A Freight Broker's Path to Success
Freight demand has been regaining momentum following the initial disruptions of the pandemic and is now reaching an $800 billion industry in the USA. With constrained truck capacity supporting freight rate increases, this is a great time to be running a freight broker company. However, technological advancements such as dynamic pricing have created increased flexibility, adaptability, and transparency in the freight market. Shippers can match loads with approved carriers at competitive prices, and carriers can position themselves in the right place at the right time for more effective freight procurement. To remain relevant and profitable, a freight brokerage needs to connect customers with quality carriers that are professional, punctual and reliable. In addition, freight brokers must also provide value-added services to shippers by saving time, resources, and money.
So, what do you need to do to be successful as a freight broker? Follow the seven steps listed below to chart your path to success.
Step 1. Get experience and never stop learning
You can’t manage what you don’t know. The first step successful freight brokers take is to gain experience in freight transportation. While some may have experience in logistics roles, working with a trucking company as a truck driver is the best on-the-job training to learn the trade and what freight brokers do. Expanding this experience by attending a freight broker training course to learn the fundamentals, how to deal with shippers, and how to handle different shipping rate negotiations is a great option. It takes 30 to 45 days to complete freight broker training – most are available as self-study courses online.
Operational issues frequently occur during freight transportation. Having the knowledge and experience to react quickly and efficiently when an issue arises is critical to the success of your freight broker business. Never stop learning – participate in online forums or read publications on shipping, trucking, and logistics. Look for conferences, webinars, news articles, and classes for freight brokers that can help you stay current and able to act quickly when service issues arise. In other words, never stop learning about the industry you’re working in.
Step 2. Know the market and let the market know you
Market conditions are in constant flux and can change on a dime impacting the industry’s cost and capacity to deliver freight. Knowing the market and the unique characteristics of the lanes your freight broker company services are critical.
Develop a business plan and focus on a niche market. Become experienced in a particular mode of transportation that other carriers may not have, or dominate a lane to outperform the competition. Knowing equipment availability, weather, seasonal shipping, and lane history are important considerations when negotiating rates and delivery times. It is of crucial importance to be on top of pricing. Freight demand may be high, but the market is chaotic with supply chain disruptions continuing, and competition remains fierce.
Having established a market position, it is essential for freight brokers to develop a marketing strategy. Raising brand awareness is essential to becoming a successful freight broker company. Decide what platforms will get your marketing message across the best. A common starting point is to list your freight broker business with online directories that will direct potential shippers and carriers to your website. No matter what marketing approach you use, never stop prospecting. Don’t make the mistake of waiting for the phone to ring with new business. Be proactive and get your name out there! Successful brokers should have active social media pages and an established presence in search engine business indexes or directories.
Step 3. Build carrier relationships
Building a network of reliable carriers is the foundation for your freight broker business. Select carriers that are professional, safe, and have experience working within the operational parameters you have selected for your business. The best way to start searching for carriers is to check online directories or use referrals from other transportation industry professionals in your network.
Having selected your carriers, it is essential to win their loyalty to maintain the level of service you need to pass on to your customers. The best way to do this is to exceed carriers’ expectations for payment. Partnering with a reputable freight factoring company is an excellent strategy for managing cash flow and ensuring carrier payments are accurate and paid quickly. eCapital’s carrier payment services for freight brokers is the obvious choice as the best carrier payment program available. Simply submit invoices and supporting documents for each load – eCapital pays the carriers and broker fees without delay.
Program benefits include:
- Establish solid carrier relations with fast payment for services provided.
- Improved cash flow. No more chasing customers for payments.
- Gain additional revenue with Quick Pay options to your carriers.
- Extend benefits to your carriers with cost-saving fuel cards and unlimited free credit checks.
- A dedicated account manager will streamline the entire process.
Step 4. Communication is a key role of your job
The core of your success will be excellent customer service. That means reliable and safe pickup and delivery, good rates, and effective communication. Once a carrier is in your network and hauling freight, stay connected with apps and electronic communication. Monitor shipment carefully with telemetry, load location and carrier GPS systems. A key role for freight brokers is to stay in contact with your carrier network and provide timely status updates to inform your customers where their shipments are at all times.
Step 5. Invest in technology
Using technology to automate processes allows you to focus on growing your book of business and develop carrier relationships. The most successful freight brokers constantly discover and implement new tools that can make their jobs easier. The technology for scheduling, instant pricing, and business analytics exists to help freight brokers streamline their business operations. Do your research and choose the best transportation management system (TMS) for your freight brokerage. Stay current with technological developments and keep investing in technologies that provide a competitive advantage.
Step 6. Know the cost of business and keep overhead low
Startup costs for establishing a freight broker company are relatively low compared to other industries. To start operating, all a freight broker needs is a computer, a dedicated cell phone for business operations, and systems that enhance process efficiencies. These expenses, coupled with licensing requirements, can range from a few hundred to several thousand dollars. In addition, when you apply for your MC authority, you’ll also need to get a freight broker bond. This $75,000 bond guarantees that your broker company will apply all necessary rules and regulations when you start moving loads. You won’t need to pay the entire bond, only a percentage based on your credit score.
To be competitive and profitable, keep your overhead cost low. Work from home and keep a sharp eye on costs, cutting out any expense that does not ultimately contribute to enhancing your bottom line.
Step 7. Keep the cash flowing
Maintaining adequate cash flow and having access to working capital to pay carriers before your customers pay you is one of the greatest challenges freight brokers face. Unless you have a healthy cash reserve on hand, you will likely need a line of credit, or some other form of financing. Banks are reluctant to extend credit to small businesses and particularly wary of lending to trucking companies. For this reason, a growing number of truck company owners and freight brokers are turning to freight factoring as their preferred cash flow solution. eCapital Freight Factoring is a growing leader in transportation financing, delivering more money, faster access with less hassle. Qualification is fast and easy and account setup is within 48 hours. Simple document submission triggers fast broker fee remittance and automated net 30 day carrier payments. For an additional revenue stream, take advantage of eCapital’s Quick Pay option for carriers – payments within 24 hours for them, additional fee revenues for your freight brokerage.
Now is the time to be successful
Today’s economic environment is prime for building a robust freight broker company. A successful freight broker has the potential to yield high annual revenues with great profit margins! Strengthen your position to prosper — build relationships, control cash flow, and partner with industry experts that are willing and wanting to help you succeed.
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.