are essential for securing advantageous terms. With these skills, brokers can prove their worth, such as by helping shippers negotiate better pricing than they could on their own, based on brokers having relationships with and insights into multiple carriers.
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Technology proficiency: Freight brokers also need technological proficiency, particularly proficiency in using a transportation management system (TMS), to effectively manage operations and track real-time shipments. A TMS is a type of software that helps with supply chain management or transportation operations, such as through-route optimization and tracking.
Technology skills can be particularly helpful for freight brokers to provide value to shippers, considering that “97 percent of shippers identify real-time visibility as ‘important’ or ‘very important,’ and they are boosting routing efficiencies, capacity levels, and profitability through a centralized TMS,” according to PLS Logistics. -
Communication skills: Effective communication is crucial to clearly articulate the needs and expectations between shippers and carriers. If shippers and carriers can’t rely on brokers to keep them accurately informed, then they would have greater incentive to cut out the middleman and communicate directly with one another, so solid communication helps brokers prove their worth.
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Time management: Timing is everything, not only in terms of keeping shipments on time but also managing the day-to-day aspects of running a freight brokerage business.
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Industry knowledge: Building industry knowledge is also non-negotiable because it's the currency of credibility, allowing you to speak with authority and make informed decisions.
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Have a niche: Zeroing in on a niche market will set you apart, allowing for more profound expertise and a more targeted approach. Specialization makes you the go-to expert in a sea of generalists and can help freight brokers avoid commoditization.
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Marketing savvy: To enhance visibility and engagement, freight brokers can leverage comprehensive marketing strategies, such as implementing content marketing initiatives, email marketing, social media campaigns, and advertising.
Organizations like the Transportation Marketing & Sales Association (TMSA) provide aspiring freight brokers with marketing research and knowledge that can help them stay current with both sales and marketing trends.
How to gain the skills and qualifications needed to become a freight broker
Freight brokers often gain these aforementioned skills through related work experience within logistics, trucking, supply chain or similar companies.
For those without related work experience, enrolling in an introductory freight brokerage course that covers industry practices, legal requirements and business management could help, particularly for individuals who want to start their own freight brokerages. However, gaining first-hand experience, such as through a dispatcher or entry-level logistics coordinator role, could be a more realistic route for those who want to get hired by an existing freight brokerage.
That said, the specific qualifications for becoming a freight broker are highly specific to each company and role. Some require a bachelor’s degree and a freight broker’s license, while others only require work experience in a related field. Before becoming a full-fledged freight broker, for example, an individual might work as a freight broker agent within an existing brokerage.
In general, having more qualifications such as freight-related work experience, a college degree, and potentially advanced certifications such as the Certified Transportation Broker (CTB) program offered by the Transportation Intermediaries Association (TIA), makes it easier to get a job as a freight broker.
In some sense, those interested in starting their own freight brokerages have more flexibility on qualifications, such as by not needing a college degree, but like with any entrepreneurial effort, having industry experience generally makes it easier to succeed. Starting a freight brokerage also requires licensing, whereas working for another freight brokerage does not always require licensure.
For comparison, think of how a real estate broker needs a license to start a brokerage and then can have licensed agents and brokers working for them, while also potentially having entry-level assistants who do not have licenses or degrees. The same dynamic applies to freight brokerages.
Do I need a freight broker license?
In general, a freight broker wishing to operate in the United States must obtain a freight brokerage license, specifically by obtaining an MC number to gain broker authority from the Federal Motor Carrier Safety Administration (FMCSA). However, an individual could potentially work as a freight broker under an existing freight brokerage that has its own license from the FMCSA. Those who want to start their own freight brokerage need their own license though.
Technically, only companies operating as freight brokerages need to be licensed, but an individual could operate a sole proprietorship business and obtain a broker’s license under their own name. This may seem a bit confusing, but basically with some business structures, the individual and business are one and the same. If you’re unsure how exactly this applies to your situation, you may want to contact the FMCSA and/or get guidance from a business formation attorney or similar professional.
Obtaining a freight brokerage license involves several steps, including:
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Registering the freight brokerage business with the FMCSA through the Unified Registration System (URS)
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Obtaining a USDOT number, if applicable
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Securing a surety bond or trust fund agreement (BMC-84 or BMC-85) for $75,000 to ensure financial responsibility
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Submitting the application with the FMCSA along with the required $300 fee
The FMCSA application approval process typically takes 4-6 weeks. Freight brokers should also review any state or local licensing or insurance requirements before operating their businesses.
