Are You Exploring Freight Broker Agent Job At A 3PL?
What if I could guarantee you a new career as a truck broker or a freight broker agent in two weeks making good money, would you believe it?
An Exploration of Freight Broker and Truck Broker Agent Careers
For those considering a lucrative career as a Truck Broker or a Freight Broker Agent there are a whole slew of Learn How's, Become A, or Work from home courses and training materials that promise a rewarding career, quickly and easily.
Don't, good things take time, focused effort and a measure of initiative? Take these promises with a grain of salt before shelling out the money for these sorts of training courses and know these key elements before you quite your day job.
- Know that unless you are in the industry, have contacts, money backing and a whole host of other elements you might find it difficult to hit the ground running making the kind of money you expect.
- If you are new to the career you will need to budget time and resources, (money), to not only run your business if you choose to be a broker vs. an agent as well as to cover your living expenses.
- That the job market for new broker agents with no experience (no client book or related experience/ clients) is difficult as many established good reputation 3PL's are looking for experienced freight broker agents with client following as these positions are commission based and have the greatest earning potential.
- New brokers with no experience in industry, starting a new brokerage need to be aware of costs, licensing requirements and the time involved. To start it would be wise to start with shipper clients in place, financial backing for what is required of a full blown brokerage and enough liquid funds on hand to sustain you for a reasonable time until your business generates billings & cash flow that can meet your business and personal expenses.
So again nothing good comes easy, it takes work, knowledge and understanding to succeed, but there is money in them there hills you just have to walk before you can run.
Topic Focus: We are going to address working as a freight broker agent but we will touch on some of the aspects of being a broker. We will give you some reasonable explanations of what the responsibilities are for a broker or broker agent and what to watch out for when choosing to work either directly, open your own freight logistics brokerage or being an independent broker agent under the umbrella of a 3PL (Third Party Logistics) in the following sections of this article
You might already be on your way to being a broker or broker agent!
If you are currently in the field as a truck driver, shipping agent or dispatch agent or are a "truck broker" working as a base salary plus commission employee and want to earn more while not having the responsibilities of being a broker, you already have the basic tools to work with an established, good credit 3PL as a Freight Broker Agent to achieve in many cases greater growth and income potential. For those who are broker agents with good resources, client list and can handle all the administrative, legal and other elements required you are also in a good position as well to take the next step and have your own 3PL or freight/truck broker business.
Is the freight broker agent job or transportation logistics industry saturated?
In the United States alone we experience a net gain of one person every 13 seconds. Wow, this is incredible when you consider today at the time of this writing the U.S. Population Clock projects 303,431,751 people inside the U.S. With this kind of growth the according to PEW Research Center we are projected to have over 438 million people within our borders by the year 2050. With the additional population and their demand for goods we add a greater burden to our logistics requirements to get those goods to market in a cost effective and efficient manner.
News & Information: 3PL, Broker Agents
- 3PL Trends & Market Segment Report
Global Fortune 500 3PL market at $162 billion. Report by Armstong & Associates,Inc.
- Distribution/Logistics Salaries Report
DC Velocity article on salary recovery trend in 2010 based on industry and job title as well as geographic location information.
- 2010 3PL Logistics Study - Services, Demand And Issues
Comprehensive report on the 3PL logistics industry. Details include: how providers are responding to market demand, emerging markets, 3PL freight brokering industry future, technology and management topics.
- Who's Hiring Freight Broker Agents
Example of a reputable 3PL who's hiring experienced Broker Agents. Note especially the blog post about one broker agent who worked direct and took the dive into working as a self employeed broker agent with a 3PL.
This growth in goods demand has fueled an increase for skilled brokers or intermediaries (known as 3PL's) to meet the needs of a growing population .
Many large and small businesses are moving their shipping to outside shipping sources (outsourcing). They find that they can reduce their operating expenses and ship their products more quickly and efficiently. When they outsource their shipping, they contract to reputable 3PL's or work with broker agents who have the backing of a reputable broker that has reliable carriers, and can move their loads with minimal lag time and or problems. This is where Freight Brokers enter the picture.
