Freight brokers work as intermediaries between shippers and carriers, helping facilitate the transfer of goods from one location to the next. As the trucking industry experiences sweeping change thanks to technology, becoming a licensed freight broker provides an opportunity for a lucrative career. Freight brokers who take the time to understand business and licensing requirements, cultivate relationships with potential customers, and market their business successfully can make a stable living over time. The earning potential for a licensed freight broker depends on several different factors, however, as well as how much it costs to get a business up and running and maintained over time.
According to the most recent statistics from PayScale, a licensed freight broker earns an average income of just over $41,000 per year. This income is comprised of many different components, though, including a base salary, bonuses, and commissions. Here are the ranges for licensed freight brokers in each income category:
- Salary for a freight broker: between $31,000 and $66,000 per year
- Bonuses: between $1,000 and $24,000 per year
- Commissions: between $2,000 and $35,000 per year
The amount of money a freight broker can make in any given year depends on his or her level of experience in the business, the demographics of customers with which the broker works, and the location of the brokerage. However, for licensed brokers who work for themselves, the earning potential can be even higher than those listed above. There are, though, several cost components that play a role in the income of a freight a broker who runs his own business.
Start-up Business Expenses
For new freight brokers just getting started down this career path, the costs associated with starting a brokerage can eat away at revenue if there is not a plan in place. Some of the common costs of starting a freight broker business include licensing and application fees, registration fees with the Federal Motor Carrier Safety Administration (FMCSA), and equipment like a laptop or cell phone. Above and beyond these expenses, freight brokers must also go through adequate training, either in-person or online, with a reputable freight brokerage training school.
Although these costs are often less than a few thousand dollars combined, freight brokers must also consider their need for a broker bond or trust. All licensed brokers must secure a bond or trust in the amount of at least $75,000 in order to comply with federal regulations. This bond or trust is used to pay claims against the broker should a shipper or carrier have a legitimate issue with the business transaction with the broker. A freight broker trust requires the full $75,000 requirement to be paid into a trust and managed by a trust company over time. However, a freight broker bond only costs a percentage of this amount, renewed each year. Freight brokers who are just getting started in the business may be able to save costs by opting for a bond rather than a trust.
Ongoing Costs for Freight Brokers
Freight brokers who remain in business over a period of several years must are able to earn more than entry-level brokers. However, there are costs associated with ongoing business operations as well. Many freight brokers take advantage of technology tools that make managing scheduling and monitoring of loads far easier, and this comes at a cost to the business. Similarly, freight brokers may outsource services necessary to run an organized and sustainable brokers, such as bookkeeping, accounting, or compliance. Each of these services represents an additional, ongoing cost to the broker.
Marketing and advertising may also be an expense freight brokers pay. It is estimated that there are more than 17,000 licensed freight brokers currently operating in the United States, and that number is expected to grow over the next several years. As more options come into the market, freight brokers have to stay ahead of the curve by promoting their business to both current and potential customers. Having a marketing budget and plan is often necessary to achieve this goal.
The earning potential of a licensed freight broker is promising, even for new brokerage businesses entering the market. However, freight brokers must consider the up-front costs, such as licensing, bonding, and business operations, before diving into the business. The ongoing expenses of business services, marketing, and management of the brokerage also must be calculated to ensure income exceeds costs over time. If the cost of doing business is kept relatively low, freight brokers can make a sustainable living in the transportation and logistics industry.
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
Latest posts by Pauline (Posts)
- Need to Make More Money? 4 Types of Savings Lurking Right in Front of You - August 10, 2019
- How to be a Million Dollar Freelancer - August 8, 2019
- How Much do Freight Brokers Really Make? - July 27, 2019
- Are You in Crippling Debt? 10 Mistakes Made When Getting Out of Debt - July 13, 2019
- Stop Bleeding Money with These 4 Quick Financial Tips - July 9, 2019