Shippers use freight brokers to find available carriers, which often saves shippers time and money compared to what they could find on their own. (Sean Anthony Eddy/PeopleImages.com via Getty Images)
How much does it cost to become a freight broker?
The upfront costs to become a freight broker can vary based on several factors, including whether an individual starts their own brokerage firm or works under another broker's authority.
As a general rule, working under another broker’s authority does not necessitate upfront costs, although some positions might have education or training requirements, which could cause individuals to incur the costs of meeting those specific requirements.
Starting a freight brokerage does not require specific education or training requirements, but the typical startup costs can be several thousand dollars, if not $10,000+, depending on factors like the business structure and operational investment.
So, those who don’t have the money to invest in starting a freight brokerage might be better off gaining experience and building up savings by working as a freight broker agent under an existing freight brokerage, before becoming their own broker. Think of how a real estate agent might initially work under another broker before starting their own real estate brokerage.
For more details on the costs of starting a brokerage, see Part 2 of this guide.
How long does it take to become a freight broker?
Becoming a freight broker can take anywhere from a few weeks to a few years, depending on your starting point and goals.
The initial step of getting licensed is straightforward, typically taking a few weeks to complete the process with the FMCSA. However, the grind begins when finding carriers and establishing a solid shipper client base. This phase can stretch from months to over a year, depending on how quickly one navigates the industry's complexities and builds relationships. In addition, completing coursework, while often optional, adds to the timeline.
How to become a freight broker with no experience
While it’s technically possible to start a freight brokerage with no experience, doing so is unlikely to lead to success, considering the competitiveness and nuances of the industry.
Rather than trying to immediately open a freight brokerage, consider starting as a freight agent for an already established freight broker.
TOP FREIGHT BROKERAGE FIRMS: Ranked by gross revenue
Once you have a good baseline of understanding the industry, you can leverage technology and online resources to jumpstart the journey of becoming a freight broker. Your best allies are tools like load boards, carrier directories and freight-matching platforms. They open doors to countless opportunities, enabling you to connect with partners and streamline operations effortlessly. You can also accelerate learning through YouTube videos, postings in online forums, and social media sites like LinkedIn.
Even if you're just stepping into the field, these technologies and resources can significantly level the playing field, helping you find your footing without years of experience. Networking within industry groups and attending industry events can also speed up the process, as you can learn from the successes and challenges of others, rather than waiting to experience those all firsthand.
What resources are available to help me learn more?
Luckily for intrepid freight brokers, plenty of resources are available to help you get started on the right path.
Online freight broker courses are particularly beneficial, offering comprehensive training that covers the essentials of freight brokerage, including legal requirements, logistics management, and effective communication strategies. These courses often blend theoretical knowledge and practical skills, making it easier for aspiring brokers to understand the industry's complexities.
Numerous books have been published on the subject for a more traditional learning method, providing insights into the strategies for success in freight brokerage. Trade associations, such as the Transportation Intermediaries Association, offer memberships with access to educational materials, networking opportunities, and industry updates.
Aspiring freight brokers can also keep up with transport industry news to identify the challenges that shippers and carriers face and learn more about the role that freight brokers play in facilitating freight movement.
Many freight brokers have found that the process of matching shippers to carriers is easier when they identify a target market and uncover ways to differentiate themselves from competitors. (Hispanolistic/Getty Images)
Part 2: How to Start a Freight Brokerage Company
Starting a freight brokerage company requires more than just obtaining a freight broker license, as outlined above. In this section, we’ll take a deeper dive into what freight brokers need to do from a business/operational perspective to start a successful freight brokerage company.
Costs to start a freight brokerage
Starting a freight brokerage typically involves a mix of both mandatory and optional costs, such as the following:
Mandatory costs of starting a freight brokerage
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Companies (including individuals operating sole proprietorships) that want to work as freight brokers need to obtain a Motor Carrier (MC) number from the FMCSA. This agency generally charges a filing fee of $300.
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After obtaining an MC number, freight brokers are required to purchase a $75,000 surety bond or trust fund. See the Surety Bond or Trust Fund Agreement (BMC-84 or BMC-85) for more information. The good news is that the actual cost is only a fraction of this $75,000 amount. Premiums typically range from $750 to $9,000 annually for a surety bond, depending on an applicant’s credit score and financial strength.
