Here’s a question for you: what do your clothes, your soap, your car, your computer, and your sofa have in common? Answer: all of them were delivered by truck to the stores where you purchased them. Virtually everything you’ll find for sale is transported by 18-wheelers. Our economy couldn’t function without the interstate highway system and the men and women who make their living hauling freight. With the way that trucking industry trends are headed, the demand for trucking services will continue to grow in the months and years ahead.
This system doesn’t always work smoothly. Sometimes goods need to be shipped, but the supplier doesn’t have anyone to pick them up. This may be because the regular driver is out sick, their truck is down for repairs, or the normal carrier is booked up. When this happens, warehouses and factories need to find someone to pick up and deliver their goods, and fast. Retailers don’t like empty shelves anymore than shoppers do. Plus, many items such as produce and dairy products have a limited window of time in which to be sold, and failure to get them to their destinations can cost suppliers a hefty sum.
This is where the opportunity for you to own a successful business comes in. As a freight broker (also known as a truck broker), you will pair suppliers needing to ship goods with carriers willing to transport them. Think of it as being a matchmaker, with profit rather than romance being the goal. Truck brokers
There are two types of truck brokers. One is a person or small company that simply acts as a go-between for suppliers and carriers; that is, they make the deal between the two parties but do not offer transport services themselves. The other is a cargo company that arranges for other firms to carry loads they can’t service themselves, due to schedule conflicts or other factors. In either event, the broker earns money by charging a fee for making the arrangement.
Brokers provide an invaluable service to thousands of manufacturers, warehouses, and retail locations across the country. Many times, they are the only ones who can pair suppliers with available carriers, making the difference between an on-time delivery and a disastrous missed shipment. The demand for their services is constant, and will only grow as the economy expands. This translates into a fantastic opportunity for those who have the equipment, know-how, and skills to make it in this business.
How do you get started? First of all, you’ll need some experience in the transport industry, and the best way to gain this is by working for a supplier or carrier. This will teach you the lingo and industry knowledge you’ll need, as well as provide opportunities for you to make contacts that will later become your clients. Some of the positions that will give you these things are warehouse worker or manager, truck driver, or dispatcher for a freight line.
In addition, you can also break into the field by working as an agent for an existing broker. An agent does the legwork in a geographical area that’s separated from the broker’s offices. They normally work out of their homes, and their equipment investment is minimal. A phone, fax machine and PC with printer are all you will need. If you have experience in sales, customer service, or public relations you may already have the basic skills to be an agent.
As far as initial paperwork is concerned, you’ll need to fill out a form known as the Federal Motor Carrier Safety Administration (FMCSA) OP-1 Application for Motor Property Carrier and Broker Authority. This can be downloaded from www.fmcsa.dot.gov. You will also need to provide proof of $10,000 insurance in the form of a surety bond or a trust fund account, as well as a $300 application fee you’ll mail in along with the form. You can also fill out the application at the web site and pay the fee online with a credit card.
Furthermore, you will need to complete a form known as the BOC 3 that names your legal representative or process agent, have your insurance company file forms with the FMCSA, and sit through a ten-day waiting period. After that your broker’s license will be issued. There are no education or training requirements, and an adult of any age can obtain one.
Regarding finances, one of the advantages of getting into this business is that it lends itself easily to working from a home office. This will save you the significant expenses that come with renting and furnishing a commercial office space. Marketing need not cost a fortune, either. Making relationships with suppliers requires nothing more than the initiative and sales expertise to approach shipping and warehouse managers and offer your services. You can form a network of drivers and trucking companies by advertising in truck stops or trucking magazines.
One thing that you will need is a sizable line of credit with a financial firm, unless you have $250,000 to $300,000 available in cash or deposits. This is because you will pay the carriers first, and then wait for reimbursement to be issued by the shippers. A solid business plan as well as a good relationship with your banker can help a great deal in getting the necessary financing.
A typical day (or night) at work will go something like this: you get a call from a supplier—let’s say it’s a furniture manufacturer. They inform you that they have a hundred recliners that need to be sent from their location in Atlanta, Georgia to a chain of furniture stores in Colorado within three days. You contact a transport company or independent truck driver by phone, fax or email and say “XYZ Furniture Company in Atlanta has a load of recliners that needs to be picked up today and arrive at a location in Colorado in 72 hours. Can you do it?” If they say yes, you fax them a written agreement with the details of the job. They then sign it and fax it back to you before dispatching the driver.
You want to make sure all goes well, so you should have the driver call you to confirm the pickup, and then contact you again when the freight has reached its destination. Once this has been done, the carrier will invoice you for the cost of hauling the freight. You pay them, and then send your own invoice to the supplier. You then repeat the process with different carriers and shippers, each time earning a profit for your efforts.
A question that’s probably on your mind is how much a truck broker can earn. As with any business, the possible amount varies, depending on many factors. However, it’s safe to say that an income of $100,000 to $150,000 per year is entirely realistic. Some brokers earn much more, while a handful make far less. The more contacts you have, and the more reliable you and your drivers are, the better reputation you will have, and the more money you will earn.
One way to help grow your business and increase your bottom line is to find a niche market to specialize in. Potential niches include specific types of cargo, such as produce or bulk goods; a certain geographical area, such as the southeast; or a specific industry, such as textiles or electronics. Pay attention to developing trucking industry trends for potential opportunities here.