So I guess the question we should start off with today is:
What is a broker?
I found a very good and accurate answer at wisegeek.com. It is long and lengthy, but here it is:
What is a broker?
I found a very good and accurate answer at wisegeek.com. It is long and lengthy, but here it is:
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 in filling their trucks and earning money for transporting a wide variety of items. For their efforts, freight brokers earn commissions.
Freight brokers use their knowledge of the shipping industry and technological resources to help shippers and carriers accomplish their goals. Many companies find the services provided by freight brokers indispensable. In fact, some companies hire brokers to coordinate all of their shipping needs.
One thing not mentioned within this explanation is that some trucking companies are freight brokers.
Many larger carriers such as Landstar and Prime, for example are freight broker companies and are registered as such. They primarily supply their own company trucks or contractors solely contracted to them with loads, but also supply other smaller carriers signed on with them.
Prime, for example has RTD and Regnum Transport signed on underneath them in this department and another 30 or so other carriers ranging between 1 and 30 different trucks. They also sell loads to other carriers for a brokerage agent fee when they have an over abundance of loads. So that being said:
what does a broker typically earn off of a load?
Brokering is a commission and percentage based industry.
According to Entrepreneur.com there are two ways for which a broker is paid:
Many larger carriers such as Landstar and Prime, for example are freight broker companies and are registered as such. They primarily supply their own company trucks or contractors solely contracted to them with loads, but also supply other smaller carriers signed on with them.
Prime, for example has RTD and Regnum Transport signed on underneath them in this department and another 30 or so other carriers ranging between 1 and 30 different trucks. They also sell loads to other carriers for a brokerage agent fee when they have an over abundance of loads. So that being said:
what does a broker typically earn off of a load?
Brokering is a commission and percentage based industry.
According to Entrepreneur.com there are two ways for which a broker is paid:
Your income is generated by the commissions you earn on each load. You'll be paid one of two ways: You can bill the shipper the amount you're going to pay the carrier plus the amount of your commission, or the carrier can bill the shipper directly and then pay you a commission from its revenue. The most common way to handle billing and commissions is to have the carrier bill you and then you bill your customers.
Your commission is negotiable, and you can get whatever the traffic will bear. The average broker's commission is between 5 and 11 percent of the shipping charges, sometimes higher. Keep in mind that your commission is your gross revenue, and out of that you must pay your overhead: rent, taxes, payroll, sales commissions, utilities, debts and so on. Ron W. estimates that most brokers are lucky to earn a net profit of 1 to 2 percent after expenses.
It is really a difficult business especially in a downed economy, but provided you understand your freight lanes and have good contacts (especially this! starting out as a truck driver will give you these contacts!) you can still do really well.
How do I know if I am paying a broker fee?
If you are a company driver and paid by the mile, you will never know and nor will it affect you if the company you work for is paying a broker for your load.
However, if you are a contractor or a small trucking company, if there is a broker fee it will be included with the settlement from you broker or the carrier you are contracted through. It should be also included in the price break down given to you before you commit to a load.
Where can I find a broker?
Well, as I mentioned before, many of the larger motor carriers have their own brokerage licenses, but if you prefer to go local so you can meet and get to know the person you are dealing with, then a lot of smaller agencies have websites which you can access them through. However, be weary, there are many different types of brokers and not all of them are reliable.
So, whether you are a trucker, a motor carrier, a shipper at some point you will deal with a broker so i hope this info helps you. Safe Driving!
How do I know if I am paying a broker fee?
If you are a company driver and paid by the mile, you will never know and nor will it affect you if the company you work for is paying a broker for your load.
However, if you are a contractor or a small trucking company, if there is a broker fee it will be included with the settlement from you broker or the carrier you are contracted through. It should be also included in the price break down given to you before you commit to a load.
Where can I find a broker?
Well, as I mentioned before, many of the larger motor carriers have their own brokerage licenses, but if you prefer to go local so you can meet and get to know the person you are dealing with, then a lot of smaller agencies have websites which you can access them through. However, be weary, there are many different types of brokers and not all of them are reliable.
So, whether you are a trucker, a motor carrier, a shipper at some point you will deal with a broker so i hope this info helps you. Safe Driving!