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Freight brokers operating as interstate brokers also need to pay the Unified Carrier Registration (UCR) fee, which can vary but is generally a few hundred dollars.
Optional/variable costs of starting a freight brokerage
- Freight brokers that establish a legal business entity, like an LLC, can face variable costs depending on their state and whether they register on their own or through the use of a filing service or attorney. Typically, initial filing fees alone cost a few hundred dollars, depending on the state and entity type. Getting professional business formation help can add several hundred dollars to the process.
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Once the business is formed, freight brokers also need to consider the costs of office equipment, software, a phone line, etc. There’s a lot of leeway here in terms of how much a freight broker invests in starting up their business, with some preferring lean operations and others wanting to jump in with higher costs, like by renting office space.
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While the BMC-84 or BMC-85 covers the surety bond requirement, freight brokers should also consider additional insurance for general liability and errors and omissions, which can add to your upfront costs. Premiums can vary widely depending on factors like the level of coverage but might be somewhere in the ballpark of a few thousand dollars per year.
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Lastly, freight brokers face miscellaneous expenses when starting and operating a brokerage, which can include costs for creating a website, marketing and other operational tools necessary to run the business efficiently.
Add it all up, and the initial investment to start a freight brokerage can range from a few thousand dollars to over $10,000, mainly depending on the approach to bonding and insurance and the scale at which a freight broker begins their operations.
Foundational steps to build a freight brokerage
Starting a freight brokerage requires more than initial investment and a basic entrepreneurial spirit. Consider the following foundational steps to build a business that can succeed within the nuanced world of freight:
- Dive into training programs or read books like Freight Broker Business Startup to master the ins and outs of the freight world, from regulations to logistics to the operational aspects of running a freight brokerage.
- Evaluate different business structures, such as LLC or S Corp, to fit your goals and state laws.
- Procure your broker authority by filing Form OP-1 with the Federal Motor Carrier Safety Administration (FMCSA).
- Designate a process agent to handle potential court papers that may be served; brokers need a process agent for each state they have an office in and write contracts in.
- Secure a surety bond or trust fund to provide financial protection in case of cargo mishaps.
- Invest in contingent cargo and general liability insurance to protect against the unexpected.
Building a successful freight brokerage business
In addition to the aforementioned steps needed to get a freight brokerage business off the ground, consider the following operational steps to build a successful freight brokerage business that can last.
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Identify a target market and points of differentiation: To avoid commoditization, where the only way to win business is to price below competitors, freight brokers need to identify a target market and ways to differentiate from competitors.
For example, a new freight brokerage business might target new Shopify store owners who want to handle their own shipping yet need more operational guidance and technology support to manage and track orders and fulfillment. One differentiator could be creating resources on how to fulfill small order sizes more efficiently. -
Establish a financial plan: Freight brokerages need a solid financial plan to go along with a go-to-market strategy (e.g., targeting Shopify store owners).
For example, new freight brokers might calculate the cost of doing business for one year and identify funding sources to make it through that first year, such as with small business loans or raising money from friends and family. From there, the plan might be to self-fund once sufficient revenue comes in after year one. Businesses that do raise investment money should look into applicable securities laws to ensure they stay compliant. -
Create broker contracts: These will be the backbone of a successful freight brokerage business, as contracts are needed to close deals and protect against disputes. Consider consulting with a legal professional to create contracts that are clear and fair for both carriers and shippers.
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Identify dependable carriers: Use directories, load boards, and network within industry groups, such as the Transportation Intermediaries Association, to find dependable carriers. Freight brokers need these carriers as one-half of their matchmaking business. Shippers will not continue to work with freight brokers if they cannot match them with reliable carriers.
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Establish relationships with shippers: Just as freight brokers need dependable carriers, they also need to establish relationships with shippers to support moving their freight. Like in other types of businesses, finding shippers can involve a mix of tactics like cold calling, industry networking, and asking existing clients for referrals. And specific to the freight industry, load boards can help freight brokers identify new shippers that need support.
Tech considerations for freight brokers
In addition to these operational aspects of starting a freight brokerage, new freight brokers also typically need to invest in technology, particularly a Transportation Management System (TMS). Using a TMS is paramount to efficiently managing shipments by providing workflow automation, effective data management, and the ability to track performance metrics in real time.
