Lone Wolf Or One Of The Gang: Freight Brokers Versus Freight Broker Agents
Freight broker training can be the gateway to a lucrative career helping companies place shipments with willing carriers. Freight brokers run their own independent brokerage offices, matching up customers who need products shipped with trucking companies that can transport the goods, but they also handle all administrative and marketing aspects of the office themselves. You have the option of becoming a freight broker agent -- someone who works for a broker instead of running their own brokerage -- if you prefer to avoid most of the administrative work and work solely with shipping companies and customers, but that position has considerations of its own. Look at the advantages and disadvantages to both before deciding which career path to take.
Credit Ratings
Whether you work as a broker or an agent, you can work out of your home, saving on office overhead costs. However, if you're a broker and running your own brokering company, you have to have money set aside to pay carriers. When you arrange for products from one company to be shipped by a carrier, you won't always receive payment from the company before you have to give the carrier its cut.
That means you have to have funds available -- also called operating capital -- to pay carriers even if you aren't receiving any pay yet yourself. To do that, brokers often get lines of credit or loans from banks. You would have to have very good credit in order to get those funds, especially if you're new and can't show proof of a profit yet.
However, if you become an agent who is working for a broker, the credit and capital are not your concerns. The only reason you have to think about the amount of capital that the broker has is to ensure in general that your carrier contracts will be paid on time -- if they're not, that still reflects badly on you.
Cost Splitting
Independent brokers get all the profits from a transaction, save for taxes and the usual amounts going back into the capital pool. If you score a really big contract and don't have any agents working for you, that profit is all yours.
But if you're an agent working for a broker, you get only a percentage of the profits. Many times these percentages can work out just fine, but you should be sure that the percentage you get is something you agree with. As you apply to brokerages, compare the splits -- the percentages given to the agent versus the broker, like 50-50 -- to see what the average is for your area.
Office Setup
While both brokers and agents can work from their homes if they want, many brokers try to set up actual offices. They have to deal with office overhead and upkeep, leases, and equipment. Agents, though, usually work out of someone else's office if the agents aren't going to work at home. If you decide to work as an agent and can't work out of your home, you won't have to worry about paying for office expenses yourself.
Attention Division
And finally, what do you want to spend your time doing? If you don't mind handling all the administrative functions as well as arranging for freight transport, being a broker could be a good independent path for you. But if you want to devote your time to working with customers and finding space for cargo -- and not dealing with arranging for fax repair, for example -- being an agent might be a better choice for you.