Doing Business as a Freight Broker or Freight Broker Agent What's the difference?
Whether you are the freight broker or the agent of the freight broker you have a differing set of responsibilities. The similarity is that you need to be an independent achiever, good at building relationships and have attention to detail.
Freight Broker Agents
Agents work under contract to the Freight Broker and receive commissions for serving as the intermediary between the shipper and carrier.
- Office set up, ie computer, phone, fax.
- Software to support your accounting & shipping scheduling.
- Funds to market & advertise your services. (independents')
- You need to find the right organization that you can work successfully in, either on site or independently out of your on office, primarily your home.
- Business license: either as a sole proprietor, LLC or Corp. Note LLC or Corp.
- Business liability insurance - E & O (error and omissions) - carry your own policy as an additional layer of protection beyond what your 3LP offers.
To work as a Freight Broker you need
- Business licenses, LLC's or Corp setup the business operations.
- Obtain your license - Federal Motor Carrier Safety Administration.
- Maintenance of a $75,000 surety bond or trust fund.
- Line of credit from various financial institutions $250,000 to $300,000 to pay carriers before receiving payment from shippers.
- A BOC-3 credential from an associated vendor.
- Legal agreement documents for carrier/broker.
- Recommend E&O and liability insurance.
- Funds for advertising & marketing.
- Computers, software phone systems to support your operations.
- Join industry associations.
Freight Broker responsibilities
- Financial responsibilities of making sure your receivables are managed.
- Operate as a fiduciary between the parties and the responsibility requires that the Freight Broker is licensed. Licensing includes authority from the Federal Motor Carrier Safety Administration, (FMCSA), of the Department of transportation, (DOT). Freight Broker authority includes: A motor carrier number, called the MC# o From the FMCSA Maintenance of a $75,000 surety bond or trust fund o From various financial institutions A BOC-3 o From an associated vendor. Once a Freight Broker is setup with these credentials they are good to go and are legal to perform brokering operations between shippers and carriers.
- One of your core requirements as a Freight Broker is to insure that shippers are paying their bills in a timely manner and that your carriers are being paid promptly to cover their real-time expenses associated with moving your freight obligations. The financial operations of the business are one of the most important aspects and one should consider this carefully when determining ones position in the Freight Broker profession.
- A reputable broker is one who has a good credit score and pays his or her accounts in a timely manner. Most Freight Brokers in the industry today started out as Freight Broker Agents working under the licensed and bonded Freight Broker.
- Freight Brokers use home based Freight Broker Agents to expand their business reach and build their business operations and contacts.
We Recommend These Books: Logistics, Supply Chain Management And Business
Is being a Freight Broker Agent right for you?
As a Freight Broker Agent you perform the same duties as the Freight Broker under the watchful eye of the Broker. It is important to realize that as the Freight Broker Agent you are the responsibility of the Broker, everything you do as a Broker Agent needs to be monitored somewhat by the Broker to insure it meets the guidelines of the FMCSA. Your transactions as a Broker Agent are covered by the Broker's bond and BOC-3. The buck stops with the Freight Broker so it is important to keep the relationship clean and error free with each transaction.
So as a freight broker agent, to begin you need to find a reputable, honest, broker to work with. A reputable broker pays all parties to your transactions and pays you your hard earned commissions in a quick and timely manner. Prompt and timely payment is very important to the success of broker agents because if you are late or checks bounce to your carriers, soon you will find you have no sources to move your loads and carriers will go with the Brokers who pay on time. This effects your bottom line and means you don't get paid on time as well.
Day to Day Operations - Freight Broker Agent Traits
Let's say you decide to become a Freight Broker Agent, considered a good place to be in the industry as discussed above. As we have indicated being an agent is basically the same as being a broker without the fiscal or financial responsibilities associated with the shippers, carriers, and your commission. With this being taken care of by your reputable broker you can focus on building your brokerage business. This consists of several things that you need to do well on a day to day basis.
