Requirements to Start a Freight Brokerage Business

Freight brokers coordinate shippers and shipping companies.

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Starting a brokerage requires a license from the Motor Carrier Safety Administration, above and beyond any necessary training and business permits.

Freight brokerage businesses assist the shipping industry by establishing connections between shippers and freight companies, acting as matchmakers between shippers with loads and freight companies with unused space on their trucks. Freight brokerage businesses are licensed as property brokers by the Federal Motor Carrier Safety Administration, part of the U.S. Department of Transportation, so starting a brokerage requires this license above and beyond any necessary training or business permits.

Before you can start a freight brokerage business you must first apply for a USDOT number with the Department of Transportation. Though not specifically required to become a freight broker, the USDOT number is required when filling out the application to become a broker through the FMCSA.

Broker authority is a license provided by the FMCSA authorizing individuals or companies to act as freight brokers. Broker authority is applied for by filling out MFCSA form OP-1 and selecting the broker of property option. Form OP-1 requires individual or company contact information, the company name filed on a doing business as form (if applicable), and the applicants USDOT number. A $300 fee must accompany the application.

A surety bond or trust fund acts as insurance to guarantee that the shipping companies will be paid for their cargo space. If the shipper does not pay for the shipping service, the freight brokerage must absorb the cost; should they not be able to, the bond company or trust fund will cover the expense. A freight broker must have a surety bond or trust fund worth $75,000 or more. A thorough credit and background check is generally required before a surety bond will be issued. Proof of the surety bond or trust fund is filed with the FMCSA using form BMC-84 or BMC-85.

Freight brokerage businesses must register legal process agents for each state they operate in with the FMCSA. The process agent provides legal representation within their state, though law firms which have members in multiple states may be retained for use in each of these states. Process agents are registered with the FMCSA using form BOC-3, with spaces provided on the form for every state. A filing fee of $50 is required with form BOC-3.

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Born in West Virginia, Jack Gerard now lives in Kentucky. A writer and editor with more than 10 years of experience, he has written both articles and poetry for publication in magazines and online. A former nationally ranked sport fencer, Gerard also spent several years as a fencing coach and trainer.

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