As you can imagine, I get a lot of questions about the cost to become a new freight broker or freight agent. So I put together what I consider to be the most comprehensive guide in the freight industry.
This cost analysis is based upon my 25+ years as an entrepreneur, 20+ years in the freight brokerage industry, as well as extensive online research.
- How Much Does It Cost To Become A Freight Broker?
- Freight Broker Startup Costs
- Freight Broker Startup Cost Survey 2023
- Freight Broker Startup Cost Summary
- 5 Ways to Lower Your Freight Broker Startup Cost
- How Much Does It Cost To Become A Freight Broker Agent?
- Freight Agent Startup Cost – Overview
- How long will it take to get back my freight broker or freight agent startup cost?
First decide if you want to become a freight broker or a freight agent?
1) You can file for your freight broker license, also known as a freight broker authority through the Federal Motor Carrier Safety Administration (FMCSA) or
2) You can become a freight agent first, which does not require you to get your freight broker license or your freight broker surety bond.
I strongly suggest that if you are new to the freight brokerage business or have limited experience, to get started as a freight broker agent.
Why starting as a freight agent might make sense?
Mainly because it limits your capital risk and allows you to earn while you learn. You’ll also save on startup costs because freight agents do not need a freight broker surety bond or a freight broker authority in order to get started.
The good news is, even if you start out as a freight agent you can always decide to get your freight broker license once you get a few customers and start generating profits.
In this article, I answer the question, how much does it cost to become a freight broker or a freight broker agent in 2023. I’m including a comprehensive list for both that are designed to help you decide for yourself how you want to get started.
I go over all of the freight broker agent and the freight broker startup costs, including one-time costs, recurring costs, and optional costs.
At the end of the article, I also share my freight broker profit calculator to help you do the math on how fast you can expect to earn back your investment.
How Much Does It Cost To Become A Freight Broker?
The short answer is probably less than you think. First of all, becoming a freight broker is more expensive than becoming a freight broker agent. That’s why many newcomers to the transportation industry start as freight broker agents.
The costs for new brokers include elements such as forming your corporation or LLC, getting your freight broker license, your freight broker surety bond, freight broker software, and freight broker insurance.
Let’s have a closer look at what this means for your costs.
Freight Broker Startup Costs
- LLC/Corp: $100 – $400 one time
- Freight Broker license / authority cost: $300 one time
- BOC 3: $25 one time
- Freight broker surety bond: $1,500 – $3,750 annually
- Freight broker training cost: $185 – $1,000 one time
- UCR: $59 annually
- TMS: $50 – $100 per month
- Load board: $50 – $150 per month
- General liability insurance: $300 – $1,000 per year (optional)
- Contingent cargo insurance: $100 – $400 per month (optional)
- Website: $250 – $500 one time (optional)
- Phone: $25-50 per month
One Time Investment: As low as $2,219
Recurring Cost: As low as $100 per month
Optional Cost: As low as $1,750 per month
1. Corporation/LLC & Business Structure
The first step you need is to form a corporation. The costs vary based upon which state you are in but you’ll notice they usually range from $100 – $400 one-time fee.
The #1 reason why you want to form a corporation for your freight broker business is to limit your liability. Without a corporation, owners can be liable for debts and liabilities of the business.
Filing for a corporation isn’t complicated either. Click here for a step by step walkthrough of “How to Form A Corporation”
2. Freight Broker Broker License / Authority Cost
You’ll also need a broker authority, this is often referred to as freight brokerage license. To file for your authority with the FMCSA, there is a one-time fee of $300 and it can all be done online.
3. Freight Broker BOC3
Another required freight broker fee is your BOC3. You need this as a requirement to get your broker authority. The one-time cost is $25.
A BOC3 is a federal filing in the United States that establishes a process agent which can accept legal documents on behalf of a freight broker, in each state in which the company is authorized to do business.
4. Freight Broker Surety Bonding Cost
You also need your freight broker bond, which is an FMCSA requirement in order to get your freight broker license / authority.
The freight broker surety bond is designed to prevent fraud and to ensure that motor carriers get paid by freight brokers on time.
This is the biggest startup cost associated with becoming a freight broker. The typical cost for a freight broker bond is 2-5% of the total bond amount.
The total freight broker surety bond amount required by the FMCSA is $75,000 – which makes your costs range from $1,500 – $3,750 annually.
5. Freight Broker Training
Next up we have freight broker training costs. The cost of freight broker training essentially depends on what style of training you choose.
