Many times I receive calls from people that want to enter the logistics side side of the transportation industry but don’t know where to begin let me tell you the difference between a freight broker and a freight broker agent.
Which one is right for you? These are the two most commonly asked questions. Now, let’s have some honest answers.
1. First of all, a freight broker is totally self-employed. The freight broker carries all the financial responsibility i.e. obtaining own DOT authority, getting surety bond in place, paying the carriers, sending out invoices, collecting payment from shipper, and paying his/her agents. (If using agents) and also pays his/her own taxes. Thus the broker is operating a full and complete business, known as a brokerage.
2. Second, the cost to open and maintain this type of business can be very expensive and time consuming, especially if the broker does not use agents.
3. Being a broker agent is also a business, Your Business. While a broker agent is self-employed and also responsible for his/her own taxes, he/she has none of the financial burdens associated with the brokerage. The agent does not need his or her own authority, surety bond, or license. He or she will work under that of the brokerage, thus, being considered an agent. The agent has minimal start up costs, which consists mainly of a phone, fax machine, a good long distance company, computer with Microsoft office/word/excel, and whatever load boards, etc. that they will need if the brokerage does not provide them. (Some do, some don’t)
4. Since most of the brokerages that have been in business for awhile will only want experienced agents (although there are some that accept new agents) with their own customers, it is always best to receive the proper training from a reputable trainer/consultant. I say trainer/consultant because a trainer/consultant will be there for as long as you need him/her. Whereas a school teaches you the basics and after that you are on your own.
5. If you have little or no knowledge of this type of business, I strongly encourage you to be an agent first. Then open your own brokerage in a year or two if you so desire. After all, an agent does the same exact work that a broker does, less the financials.
6. No matter which one you choose to do, it will not happen over night. It will take hard work, determination, sincere dedication, and a lot of time to build either business. (6months-2years)
7. Proper training is the most important factor in any business. Below are some of the important topics you should learn for proper training:
Broker/Agent:
How and where to find shippers
How and where to find carriers (trucks)
How to build and maintain your customer base
The importance of customer service
Rate calculations including fuel surcharges
How to cold call
How to and why, the carrier needs to be pre-qualified
What is required to get set up with the carrier
Proper procedures for booking a load
How and why to keep track of your loads
The importance of check calls
How to use the different load boards
How to talk to and communicate with the shippers, carriers, and dispatchers
How to maintain records and why
Commission Structure
Brokers:
Start Up Costs and what they are for
How and where to get DOT Authority
How and where to get Surety Bond and the cost associated with it
What Facturing Companies are and what they do
Timely manner for paying carrier
What Quick Pay and Advances are and the fees associated with them
AUTHOR BIO:
Jack is the sole owner of a1 freight broker training, and is a Logistics Consultant. He has over Twenty eight years of experience in the Transportation field. Jack offers several different methods of training including live video and he builds his schedule around YOU. To learn more about these careers, contact Jack @ his website: www.a1freighttraining.com
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