What is a Freight Broker?
A freight broker is legally a “property broker”, which is the term established by the Federal Motor Carrier Safety Administration (FMCSA), a division of the United States Department of Transportation. It describes licensed individuals, or corporations, that help make a shipper and an authorized motor carrier successful in the transporting of freight.
A freight broker is an individual or company that serves as a liaison between another individual or company that needs shipping services and an authorized motor carrier. Though a freight broker plays an important role in the movement of cargo, the broker doesn’t function as a shipper or a carrier. Instead, a freight broker works to determine the needs of a shipper and connects that shipper with a carrier willing to transport the items at an acceptable price. To operate as a freight broker, a business or individual must obtain a license from the Federal Motor Carrier Safety Administration (FMCSA). Freight brokers are also expected to carry insurance to protect both their business clients and their customers from loss. In many areas, freight brokers are required to carry surety bonds as well. Freight broker services are valuable to both shippers and motor carriers. Freight brokers help shippers find reliable carriers that might otherwise be difficult to locate. They assist motor carriers
A freight broker is legally a “property broker”, which is the term established by the Federal Motor Carrier Safety Administration (FMCSA), a division of the United States Department of Transportation. It describes licensed individuals, or corporations, that help make a shipper and an authorized motor carrier successful in the transporting of freight. What are the requirements to be a Freight Broker? There are three legal documents needed to operate as a freight broker. They are: · A Broker’s Authority – through the FMCSA – $300 fee. You fill out Form OP-1 and file for your authority to operate as a broker. · Surety Bond or Trust Fund – obtained from a bank or bonding company. The cost varies depending on your personal credit. You are required to carry a $10,000 bond or trust, but if your credit is good, some companies will put up your bond for you for a fee (normally $500 to $700 per year). The form filed with this is BMC-84 or BMC-85. · Processing Agent – This runs approximately $50,
Very simply, it’s an individual or a company that brings together a shipper that needs to transport goods with an authorized motor carrier that wants to provide the service. A freight broker falls into the category of transportation intermediary, which is a company that is neither a shipper nor an asset-owning carrier, but plays a role in the movement of cargo. Brokers provide an important and valuable service to both motor carriers and shippers. They help carriers fill the trucks and earn a commission for their efforts. They help shippers find reliable motor carriers that they (the shippers) might not have otherwise known about. In fact, some companies use brokers as their traffic department, allowing the broker to coordinate all their shipping needs. Back to the top.