- Negotiation Skills: First you need negotiation skills to work with and build relationships with both shippers and carriers as you are negotiating price, timming and details between the shipper, carrier & broker. A good Broker believes in strong personal relationships with the customers as the essential component to sustain asuccessful operation. As the Broker Agent you carry the Broker's torch to accomplish these objectives.
- Trustworthy & Honest: Business creditability is a must and is established by, the credit strength of the broker or 3PL, all bonds, trust and insurance documents are in place. The rest is up to you and your reputation to solve the shipping needs of your clients requirement as they arise on demand. Honest prompt communication between all parties is a must have trait, even if the news is bad such as the occurrence of an accident, truck break down etc.
- Have Great Carriers/ Trucker Sources: On the other hand in order to ship goods you need carriers (trucks). The Broker Agent and the carrier's sign a broker/carrier agreement for load transportation. It is important to work with reliable carriers who diligently attend to the detail of moving the covered load. It is up to you to develop well established carrier relationships, this is done by, paying fair market for carrying your loads, prompt payment to your carriers, keeping them busy which helps them with their business including helping with backloads or backhauls.
The process: The Broker Agent establishes the relationship with the shipper using the Broker's credentials and correspondingly establishes relationships with carriers who are available to carry goods. When a shipping order is taken the Broker Agent springs into action to find the appropriate truck resource to move the goods for the shipper from point A to B. Once the shipment is delivered by the carrier the carrier bills the broker The invoice includes the bill of laden and many carriers want be funded at time of delivery (Brokers front this expense). The Broker then bills the shipper and collects the monies which is typically 30 days out., or net 30.
3PL Pay Comparison: A 5 years of experience broker agent working with the right 3LP.
Example: Broker Agent runs an average of $30,000 gross profit in loads a month at a 55% commission structure. Wow, the Broker Agent would make $16,500 a month or $198,000 per year! ( the $30,000 in loads per month is a low ave. figure for a 5 yr. broker agent with a client list at a reputable 3PL firm)
You can see the lure of this career especially if you are an experienced freight broker agent job!
Expected Pay Commissions for independent Broker Agents : You need to be paid fairly for the efforts, skill, experience and clients that you bring to the job at hand even though you are working under your brokers flag, this is your business and livelihood. There are two types of broker agents, and the pay differs between the two.
- Independent Broker Agents - Commission: You can expect to be paid 50-65% of the gross profit proceeds of the transactions you bring in minus the carrier costs. It is important that the Broker that you contract with has financial strength to keep everyone paid and the relevant financial institutions happy.
- Employee Type Broker Agent- Depending on the type, size of the logistics company there are positions where you are a direct employee where most are compensated with a base pay + commission. Note:if you have no shipper clients or experience this is a good position to start with but often salary agents are under a non compete agreement which makes it difficult to transition to an independent broker agent position because clients remain with the company.
The below graph results are from a voluntary survey of industry specific segments conducted by Payscale.com (* note keep in mind that most surveyed within the logistics industry are from direct employee type companies.)
Interpretation: Direct Freight Broker Agents with 5+ years experience; pull a higher average pay rate with a 3.5% increase in salary.
Watch out for: When you see Brokers advertising commissions higher than 50-65% make sure you read your contract agreement carefully and do your due diligence on the broker and his or her operation to insure they are credit worthy and that your hard earned shipper client book is protected.
There can be no worse fate than to sign an exclusive Broker Agent agreement with a Broker who is in financial trouble or whom may take ownership/access your shipper book under guise of the inflated rate and extreme bonus constituted a sale (of your data).
The failure of your broker to pay your carriers and collect from your shippers will quickly torpedo your business opportunities, prospects and reputation. The best Freight Brokers are interested in your success as a Freight Broker Agent and are available to support your efforts with no hidden agendas or funny pay/commission schemes. for example, we train you, you work for considerably less than industry standard for a year or more and more so, the exclusive or non compete, work for hire type contract which means that they own the client relationships that you develop and you can't take them with you if you want to go independent.
