How to Get a Freight Broker License 

Are you thinking about getting a freight broker license? If you want to operate as a freight broker you will need to follow the steps to get your freight broker license and freight broker bond. The Federal Motor Carrier Safety Administration (FMCSA) regulates freight brokers, and the laws and regulations that accompany the trade can be complicated. Fortunately, following a step-by-step guide is all you need to do in order to legally obtain your freight broker license. 

To apply for a freight broker license, you must first get a motor carrier (MC) number from the Federal Motor Carrier Safety Administration (FMCSA). The process, however, does not end after you get your license. It might be a long and arduous process to meet all of the legal criteria. The Surety Place is here to help you during the process of getting a Freight Broker License and Bond.

What is the role of a freight broker?

A freight broker is a middleman in the transportation industry. Freight brokers do not transport goods or have cargo to convey; instead, they function as middlemen between shippers and carriers.

It’s critical to recognize the distinctions between freight brokers and freight forwarders. A freight broker isn’t the one who handles the cargo. A freight forwarder takes physical possession of items that need to be sent, consolidates many minor shipments into one bigger cargo, and then arranges the transportation of that shipment. Although a company may provide both brokerage and forwarding services, we will concentrate on freight broker certification in this article.

What are the benefits of having a freight broker’s license?

Becoming a certified freight broker might be a wonderful decision if you appreciate flexibility, independence, and high-income potential. Obtaining a freight brokerage license has several advantages, including: 

• There is no earnings ceiling – As a freight broker, your income potential is only limited by your willingness to put in the work. Each cargo you successfully book and schedule for transport earns you a commission, and top brokers can potentially earn more than $150,000 per year. You may even create your own freight brokerage firm and manage a staff of freight brokers. Because it can cost quite a bit of money to get started, most people start out as independent freight agents.
• There is no need to commute or spend time on the road – Perhaps you’re a driver who’s fed up with missing birthdays and holidays. Maybe you work in a different field and want to reduce your travel or commute time. Become a freight broker if you enjoy the transportation sector yet want to work from home, regardless of your experience. To be successful, you must work hard, but you may also take time off as required rather than being restricted to a set amount of vacation or PTO.
• Low-cost initialization – You may get started for as little as a few thousand dollars, or even less if you work with a reputable freight broker. The idea is to start small as an independent agent and then gradually grow your business.

What are some of the difficulties of working as a certified freight broker?

There is no such thing as a perfect job or profession. Before we get into the nitty-gritty of how to obtain your freight broker license, consider the following obstacles you’ll have to tackle: 

Risk Management

Risk management is one of the most stressful aspects of any organization, and freight brokers are no exception. You could find yourself in a scenario where you have to pay the carrier first, then the shipper. When there is less work coming in, you may have a slow period. It might take a long time to establish yourself, so expect some ups and downs in your earnings.

Developing a Sense of Trust

In every sector, gaining client trust is difficult yet a crucial component to success. As a freight broker, you must demonstrate to both shippers and carriers that you are dependable and will not abandon them when they are in need. You must continuously win over new clients to develop a profitable firm, which can be difficult if networking isn’t your strong point. As the middleman, it is your job to make sure all parties are satisfied with your services from start to finish. 

Clauses in Contracts

You may be required to sign contracts containing legal language in order to conduct business with big carriers or shippers. Non-compete provisions, for example, might restrict your capacity to perform certain activities. If a consumer obtains a quote straight from the carrier and then wants you to match or beat it, you may not be permitted to do so. Before you sign any contract, have an attorney familiar with the trucking and cargo industry review the documents with you to ensure you comprehend and understand every detail.

When it comes to creating your own freight brokerage, there are various measures to take, such as keeping up with biannual changes and acquiring insurance and surety bonds. Take a look at our license guide summary below, which describes the process you must follow:

• Obtain your MC Authority from the Federal Motor Carrier Safety Administration (FMCSA) – The motor carrier (MC) number is required for your brokerage to be licensed. From start to finish, obtaining your broker authority will take weeks. As a result, get started as soon as possible.
• Receive a PIN –  You must first obtain a PIN from the FMCSA before you can begin the process of acquiring your MC Authority online. A valid credit card is required to apply for a PIN, however, no charges will be incurred. In 4-7 business days, the PIN will be securely sent to your company’s address.
• Fill out the following form to apply for an MC Authority license:
  • Your license, also known as an authority, is a requirement for becoming a registered freight broker with the FMCSA. You’re finally ready to submit an online OP-1 application for your MC Authority after you receive your PIN. Begin by choosing the first option, “New or Additional Registration,” and then fill out all of the required fields. The filing price is $300, and if you make a mistake and need to refile, you will not be reimbursed. As a result, double-check all of the information before submitting it!
  • If you want several licenses (for example, to be a broker and a carrier), you must apply for each one separately and pay $300. Your ICC authorization will take 4-6 weeks to process, however you may check the progress of your application at any time. If you’re a carrier involved in interstate commerce, you’ll need a DOT number, which you may get by filling out an MCS-150 form.
  • Submit Biennial Updates: Once you’ve received your DOT registration, you’ll need to submit an MCS-150 form online for a biennial update. Fortunately, this procedure is completely free.
  • Even if your company’s information hasn’t changed, interstate operations have ended, or it’s no longer in business, you must give this update.

 

Consider Training Opportunities

Although it is not required by law, completing a freight broker training program can help you succeed. Look for an online training course or read one of the numerous training books available. If at all feasible, acquire some hands-on experience at an existing freight brokerage firm. Spend time honing your abilities and expanding your knowledge. 

Decide on a Company Structure

Freight brokers can operate as a single proprietorship, partnership, or corporation, among other company structures. Each has its own set of tax ramifications and paperwork obligations. Because your business structure might have far-reaching, long-term consequences for your firm, it is strongly advised that you get advice from a business attorney and a tax specialist before making a decision.

Submit an Application for Broker Authorization

The next step is to apply for broker authority with the FMCSA using Form OP-1.  Other than deciding whether to apply for “Broker of Household Goods,” “Broker of Property (except Household Goods),” or both, the form is very easy. The filing cost will be $300 per type or $600 for both in 2020. You’ll obtain your motor carrier number straight away if you apply online, which you’ll need for the rest of the process.

Purchase a Surety Bond

The FMCSA requires a surety bond to guarantee that you follow all rules and regulations. The bond amount required for freight brokers is $75,000. However, you will only be responsible for paying the premium amount. Working with a national surety agency who has underwriting authority in all 50 states is the best option for those looking to obtain a freight broker bond. The Surety Place can help you get fast approval and an affordable rate for your freight broker bond. Surety bonds protect your customers or clients in the case that you do not obey all laws and regulations.

Decide on a Process Agent 

In every state where you create contracts, you’ll require a process agent. A process agent is simply someone who agrees to take any court documents that are served on your behalf if legal actions are filed against your company. Some freight brokers use state-by-state agents, while others hire a nationwide firm that provides process agent services in all 50 states. To indicate your choice of process agents, you must submit Form BOC-3 with the FMCSA.

Use the Unified Registration System to Register

The final step is to use the Unified Registration System to register with the FMCSA (URS). This method integrates all of the paperwork you’ll need to finish your registration into a single, simple online application. 

Following the completion of your URS application, you’ll need to familiarize yourself with any applicable state interstate commerce rules in the states where you want to do business. For further information, contact the regulatory agency in each state.

How to Register as a Unified Carrier 

The final stage in the legal process is to get your Unified Carrier Registration once you’ve decided on either the BMC-84 or BMC-85 (UCR). It’s easy and affordable for freight brokers, costing only $76. If you’re also a motor carrier, the cost of registration is determined by the size of your fleet. In any instance, you must re-register and pay the cost on a yearly basis. 

Fortunately, the registration system has just recently been changed. The UCR system is responsible for registering and collecting payments from interstate vehicle operators. This method allows you to register online at the UCR application page. 

It’s worth noting, though, that this system is now in place in all states besides Oregon, Wyoming, Nevada, Arizona, Florida, Maryland, New Jersey, and Vermont. If you work in one of the latter, you’ll need to go through a different registration process.

How to Get a Freight Broker License

The Surety Place has helped hundreds of freight brokers obtain their BMC-84 freight broker bonds. We make it easy to get started by giving free freight broker surety bond quotes, which are usually available within hours. Learn more about freight broker bonds and how to acquire one at a reasonable price by connecting with a team member today.