How to Start a Freight Brokerage Business

Income & Pricing

Freight charges are based on a number of variables, but the two main factors are the weight of the load and the distance it must travel. Rates are also affected by the type of truck needed, whether the driver needs to make one or more stops to pick up the freight, and whether the driver needs to make more than one stop to deliver the goods. Each shipment is entitled to one pickup and one delivery with no extra charge; you can usually negotiate the rate for additional stops with the carrier.

Before you begin shopping for rates for specific shipments, get an idea of the current "going rates" for the types of shipments you're likely to be handling. You can do this by requesting copies of tariffs from several carriers and studying them.

Your income is generated by the commissions you earn on each load. You'll be paid one of two ways: You can bill the shipper the amount you're going to pay the carrier plus the amount of your commission, or the carrier can bill the shipper directly and then pay you a commission from its revenue. The most common way to handle billing and commissions is to have the carrier bill you and then you bill your customers.

Your commission is negotiable, and you can get whatever the traffic will bear. The average broker's commission is between 5 and 11 percent of the shipping charges, sometimes higher. Keep in mind that your commission is your gross revenue, and out of that you must pay your overhead: rent, taxes, payroll, sales commissions, utilities, debts and so on. Ron W. estimates that most brokers are lucky to earn a net profit of 1 to 2 percent after expenses.

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