Consider the following when looking into your Freight Broker Agent positions:
- Does the Freight Broker have a good reputation?
- Does the Freight Broker have a good credit score?
- Do Freight Broker Agents like working with the Freight Broker?
- Is the compensation package fair 50-65%?
- Are there hidden fee's and or what is (if any) their charge back policy.
- Does the broker pay on performance or receipt of shipper payment?
- Does the Freight Broker free tools and resources to make your work easier?
- Is the Freight Broker Agent agreement fair for all parties?
- (Most Important) Is the Freight Broker a person you can see yourself working with successfully?
- Does the Freight Broker offer assistance and support if necessary?
- Does the Freight Broker have a good marketing plan to help support your operations?
Answer these questions when you look to find the best and most profitable operation for your professional efforts.
Recommendation For Those Thinking About Being A Broker Or A Broker Agent
For Brokers: Most established Brokers were Brokers Agents at one time. The complexities that go with running any business require experience and know how. On the job training is the best way to get the relevant experience to determine if you have what it takes to be a Freight Broker.
So the recommendation to start as a Freight Broker Agent is valid in that you can focus on one slice of the business that is considered the most important aspect of the business, relationship building. Once you establish your ability to do this well you can then consider taking the next step to owning and running your own independent Freight Broker operation. You will find that many Broker Agents prefer to remain such and leave all the other associated financial, administrative and daily responsibilities to the Broker.
New to the industry:
While just starting out, with no contacts or book, no specialty niche or you need the surety of a guaranteed check and benefits a direct employee pay + commission might be the option for starting out. Many who start this way soon find that once they gain the experience, established contacts that it is financially far superior option to work as a independent Broker Agent even with buying their own benefits and office set ups.
Vertical Industry Experienced: Getting or having core experience as a shipping clerk, dispatch agent, truck driver would be a good start for independent broker agents because you have had contact & relationships with shippers & carriers that you could bring with you. You will find a job with a well qualified 3PL much easier with this experience in your background. You could negotiate a on the job training period to learn the administrative responsibilities, tools and methods as well as set up your office and begin working with or marketing to your contact list.
- Make sure that you are not under a non-compete arrangement if you intend to use the contacts you've made on the job.
- Before you make the jump to independent agent, poll some of your contacts to see if they would move their freight with you. This will give you an idea if you'll have business to start with.
Company direct based Broker Agents or other 3PL experienced broker agents: Before you make the jump into working as an independent
- Make sure that you have the right to market or broker your current client shipments. Meaning that you did not sign any legal documents/ non-compete agreements with your employer such as a work for hire or that all clients that you serviced were proprietorial to the company.
- Have a copy of your shipper data and carrier relationships - this is the core of your business as a independent freight agent and how you'll derive an income.
- When applying for a independent freight agent position, be prepared to demonstrate that you have active shippers and carrier relationships.
- Know your numbers. Know what your average monthly gross profit and margins are as this information further demonstrates your ability as a freight agent as well as the logistics company potential support/ financial responsibility.
In this hub page we have looked into aspects of being a Freight Broker Agent. In the process we have covered the differences between being a Freight Broker and a Freight Broker Agent to provide a foundation to consider when entering the industry or making the transition between Freight Brokers. In addition we have tried to dispel the myth that you can be a successful Freight Broker in as little as two weeks, we think it could possibly be two years or more depending on your individual aptitude.
We caution those who are starting out in the industry that finding reputable training organizations and Freight Brokers may be difficult and to be sure to pay particular attention to what the company offers with diligent research and investigation on all contracts you sign.
In closing we have provided guidelines on selecting a Freight Broker organization that you should consider when making one of your most important decisions. We hope you have found this hub page information and wish you the best of luck with your Freight Broker Agent career.
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