Freight brokering involves a go between in the process of getting materials shipped from one place to another by a customer who wants something transported and a licensed motor carrier. A freight broker is a vital part of the shipping process, as a freight transporter depends on the broker to find him loads to transport and customers depend on the freight broker to find a transporter to move their freight.
A freight broker must be licensed in his state to do business as a broker. A broker need to acquire several licenses and certificates, including an EIN (Employer Identification Number) from the Internal Revenue Service, a Motor Carrier number giving you the legal right to set up transports in the 48 contiguous states, a Broker Authority (Form OP-1) and a Trust Account or Surety Bond that protects your business if you cannot pay a driver because you are awaiting payment from the shipper.
A freight broker is the one responsible for having all required documents and business items to legally do the brokering. A freight broker is the main contact between the shipper (customer) and transporter.
There are also people who telecommute as representatives of the freight broker. These individuals are called freight broker agents. They work from the brokers licenses and pay the broker a fee for every transport order they submit for using the freight brokers authority. The fees range from 10 to 20 percent.
Freight brokering is a competitive business that takes dedication and long hours to obtain the contacts needed to survive. There are freight brokering schools that are available to help with getting organized, but there are no guarantees to how they can help and it is rather expensive. Many brokers start out as agents and carry their contacts into starting their own business.
There are two types of representatives that you will work with, they are either the shipper or freight forwarder. The shipper is the customer who owns the freight that you will ship and the freight forwarder is a representative who has freight in his possession but does not own the freight but is storing it for the shipper in a warehouse. Always remember to pay your drivers on time and whenever possible go above and beyond the call of duty. It is much harder to try to get new shippers and forwarders then it is keeping the ones you have. Transport companies need the steady business and the shipper wants their product shipped out on time every time.