How To Start My Own Freight Brokerage – Becoming a freight broker is a relatively easy and inexpensive way to start a business. From there, though, you face a steep learning curve, a fiercely competitive industry and tight margins—the perfect storm for the two-thirds of new brokers who fail in their first year. But it’s not all doom and gloom.
Assuming you’ve already registered with the FMCSA, secured a bond or trust fund, and established the legal structure of your business – the road to success lies ahead. To help you along the way, we’ve put together these seven tips to be successful as a freight broker.
How To Start My Own Freight Brokerage
While there are many benefits to being a freight broker, there are also several risks and costs to consider before deciding if it is the right decision for you.
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As you may know, freight brokers profit by charging the shipper more than the cost of the truck. This markup is the profit margin they use to run their business and make money. This margin is usually 18%. However, margins may vary depending on the market.
To become a successful freight broker, you should consider developing some basic skills such as understanding market trends, gaining knowledge and experience, and identifying good customers and carriers.
Starting a brokerage is not without problems. However, if you follow the tips in this article, you’ll give yourself the best chance for success. Remember that being a freight broker is not for everyone, so “learn before you jump” and familiarize yourself with the industry and business before starting your own.
Unverified brokers must establish a level of trust with their clients. It’s hard because building these relationships takes time and requires strong communication skills, but the payoff is worth it. It’s your classic foot in the door situation. Once you’ve made contact with a customer, keep that door open and build their trust by communicating promptly and honestly while delivering consistent results.
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Your customers will measure your reliability as a proxy for your ability to consistently move cargo from point A to point B on time and at the best prices. They are, in short, the cornerstone of your business. They directly affect how successful you will be, so prioritize your relationships with them and look for those golden opportunities to go above and beyond.
To get the ball rolling, start by calling sales reps for material handlers, forklift companies, etc., and ask:
Above all, be ready to ship as soon as the prospect agrees to use your brokerage to move the load.
“Always be kind and remember that there’s nothing wrong with saying no.” “I pass more burdens than I take.”
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Shipping is a fast-paced industry, and people are busy, so respect their time. When you receive a request for an estimate, respond as quickly as possible using the same medium (phone, email, etc.) with a reasonable estimate. Note that you are not the only broker to whom the request has been sent.
When answering, keep it short. Customers first ask for a parking lot number. You can work out the details later – after you’ve locked them down.
Taking care of customers in a timely manner demonstrates your reliability and willingness to get the job done while showing them that you respect their time and business.
When answering, keep it short. Customers generally look for a tapping number first. You can work out the details later – after you’ve locked them down. Tip 3 – Know the broker’s costs inside and out
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Although freight brokerage has low initial costs, it is important to remember that an incorrect estimate can wipe out your profits (from audits and freight payments) in one trip.
Familiarize yourself with the shipping/trucking industry, transportation trends, and stay up-to-date on carrier rates until it becomes a habit to avoid running your business into the ground.
Time is of the essence in this business, and the sooner you can return a quote to a prospect, the more you’ll book while minimizing the chances of a bad call cutting into your profits.
Gaining industry experience before becoming a broker is helpful but not necessary as long as you understand the costs inside and out.
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The more knowledge you bring to the table, the more likely your customers will trust you to meet their needs. It’s a huge, fast-paced industry. The more you know, the faster you can deliver quality assessments – giving you more opportunities to book leads and increase revenue.
Keep in mind; that you are more than a broker; you are also a salesperson, negotiator and communicator. Make sure you hone these skills by consuming all the knowledge you can get by reading books and articles and checking our blog from time to time. It will be easier for you to develop and refine your competitive advantage to better position yourself for success.
The industry is highly segmented, so it makes good sense to target a specific niche, especially if you are an unestablished freight broker.
Focusing on a specific niche in the transportation industry, such as frozen food, produce, or building materials, allows you to stay focused on one particular system until you become an expert.
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This approach makes it easy to create a launch pad in your area of expertise. It allows you to gain referrals that can facilitate your expansion into peripheral services because you already have a network and reputation to follow. People will know they can count on you, which means everything in this business.
There is a lot of industry-specific technology available that you can use to increase your efficiency and productivity as a freight broker, such as
As we said initially, becoming a freight broker is quick and easy. However, being a successful freight broker is challenging. Trust is a significant factor in the $700 billion industry, and earning customer trust requires time in the early stages, working to establish a trusted book of business, and doing the necessary research and skill-building to succeed. .
Being a successful freight broker is a marathon, not a sprint. There will be frustrating setbacks along the way and it can feel like you are spinning your tires at times. However, if you remain patient, use sound business practices and persevere, you will find the rewards well worth the effort.
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Better payment of loads without calling a broker. Instant payments upon delivery. Competitive rates keep 82% of your freight.
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Trucking Surcharges: What They Are and How to Reduce them Surcharges can often add to your fees, but what are they? Find out here what extras cost, why they’re charged, and their different types. Starting your own trucking company is a serious undertaking, but with a little planning and preparation, the process can go much more smoothly.
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I got into the industry when I was working as an accountant for friends who had just started their own transport business. Since the business was new, I ended up doing a lot more than just bookkeeping, and over time I realized that I had gathered the skills and knowledge I needed to start my own business.
Here are some tips on how to start a trucking company that I have picked up over the years. By following these guidelines, you can make sure you’re dotting your i’s and crossing your t’s—and ultimately setting your business up for success.
Before you get started, here are some basics to cover when starting a trucking company: business plan, insurance, and proper equipment.
Your business plan should be based on research and analysis of the specific market you are entering. Do you know how to find cargo, for example, or do you plan to use a cargo board? Do you have an established relationship with brokers? Are there areas to avoid? Understanding how your business needs to work to be successful and then putting it into practical terms on the ground is an important first step.
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Your trucking business plan should also include financing information, including the type of equipment you need and whether you intend to buy or lease that equipment (all of which will affect your startup costs). Understanding your financing is one of the most important things you can do when starting your company. When you know the operating costs, how much you will pay drivers, how much fuel, etc., you will be able to choose a load that will profit your business.
If you plan to carry freight across multiple state lines in any capacity, then you should also apply for a motor carrier permit. The Authority team can help you set up your MC number, USDOT number, and BOC-3 processing agents, in addition to filing your federal and state permits, as well as IFTA, IRP, and Unified Carrier Registration (UCR) forms. On
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