How to Make Money in the Freight Brokering Business
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Over the last several years, a handful of driving forces have helped progress the business of moving goods from one location to another, paving the way for business-minded professionals in the industry to take advantage. One of the biggest factors in this shift has been the influx of technology in transportation. The change has created both opportunities and challenges in all areas of freight, but most notably, licensed freight brokers are experiencing a disruption in how they do business. Here is what freight professionals need to understand to fit into the future of the industry.
Growth in the freight broker industry
Over the course of the next three years, the freight brokerage market throughout the Americas is slated to grow at a rate of 4.33%. Part of the growth in the industry is tied to the increased demand for imports and exports around the world, and the ability of licensed freight brokers to help with the job. Working as middlemen between manufacturers and shippers, brokers play a crucial role in ensuring loads are moved where they are required, and on time. Consumers are demanding faster delivery of the products they want, and the logistical efforts of brokers are becoming that much more important in getting the job done.
The business potential for brokers
With more businesses in need of intermediaries, new brokers have a chance to gain valuable market share quickly after entering the business. However, the business potential for brokers is not an easy grab -- individuals in the industry need to know what it takes to create a successful, competitive business from the start. The first step is getting licensed and trained in the business of freight brokering while creating valuable business relationships and partnership that allow for easy connection to potential customers.
Once these processes are in the works, freight brokers must also ensure they are working in line with federal and state guidelines. One of the requirements to become a freight broker is securing a freight brokerage bond or a trust fund, both which offer protection against bad business practices and future claims against the business. No freight broker can operate legally without the appropriate bond or trust fund in place, so it is crucial to understand these requirements before starting a brokerage business. Those who recognize the need to follow these guidelines and have strong relationships in the industry are positioned well to enjoy the growth in the industry over the next several years.
The challenges ahead
While there are opportunities for growth in the freight brokerage business in the near future, challenges exist as well. The addition of technology has led many brokers to expand their business footprint, now having the ability to reach more potential customers in a faster, more efficient manner. However, that ability also means more brokers are working in the same areas, causing greater saturation of markets and, potentially, less business for brokers who cannot keep up with the digital era. A highly competitive market leads to price cuts which ultimately eats away at profitability for brokers who do not adapt.
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Technology has also been a disruptive force in other aspects of the transportation business, from autonomous trucks to Uber-like tools for shippers and carriers. Both of these disruptions have the potential to cut into the need for freight brokers, although many believe the replacement of human elements in transportation is far from a reality. Freight brokers need to be aware of these changes, however, if they want to remain competitive and profitable in the years to come.
Those who understand where opportunities lie and what challenges come with the territory can achieve success now and into the future. Freight brokers must focus on maintaining strong relationships with their customers to do so, as well as staying up to date with training, licensing and bonding requirements, and new digital practices.