This technology streamlines operations and provides a centralized platform for overseeing various aspects of the transportation process, from route planning to carrier management. By leveraging a TMS, freight brokers can optimize their logistical operations, reduce overhead costs and improve service delivery.
Look for a TMS that provides integrations with other systems within the freight brokerage business, like truck tracking software, along with features such as dispatch systems that make it easier to manage loads. To find the right TMS for your needs, you can look at reviews on sites like G2.
Joining load boards can also be a worthwhile investment for freight brokers looking to connect with carriers and locate suitable loads quickly. These online platforms can help cut out some of the manual work that would otherwise be involved with matching freight with available transportation capacity, enabling brokers to fill trucks and keep goods moving efficiently. Consider load boards not just based on price but also the quality of the partners within their systems.
Adopting reliable communication tools is also crucial for maintaining strong partnerships and ensuring timely updates. For example, freight brokers might invest in email marketing software to help nurture new leads and keep current clients engaged. Customer service platforms could also be helpful, particularly for larger freight brokers, that need an efficient way to handle customer questions. Or, a TMS might have integrated customer support features, thereby making a separate customer service platform unnecessary.
In summary, freight brokers need a combination of software platforms that are specific to the transportation industry — e.g., TMSs and load boards — as well as more general business software that service-oriented companies — e.g., email marketing software and customer service platforms.
Those running their own freight brokerages have the freedom to choose their own technology based on budget and client needs, whereas those working within an existing freight brokerage should consider whether the company has the tools to set themselves up for success.
If interviewing at a freight brokerage, ask questions about what systems they use and how they evaluate new technologies to get a better understanding of whether that brokerage is forward-thinking and ready to support your career with helpful underlying technology.
Staying ahead of the competition
Freight brokers can benefit from networking. (Sergey Pakulin/Getty Images)
As alluded to earlier, freight brokers need to be careful to avoid the race-to-the-bottom commoditization that can occur if the only focus is on matching shippers and carriers. Even though that is the central role that freight brokers play, customers are paying for more than just generic matching services; they’re also paying for a freight broker’s expertise and customer support.
Consider how other types of brokers, like real estate brokers, similarly do more than just match buyers and sellers. A real estate agent can use their expertise and empathy skills to help a buyer consider a new neighborhood that they wouldn’t have looked in otherwise, for example. Similarly, a freight broker might use their expertise to help a shipper move their goods via a method like rail, rather than just trucking, based on factors such as pricing and timing.
More specifically, freight brokers should try to stay ahead of the competition through a commitment to:
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Learning: Subscribe to leading industry publications, attend workshops and seminars for deep dives into new trends, and join professional associations like the Transportation Intermediaries Association for exclusive resources and networking.
In addition, freight brokers can take training courses to expand their skills, or at the very least watch YouTube videos to keep up with emerging technologies and regulations that affect the industry. The more a freight broker can learn about areas like route optimization and cost negotiation strategies, the more value they can provide customers. -
Networking: Freight brokers can benefit from networking with other industry professionals on social media, within industry associations, and at trade shows/conferences/events for the logistics and transportation sectors, like Manifest, TIA’s Capital Ideas Conference, the Mid-America Trucking Show (MATS), and DATCON. Doing so helps from both a learning perspective as well as gaining referrals for new customers, new hires, and forming partnerships that can help with operating a freight brokerage.
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Customer service: Prioritizing exceptional customer service helps retain clients and secure repeat business, laying the foundation for long-term success and reputation in the market. If customers can count on their freight broker to not only provide matching services but answer questions and be a resource for their own businesses (like with the example of Shopify store owners needing help learning how to fulfill orders), that can provide the differentiation needed to succeed as a freight broker.
Part 3: Challenges Facing Freight Brokers
As we explored in this guide, building a successful freight brokerage requires a mix of several areas such as compliance, operations, technology, customer service, etc. The industry has a lot of potential, particularly with the growth of e-commerce, but freight brokers need to also be prepared for some common pitfalls, as we’ll explore in this section.
What are the biggest challenges new freight brokers face?
New freight brokers, whether starting their own brokerages or working for existing freight brokers, often face challenges such as:
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Finding enough customers: Even if you know where to look, such as by attending trade shows and networking on social media, the competition for finding new customers — i.e., shippers — is fierce. Standing out in a crowded marketplace requires more than just determination.
