If you’re interested in a rewarding career in the freight logistics and transportation industry, one of the questions I get regularly is, “What is the difference between a freight broker and a freight broker agent?”
Both freight brokers and freight broker agents work in the shipping industry. However, their roles and responsibilities are different. The major differences between a freight broker and a freight agent are pretty straight forward.
A freight broker agent, also known as a freight agent, can be thought of as a sales agent while a freight broker is the licensed by the FMCSA to own and operate their own freight brokerage firm.
What is a Freight Broker?
A FREIGHT BROKER, also known as a property broker, is someone that is licensed by the Federal Motor Carrier Safety Administration (FMCSA) that acts as a middleman to arrange the transport of goods by matching available trucks with shipper loads.
Independent freight brokers operate their own business helping shippers transport freight goods from point A to point B.
A successful freight brokerage can range from a simple one man operation to larger multinational brokerage companies with billions in revenues. Regardless of their size, the role they play is virtually the same.
Brokers are responsible for maintaining a level of compliance when it comes to selecting and hiring motor carriers based upon the FMCSA guidelines.
– Do they have the proper motor carrier authority?
– Do they have the necessary cargo and liability insurance?
– Do they have an adequate safety history?
They are responsible for the day-to-day operations of the brokerage firm and keeping up to date with compliance and licenses (freight broker’s authority / license).
The freight broker’s operating license and surety bond allows brokers to operate a freight broker business anywhere in the United States. There is no state licensing, certification or exams to become a freight broker.
In addition to helping shippers manage and move their freight from point A to point B, freight brokers are also responsible for:
– Assessing a shippers credit
– Invoicing shippers
– Paying motor carriers
– Collecting invoices
– Bad debt
– Insurance
– Compliance with government regulations
– Hiring and managing freight broker agents
What is a Freight Broker Agent? (Aka Freight Agent)
A FREIGHT BROKER AGENT (also known as independent freight agent) is someone that works under the authority of a licensed freight broker, helping to coordinate shipments in the freight industry.
What does a freight broker agent do?
A freight broker agent works directly with their own customer base to manage freight loads from point A to point B.
Most of a freight agent’s day consists of building their book of business, providing their customers freight rates, sourcing carriers, negotiating with shippers/carriers, dispatching trucks, scheduling pickup/deliveries and solving problems that could potentially delay or damage a shipment.
Freight agents are responsible for overseeing the entire shipping process. Their job is to provide the best service by ensuring freight is picked up and delivered on time with no issues or damages.
Unlike freight brokers, freight agents are not responsible for customer credit, invoicing, collections, bad debt or insurance. This allows freight agents to focus on customer service and building their customer base.
A freight agents primary responsibilities are outlined below:
– Find shippers
– Rating shipments
– Sourcing available carriers to move freight
– Dispatching drivers
– Ensuring freight delivers on-time
Freight agents are NOT required to have a surety bond or to be licensed by the FMCSA. Most independent freight agents operate as 1099 independent contractors under the authority/license of an FMCSA approved freight broker. They have little or no liability, but are able to earn a significant income based upon profit generated from their customer’s freight services.
Freight agents are typically work on a straight commission basis. Typical commission ranges from 50-70% gross profit for each load they manage (see commission example below).
Here is an example of how freight agent commissions work:
– $1,500 is billed to the shipper for moving a load from point A to point B.
– $1,300 is paid to the motor carrier to haul the load.
– Leaving $200 in gross profit.
If the agent is paid 60% commission of profit he/she would earn $120 for just that one load.
Freight agents regularly move 2-5 loads per day with top agents moving 10 or more per day. You can see how quickly profits can pile up.
Freight agents are vital in ensuring the smooth and timely movement of freight and efficiently managing carrier schedules within the freight brokerage operation.
Key Difference Between A Freight Broker vs Freight Agent
The main difference between a freight broker vs freight agent the fact that freight agents are not required to be licensed by the FMCSA or bonded, as they operate under the authority of an FMCSA-approved freight broker.
Whether you’re considering a career as a freight broker or a freight agent, proper training is essential. Getting the proper training will save time, money, and significantly increase your odds of success when first venturing into the freight and logistics industry.
The logistics industry offers significant opportunities for those with the right skills and knowledge, and regardless of the career path you choose, understanding the nuances of the field is crucial for success.
If you are interested in learning the skills of an effective freight broker at your own pace, my online freight broker and freight agent training program might be a good fit for you. Over 10,000 students from around the world have taken my online freight broker training.
Many of my students have gone on to become successful licensed freight brokers, but even more have taken the knowledge they gained and started their own freight agency working under an established freight broker.
Regardless if they chose to become a broker or agent the proper training will save both time, money and stress when getting started in the freight and logistics industry.
To hear my story on how I started as a freight broker with no experience and paid a consultant over $10,000 to help me get started back in 2003 CLICK HERE.