My online training Freight Broker Boot Camp starts at $185 one-time cost and you get access to everything you need as a new freight broker or freight agent to get started. You could also try other training out there, most will set you back $1,000 to $5,000 or more.
I shared my thoughts previously in my #1 Guide to Freight Broker Training, where I break down the 3 best ways to learn how to become a freight broker.
6. Unified Carrier Registration (UCR)
Yes, every freight broker needs to complete the Unified Carrier Registration (UCR), a newer requirement that when starting a freight brokerage. The freight brokers UCR is currently $59 per year and can all be done online.
7. Freight Broker Software (TMS)
If you are going to be successful as a freight broker you are going to need a TMS, also known as transportation management software.
If you are a freight broker startup, you don’t absolutely have to have this and could operate without it early in your business.
You could handle managing your loads on paper since the volume is going to be very small when you first start. But sooner or later you are going to need a TMS to manage your process.
Luckily freight broker software is very affordable these days and ranges from $50 to $100 per month.
8. Freight Broker Load Boards
Next, we have load boards. A load board is an online hub where freight brokers and motor carriers come together. Brokers post loads and carriers post trucks and both parties connect and work together for mutual benefit.
It’s essential for any freight broker business. And while costs can vary depending on the load board, most start around $50 and $150 a month depending upon the feature you desire.
9. General Liability Insurance
As a freight broker, you may also want to have general liability insurance but it is not required. General liability insurance is an annual freight broker cost that typically costs between $300 and $1,000.
It’s always a good idea to have insurance if you can afford it because it protects you from common lawsuits that arise from everyday business activities. Freight broker insurance is an optional cost for startups.
10. Contingent Cargo Insurance
Next up, we have freight broker contingent cargo insurance. People ask me about this one all the time, particularly when it comes to the topic of how much it costs to become a freight broker.
To be clear, contingent cargo is not required by the FMCSA and is an optional cost. But a small percentage of shippers do require it in order to be an approved provider.
Contingent cargo insurance is additional insurance that supplements the carrier’s primary cargo insurance that each carrier is required to have by law.
Costs range from $100 and $400 per month but once again, it’s optional. Most freight broker startups begin their journey without contingent cargo and then add it as needed down the road.
11. Freight Broker Website
Having a website is optional, especially as a freight broker startup. But I would strongly recommend it. Creation and setup is a one-time cost which can vary widely but it’s not uncommon for new businesses to get up and running for $250 to $500.
12. Phone Service
For successful freight brokers, the phone is one of their most important tools. Since the advent of the internet, the cost of a business phone system has gone down dramatically.
Most freight broker startups rely on a low-cost VOIP phone system of which there are hundreds of options available.
Here is a short list of some of the top VOIP providers for small businesses and startups.
Plans usually start around $19.95 per month.
Freight Broker Startup Cost Survey 2023
In a recent survey of 273 freight broker startups here is what they said about freight broker startup cost.
Less than $3,000 = 37.05%
$3,001 – $4,000 = 13.86%
$4,001 – $5,000 = 15%
Over $5,001 = 37.64%
RESULTS: 65.91% of freight broker startups indicated less than $5,000 to launch their business.
Data accumulated from 273 freight broker startups on LinkedIn, Facebook and YouTube November 2023
Freight Broker Startup Cost Summary
One-time cost as low $2,000 – $5,000 depending upon your freight broker training cost and website choices.
The required recurring freight broker cost estimate is between $200 to $400 a month.
There could be additional recurring costs if you choose to get contingent cargo and general liability insurance, which are both optional and not required to become a licensed freight broker.
As you can see, becoming a freight broker has very low start-up costs. Especially, when compared to popular franchise businesses that start at $100,000 on the low end and go up to $1 million plus.
Imagine starting your own freight broker business, working from home, and generating 6 or even 7 figures, all without a college degree.
5 Ways to Lower Your Freight Broker Startup Cost
- Do not buy a brand new fancy computer. You don’t need one. As long as you have basic computer with internet access you have more than enough to get started.
- Don’t pay a lawyer to file your LLC or Corp. Most lawyers charge $500-$700 just to process the paperwork and that does not include the state filing fee. It’s easy and way cheaper to do it yourself.
- Reduce your broker bond cost by improving your credit. Dispute inaccurate data on your credit report including collection accounts, tax liens, judgements, etc. To get the best freight broker bond rates, your goal should be a 700+ credit score.
