How to Get Your Freight Broker License
Many people in the commercial transportation industry are drawn to become a freight broker, serving as an expert third party who can bring together those who have freight to ship, and those who are equipped to carry it. Longtime drivers and others are drawn by the lure of independence, better hours, and potentially exceptional pay.
To achieve this position requires several steps, all of which must be taken carefully. Having a plan to follow throughout the process toward becoming a freight broker is the only reliable way to successfully navigate such a complex system, in a complex industry.
Here is a step-by-step list of how to get your freight broker license:
Learn More About Being a Freight Broker
Even if you’re a 20-year veteran of the trucking and logistics industry, taking classes or at least pursuing extensive research is important. Every position within any profession has its own unique challenges and opportunities, and “freight broker” is no exception.
Decide How You’ll Set Up Your Business
There isn’t one right way to draw up the structure of a new business. Options include sole proprietorship, partnership, limited liability corporation and more.
Determine what will work best within your own set of circumstances, then make sure consult with a professional about the legalities. The long-term benefits of investing into the front end of your plan will help prevent troublesome pitfalls in the future.
Complete the Correct Application
While the Federal Motor Carrier Safety Administration website provides clear differentiation between its tools for drivers and carriers, FMCSA’s resources for aspiring brokers are more difficult to find. The good news? In December 2015, FMCSA rolled out the Unified Registration System, which simplifies the process.
Individuals striving to become freight brokers for the first time must apply for a USDOT number via the URS. The parts of this process include determining state requirements, entering the new entrant safety assurance program, and obtaining your permanent USDOT registration number, as well as your Motor Carrier or MC number.
Assign a Process Agent and Learn Requirements in Each State
As a freight broker, every state in which you do business will have its own unique rules for starting and operating a business. Each state also requires you to name a “process agent” who will represent your brokerage and receive legal documents if the need arises.
To assign you or someone else as your process agent for each state, submit form BOC-3 to the FMCSA.
Secure Sufficient Insurance
Before you can obtain your freight broker license, you need to prove you have the correct insurance, which requires either a BMC-84 or BMC-85 bond, with coverage of at least $75,000.
Keep Safe Your USDOT and MC Numbers
There are two numbers that you’ll need to remember for years to come, so it’s important to keep those digits safe, as well as to understand why they’re necessary:
- USDOT Number — Your unique identifier regarding audits, compliance reviews, crash investigations, and inspections.
- Motor Carrier Number — This number, sent to you 4-6 weeks after you apply, is needed to continue with the licensure process.
At the end of the application process, you should be granted Motor Carrier Operating Authority (MC authority). You are then a licensed freight broker.
Becoming an Independent Freight Agent
One way to reap the benefits of being a freight broker without the initial costs, hassles and ongoing administrative duties is to become an individual freight agent. Learn more at Freight-Tec.com