If you’re thinking about becoming a freight broker, you may want to consider starting off as an agent first.
Agents still have the freedom to grow their business, but without the administrative headaches of paying the bills and maintaining the requirements of a “Broker Authority”. Some agents make a very sizable income and see no need to become a broker.
As an agent you should understand what is going on and who is responsible for what. A Freight broker has additional responsibilities and requirements set forth by the government.
Brokers must apply for a “Broker Authority” through the FMCSA, Federal Motor Carrier Safety Administration. They must also obtain the proper insurance and forms which can be immense amount of learning if you’re unfamiliar with the industry.
An agent usually works independently from their home office which makes this the perfect work at home business opportunity. No store to contend with. No employees. And no Inventory!
Unlike an agent, a broker is responsible for collecting payments from their customer and dispersing payments to the trucking company that hauls the load. If the broker has an agent working for them, they will also be responsible for paying the agent. This is usually a commission, based on the gross line haul rate.
For example, let’s say YOU are a broker and you have an agent working for you. Your agent has a customer that they work with on a regular basis. That customer calls your agent and needs to have a shipment moved. The agent then calculates a line haul rate for that load, finds a truck to haul it and has a load confirmation agreement signed.
Once the agreement is signed, the agent then gives the truck driver or company dispatcher the address and directions to the shipper. The driver will then go pick up the load. Once the load is delivered successfully, the trucking company will send YOU a statement for the amount agreed upon in the load confirmation agreement.
As a broker, it is your responsibility to pay that company. And I recommend you pay promptly for reasons we’ll get into later on. It is also your responsibility to pay your agent a commission. In addition to all of that, you need to send an invoice to the customer, billing them for the line haul, and keep the revenue that is leftover.
As you can see, a freight broker has a lot of responsibilities that an agent does not have. A broker has control of the money and who gets paid for doing certain jobs.
Below is an example of how the money could be dispersed on a 2000 mile trip paying $3,500.
Per Mile Rate
Line Haul Rate (the amount the broker sends a bill the customer for)
Trucking Company (the amount the broker pays the trucking company for hauling the load.)
Agent ( the amount the broker pays their agent for coordinating the load)
Broker (the amount the broker keeps for brokering)
(the commission rates and percentages above are for educational purposes only. As a broker you can increase or decrease the rates and what you are willing to pay for services rendered)
The agent that coordinated this particular load made $280! Folks, that’s pretty good money for making a few phone calls. I know agents that do this 10 to 15 times a day! And when its 5′ O’clock, They turn their phone off and relax.
It is not uncommon for a work at home agent to make $1,000 to $1,500 or more per day.
A freight broker can hire as many agents as they need. In most cases an agent works for a broker as an independent contractor. The amount an agent is paid is usually on a commission basis as seen in the example above. If the agent holds the status of an independent contractor, they too can hire employees to handle the workload.