What's the Difference between a Freight Broker and a Broker Agent? And which way is the best way to go?
These are common questions from those interested in this industry. Let's try to shed some light on these questions.
1. A freight broker is fully self-employed and is required to obtain his or her broker authority. A fully self-employed freight broker will do his or her own invoicing to customers and will pay the motor carriers. Essentially, the freight broker is running a complete business.
2. A broker agent works for another freight broker and does not need to obtain a broker authority. The agent works under the authority of his or her freight broker and is not responsible for invoicing or paying the trucks.
There are pros and cons to each option.
First, a fully self-employed freight broker is required to get their broker authority but they retain 100% of the profit on each load. Further, the freight broker is totally responsible for invoicing the customer and making collections as well as paying the motor carriers. Having sufficient capital and good cash management skills are an absolute necessity. Since time is required to run an entire business, the freight broker has relatively less time to search for new customers and find trucks.
Second, a broker agent is not required to get his or her broker authority and, therefore, this option is less costly. But the broker agent splits his or her commission on each load with the freight broker. Most of the agent's time is spent searching for new customers and finding trucks.
Third, most freight brokers are seeking experienced agents. There are a few who will accept new inexperienced agents but these freight brokers are far and few in between. If an agent is new or inexperienced, the freight broker normally does not want to spend a lot of time training or "hand-holding".
To recap, as a broker agent, you don't need your broker authority. You work under the authority of another freight broker. It's possible to begin as either a freight broker or broker agent and then switch to the other. The two fundamental differences are the scope of the duties and responsibilities and the fact that the broker agent does not need their authority.
Regardless of whether you work as a freight broker or broker agent, you may work out of your home. And you will meet and work with customers and carriers over the entire country.
All you need to get started is:
A good computer with a high-speed internet connection,
Preferably two telephone lines (one could be either a cell phone or internet telephone),
A good fax machine,
Proper education and the drive and determination to succeed.
For both freight brokers and broker agents, good, comprehensive training or on-the-job experience is absolutely essential.
Here are a few topics you can expect to learn if you take freight broker or broker agent training:
How to use the Load Boards
How to find shippers
How to search for trucks
How to talk to shippers and dispatchers
How to pre-qualify your motor carrier
How to calculate rates
Step-by-step procedures for booking a load
How to get set-up with your motor carriers
How to monitor and track your loads
How to set-up and manage your information flow
Jack is a logistics consultant with over 25 years' experience working in the transportation industry. To learn more about freight brokers and broker agents, you may visit his website at:
http://www.a1freighttraining.com