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Having inconsistent pay: The commission structure for freight brokers often means that new freight brokerages typically face cash flow challenges, especially when first starting out and commissions have yet to roll in. Even those working for established freight brokerages can experience slow seasons, thereby hurting their personal cash flow.
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Working long hours: The transportation industry is not a 9-5, Monday-Friday type of sector. Instead, it can be a 24/7/365 industry, and while freight brokers might be able to build their own schedules, it’s not uncommon to work long hours, including some nights, weekends and holidays.
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Navigating compliance: In addition to startup compliance issues like obtaining broker authority, freight brokers need to navigate a variety of state and federal laws for both internal and external purposes. Those running their own freight brokerages need to keep up with compliance requirements like updating their information with the FMCSA every two years. And those working as freight brokers also need to understand regulations such as requirements for transporting hazardous materials, among others.
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Keeping up with industry trends: Freight brokers, especially new ones, often need to do a lot of learning to stay up-to-date with what clients and partners need. Those who don’t understand the challenges and opportunities that shippers and carriers face will struggle to provide value to these other businesses they’re serving.
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Dealing with stress and risk: As part of working long hours and having inconsistent pay, new freight brokers often have to overcome challenges like facing stress and risk that they may be unaccustomed to dealing with. Making connections between shippers and carriers is only half the challenge; freight brokers also need to manage the risk that comes with getting goods from Point A to Point B. If they can’t find reliable carriers, for example, then there’s a risk that they could lose shipper clients and tarnish their reputation.
Overcoming common freight broker challenges
It's important for freight brokers to understand challenges that shippers face. (Sean Anthony Eddy/PeopleImages.com via Getty Images)
Part of these common freight broker challenges are par for the course, and they can’t all be swept away. No matter how much experience a broker has, for example, most jobs still tend to be commission-based, so it can be hard to remove the risk and stress of inconsistent pay.
That said, there are some steps freight brokers can take to improve their chances for long-term success, such as:
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Developing a niche: Freight brokers need to carve out a niche and offer value beyond simple matching services. For example, a broker might specialize in providing route optimization support to startups, which can help these clients provide more value to their own customers by shrinking shipping time.
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Planning ahead financially: To overcome challenges such as inconsistent pay and long hours, freight brokers should plan ahead financially, such as by waiting to start a brokerage until they have a several-month, if not year-long, runway of funds. Doing so can make it easier to navigate lean periods, while also reducing the pressure to take every job possible, 24/7. Freight brokers also need good financial discipline and technology such as accounting platforms that make it easy to stay on top of cash flow.
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Leveraging technology: Finding the right technology, such as a TMS and load boards, can make a huge difference in terms of building a sufficient client base and managing operational complexity. The right technology can even help with areas such as compliance. Don’t assume these have to strictly be tools geared toward the transportation industry.
For example, business formation tools like ZenBusiness and Bizee can be used by those starting their own business entities to operate a freight brokerage and keep up with relevant state requirements, such as LLC and registered agent renewals. That said, these types of solutions might not cover all areas of compliance, particularly requirements that are more specific to the freight brokerage industry, so it’s important to understand the limitations and capabilities of any tech solution before relying on it. -
Hiring support staff: Those who run their own freight brokerages might benefit from hiring support staff or using contracted support to help with some of the more administrative aspects of running a business. For example, getting help with legal and compliance issues could be worth the upfront cost to reduce the risk of even more expensive disputes or fines down the line. Hiring might not be an option on day one, but it should be something that brokers consider building up toward.
How can I build a strong reputation in the freight industry?
Lastly, overcoming some of the initial challenges of becoming a freight broker and building a lasting business or career also depends on building a strong reputation. To do so, focus on three core areas:
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Customer service: First, delivering excellent service is non-negotiable; it's the foundation of your reputation. Every shipment, big or small, gets VIP treatment, ensuring clients' needs are met and exceeded.
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Trust: Building trust comes next. Be transparent in your dealings, reliable in your commitments, and ethical in every decision. This trust turns first-time clients into long-term partners.
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Networking: Networking helps freight brokers make it in this competitive industry through a combination of learning from others and making connections that lead to more business. Networking can involve being active in professional groups, attending industry events, and having conversations with customers, vendors and other stakeholders that keep brokers plugged into what’s happening across the freight world.
Overall, becoming a freight broker requires a lot of work and often an upfront investment, but if you’re willing to make the effort to overcome these challenges and build up a strong reputation, you can reap the rewards that come with this dynamic line of work.
