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How to become a Freight Broker, a Freight Agent or a Dispatching Service? -2020

Jun 07, 2021
In this video we are going to discuss how to

become

a

freight

broker

,

freight

forwarder or possibly a shipping

service

. I'm benjamin kowalski with cargo 360 where we provide the latest transportation sales tips and training videos to help you reach your goals faster if you're new here make sure to go ahead and hit the subscribe button below. All the links we will discuss here will be found in the description below me and for more free content be sure to add our weekly Freight 360 podcast to your playlist, let's jump into it now, most of you who are digging This question they have at least heard of or generally know what a freight

broker

or freight

agent

does, they may even be familiar with what a forwarding

service

is, however, they may not know exactly what qualifies a one. about the other or what the legal frameworks actually are, so first we will cover the definitions and frameworks and then we will delve into some of the most commonly discovered errors by those who have not researched this before jumping to the fmcsa, the federal government.
how to become a freight broker a freight agent or a dispatching service  2020
The Carrier and Safety Administration is the primary federal agency responsible for regulating and providing safety oversight for all commercial vehicles on the road. They defined a freight broker as an intermediary that connects carriers with carriers and, for example, if the carrier has a load going from one point. a to point b your job is to match that load with a carrier that is going to transport that load they must be licensed by the fmcsa they must be bonded and insured at a minimum and with these three elements in place anyone can legally operate as a freight broker load, that being said, they probably won't be as successful without additional tools and expenses to boost their business and sales.
how to become a freight broker a freight agent or a dispatching service  2020

More Interesting Facts About,

how to become a freight broker a freight agent or a dispatching service 2020...

We'll come back to those tools and expenses in a moment. What is a freight forwarder? They are independent. contractor who works under a broker or brokerage and operates under the MC and authority of that broker, they generally operate on a direct commission under that broker and 50 to 70 percent of the gross do not need authority, do not need their own bond and they don't need their own insurance their main job is to find more carriers and develop more business below that job function there are also other responsibilities for freight their need to quote they need to price the loads they need to book carriers track and trace loads and they deliver them on time and in good condition.
how to become a freight broker a freight agent or a dispatching service  2020
Typically a much smaller set of responsibilities than they would have if they opened a full brokerage. What is now a dispatch service where many people can be? What is confusing is that they are not intermediaries and they are not

agent

s; They are normally individual entrepreneurs or a group of people who contract with transporters. These carriers are typically smaller fleet or owner-operations and their job is to fetch more loads from them and help with paperwork processing and billing so drivers and carriers can focus on what they do best. They typically earn around five percent commission. Now the FMCSA classifies them as unauthorized intermediaries because they are freight co-brokerers without their own account. or under the authority of anyone else, okay, which technically makes them illegal.
how to become a freight broker a freight agent or a dispatching service  2020
Now these are not my opinions and I'm certainly not suggesting that anyone should or should not pursue or use one of these, I am saying that this is a very gray area and if something goes wrong they are not operating under legal authority which definitely increases its risks, we now return to the other tools, expenses and responsibilities of brokers. One of the things we see most often is that people underestimate the amount of time and money it takes to do these things, for example a freight forwarder is only responsible for making cold calls, developing new relationships and booking those loads, but a broker, on the other hand, in addition to making 60 to 80 cold calls a day, now has to learn how to develop and manage his accounting. billing protocols your billing to carriers your billing to customers and the reconciliation of these invoices and all ancillary charges establishing these protocols for the creditworthiness of the customer how much and for how long you will extend credit to any of the carriers you are will work with you and by the way, you will also have to pay bad debt expenses which in many cases a shipping agency will be willing to take on for you, you know that's the risk your carrier runs or your customer just doesn't will pay you for the work you've done now, you'll also need to learn how to evaluate a transportation management system from scratch, which for someone working with an agency at the beginning means I just really need to learn what one of these are and how to use them as tool, but if you are going to own your own brokerage, this involves learning how to evaluate it, pay for it, and in some cases integrate it with your accounting protocols, a much larger set. of responsibilities and many more things to learn from the beginning, now which one is right for you.
We've all heard the statistics that many businesses fail in the first, you know, first two or three years. That's because a lot has to happen to run a business and we've barely scratched the surface in this video. What's important to remember is that there are many ways to see if owning a freight forwarding agency is right for you and they don't all involve the same risk as jumping into a full-fledged brokerage. Now, the agency model, for example, is designed for the aspiring agent to really get her feet wet without having to dive headfirst into the deep end she's likely to be able to negotiate. more than 70 percent of gross commissions and avoid having to learn and understand every other aspect of the business while learning a completely new industry.
Whichever option you choose, we will be here for all your training and education. needs and if there's a topic you'd like us to cover either on our podcast or in an upcoming training video, share it in the comments and remember whether you think you can or not, you're right.

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