- Find a broker surety bond provider that will accept payment vs requiring annual premium upfront. Better to pay $600 a quarter than $2,500 upfront for your annual premium.
- Don’t overspend on your website. You can easily get your startup website setup for $250-$500 versus $2,500- $5,000, which is what most web development companies will try to charge you.
How Much Does It Cost To Become A Freight Broker Agent?
The costs difference between being a freight broker and becoming a freight agent are vastly different.
I think it’s important to show both because then you can decide which best fits your budget.
Fact is, you do not need to be a freight broker in order to break into the logistics industry, many freight agents earn a 6 figure income working from home.
Freight Agent Startup Cost – Overview
- LLC/Corp: $100 – $400 one time application fee
- Freight broker license / authority cost: NOT REQUIRED
- BOC3: NOT REQUIRED
- Freight broker surety bond: NOT REQUIRED
- Freight broker training cost: $185 – $1,000 one time
- UCR: NOT REQUIRED
- TMS: $0 – $100 per month
- Load board: $50 – $150 per month
- General liability insurance: $300 – $1,000 per year [OPTIONAL]
- Contingent cargo insurance: NOT REQUIRED
- Website: $0 – $500 one time (OPTIONAL)
- Phone: $25 – $50 per month
One Time Investment: As low as $175
Recurring Cost: As low as $75 per month
Optional Cost: As low as $800 per month
Corporation/LLC & Business Structure
When becoming a freight broker agent, it is optional, but recommended to set up a corporation like an LLC. The reason you may want to consider a corporation as a freight agent is to limit your liability.
It’s basically a shield to protect your personal assets like your home, for example. One time costs $100 – $400 depending upon the type of filing and the state you live in.
Freight Broker License / Authority Cost
Not required as you will work under a licensed freight broker.
Not required as BOC3 is not required for freight broker agents.
Freight Broker Surety Bond
As a freight broker agent, you are not required to have a freight broker bond because that is handled by the freight broker authority you are operating under. This is commonly misunderstood by people interested in learning how to become a freight broker agent.
Freight Agent Training
Similar to a freight broker, a freight agent is going to need training. The cost to become a freight agent can start as low as $185 with an online course like Freight Broker Boot Camp. Other freight broker agent training options can range from $1,000 to $5,000 or more.
The Unified Carrier Registration (UCR) is not required for independent freight broker agents.
Freight Agent Software (TMS)
Freight broker software like a transportation management software (TMS) will vary because some brokerages will cover the cost while others may ask you to pay for it. So the range is between $0 to $100 per month.
Freight Broker Agent Load Boards
The cost for load boards usually starts around $50 to $150 per month, although some freight brokerages will cover all or part of the cost of load boards for their agents.
General Liability Insurance
General liability insurance is optional but would be roughly the same as for a licensed freight broker and can range from $300 to $1,000 per year.
Contingent Cargo Insurance
When becoming a freight agent you definitely don’t need contingent cargo insurance. Fact is, not even licensed freight brokers are not required to have it. If the broker you work under has contingent cargo that is just a bonus but either way, as a freight agent it costs you zero.
Freight Agent Website
Most freight broker agents refer to the website and brand of the freight broker they are working with when speaking to prospects or customers. If you choose to create your own website, we estimate between $250 and $500 for a basic freight agent site.
One thing is certain, freight agents will need phone service. Some use their cell phone and while others use low-cost VOIP phone systems. Most plans start around $19.95 per month but can go up based upon advanced features and benefits.
How long will it take to get back my freight broker or freight agent startup cost?
Below is a freight broker profit calculator that we created to help you estimate how many loads you will need to move as a freight broker or freight agent in order to get your startup investment back.
Plus you can easily calculate how many loads you will need to move per day/week/month in order to cover your recurring cost like phones, load boards, freight broker software, etc.
It might be hard to believe but most freight brokers and freight agents can earn $100,000+ per year in profit with just a few customers by moving as little as 2-3 loads per day.
Regardless of your financial situation, the freight brokerage industry can offer an incredible opportunity to earn full time income from home as either a freight broker or a freight agent. No matter your experience level, there is a path for you to join the freight business.
Regardless if you decide to become a freight broker agent or learn how to get your freight broker authority, one of the biggest benefits is the fact that freight broker startup costs are very affordable so you don’t have to risk your life-saving to get started.
7X Inc 5000 Fastest Growing Freight Broker