Are you considering opening up your own freight broker business? If so, there are some things you must know according to a recent article from Entrepreneur. Among the first things you should know about starting your own freight brokerage is that you should first gain experience in the industry in order to not only gather technical expertise, but also to make contacts that are vital to your success.
It is important also to understand the economics of the industry so that you can negotiate terms with your shippers and carriers. In addition, you need to understand the record-keeping that is required of brokers. For every transaction, your records must show the name and address of the shipper; the name, address, and registration number of the originating motor carrier; the bill of lading or freight bill number; the amount of compensation received; a description of any non-brokerage service performed in connection with each shipment and the amount of compensation and name of the payer connected to that non-brokerage service; the amount of freight charges collected by the broker and the date of the payment to the carrier.
New freight brokers should understand the importance of developing solid banking relationships, as well. New brokers often need a line of credit or factoring company in order to pay for their expenses before they receive payment from their customers, the article stated.
Before you start your business, you will have to register with the Federal Highway Administration. Registration consists of paying a filing fee, filling out an application, obtaining a surety bond or trust fund, and designating an agent for service of legal process. Once you’ve registered, you will receive your permit with an MC number. At that point, you’re legal to operate as a broker in the U.S.
The transportation and logistics industry has been hit hard in recent months with many court cases and large verdicts awarded against logistics companies. It is always important to consider purchasing insurance coverages. As a Freight Broker the coverages available will help stabilize you bottom line by providing coverage for unforeseen legal costs and expenses.
For more information on starting a freight brokerage, contact us.