Becoming a freight broker is a relatively easy and low-cost way to start a business. Still, from there, you’re facing a steep learning curve, a fiercely competitive industry, and tight margins—a perfect storm for two-thirds of new brokers who fail in their first year. But it’s not all doom and gloom.
Assuming you’ve already registered with the FMCSA, secured a surety bond or trust fund, and established your business’s legal structure—the road to success remains before you. To help you along the way, we’ve compiled these seven tips on being successful as a freight broker.
How to Be a Successful Freight Broker?
While there are many benefits to being a freight broker, there are also several risks and costs to consider before deciding if it's the right decision for you.
As you may know, freight brokers profit by charging the shipper more than the truck costs. This markup is the profit margin they employ to run their business and make money. This margin is typically 15%. However, margins may vary depending on the market.
To go from being a good freight broker to a successful one, you need to consider developing some essential skills like understanding market trends, gaining knowledge and experience, and Identifying good customers and carriers.
Beginning a freight brokerage is not without its problems. However, if you follow the tips in this article, you will give yourself the best chance for success. Remember that being a freight broker isn't for everyone, so "study before you jump" and become familiar with the industry and job before starting your own.
Tip 1 - Prioritize Relationships
Untested brokers must establish a level of trust with their customers. It’s tough because building these relationships takes time and requires strong communication skills, but the payoff is well worth it. It’s your classic foot-in-the-door situation. Once you’ve gotten in with a customer, keep that door open and grow their trust by communicating promptly and honestly while delivering consistent results.
Your customers will measure your reliability as a broker on your ability to consistently move their freight from point A to point B on time and at the best rates. They are, in short, the cornerstone of your business. They directly influence how successful you will be, so prioritize relationships with them and look for those golden opportunities to go above and beyond.
To get the ball rolling, start by calling sales reps for material handlers, forklift companies, etc., and ask:
- What’s important to them in a broker?
- What can you do to get more opportunities with their company?
- May you quote their next job?
Above all, be ready to deliver once a prospective customer agrees to use your brokerage to move their freight.
Tip 2 - Be Quick To Respond
Shipping goods is a fast-paced industry, and people are busy, so respect their time. When you get an estimate request, respond as quickly as possible using the same medium (phone, email, etc.) with a reasonable estimate. Keep in mind that you’re not the only broker to whom they’ve sent the request.
When responding, keep it brief. Customers are looking for a ballpark number at first. You can work out the details later—once you’ve locked them in.
Prompt customer care demonstrates your reliability and willingness to get the job done while showing them you respect their time and business.
When responding, keep it brief. Customers are generally looking for a ballpark number at first. You can work out the details later—once you’ve locked them in.
Tip 3 - Know Your Freight Broker Costs Inside and Out
Although freight brokering has cheap start-up costs, it's important to remember that an inaccurate estimate can wipe out your profits with a single trip.
Familiarize yourself with the shipping/trucking industry and remain updated on carrier rates until it becomes a habit, to avoid driving your business into the ground.
Time is of the essence in this business, and the faster you can get a quote back to leads, the more you will book them while minimizing the chances you’ll tank your profits on a bad call.
Gaining experience in the industry before you become a broker is beneficial but unnecessary as long as you understand the costs inside and out.
Tip 4 - Learn Something New Every Day
The more knowledge you bring to the table, the more likely your customers will trust you to meet their needs. It’s a massive, fast-paced industry. The more you know, the faster you'll be at delivering quality estimates–giving you more opportunities to book leads and drive your revenue.
Keep in mind; that you’re more than a broker; you’re also a salesperson, a negotiator, and a communicator. Make sure to refine these skills by consuming every bit of knowledge you can get your hands on by reading books and articles and checking our blog from time to time. You’ll find it easier to develop and hone your competitive edge to better position yourself for success.
Tip 5 - Target a Niche
The industry is highly segmented, so it makes good sense to target a specific niche, especially if you’re an unestablished freight broker.
Focusing on a specific niche in the shipping industry, such as frozen foods, produce, or construction materials, allows you to remain focused on one particular system until you’re an expert.
This approach makes it easier to build a launchpad in your area of expertise. It enables you to acquire referrals that may facilitate your expansion into peripheral services because you already have a network and the reputation to go with it. People will know they can rely on you, which means everything in this business.
Target a specific niche, especially if you’re an unestablished freight broker.
Tip 6 - Leverage Technology
There’s a wealth of industry-specific technology available that you can leverage to increase your efficiency and productivity as a freight broker, such as
- Transportation Management Software (TMS) is essential to plan, execute, and optimize shipments in today's market while ensuring regulatory compliance.
- Develop a marketing plan to increase your visibility and find new leads on autopilot. You can even hire a digital marketing agency to further improve your efficiency.
- Use auto-dialers to speed up the cold calling process—these work by automatically dialing the following number on your list when you end your current call.
- To find truck loads, use load boards to locate and secure loads or conduct market research for shippers in your area who will need your services.
- Partner with a Virtual Carrier such as CloudTrucks, where we source drivers for your loads. CloudTrucks is on the cutting edge of trucking technology and works by sending our owner-operators loads via our app —a favorable setup for drivers and brokers looking for drivers.
Tip 7 - Be Patient
As we said initially, it's quick and easy to become a freight broker. Yet, it's challenging to be a successful freight broker. Trust is a significant factor in a $700 billion industry, and earning customers’ trust takes time in the early stages, work to establish a reliable book of business, and do the necessary research and skill building to succeed.
Being a successful freight brokering agent is a marathon, not a sprint. There will be frustrating setbacks along the way, and it may seem like you’re spinning your tires at times. However, if you remain patient, utilize sound business practices, and persevere, you’ll find the rewards well worth the effort.