Thinking about starting your freight brokerage business or evaluating your brokerage’s success? Now might be the perfect time to start or further develop your freight brokering journey. If you’re wondering why, let’s consider a few reasons that make brokering a good business to be in today.
With generally positive prospects for an improving U.S. economy, it’s a great idea to catch the moment and launch a new business, or invest in developing your current one. And if you’re questioning why freight brokering is a wise step, there are plenty of reasons to think it is. The industry is becoming more stable and the standards are rising, overall income is growing, and the demand for brokers is big.
One of the requirements for freight brokers to operate legally is to have a freight broker bond. Because of this, 2013 was a turbulent one for the industry. In October of that year, the Federal Motor Carrier Safety Administration increased the freight broker bond requirement from $10,000 to $75,000, forcing many active brokers out of business. Brokers who managed to stay in business had to adhere to higher standards, boasting the overall stability and reputation of the industry. At the same time, the bond increase lowered the number of competitors in business.
With this overview in mind, let’s go through the most important reasons that make freight brokerage a good business to be in in 2015.
Considering the changes in freight brokerage that came with the 2013 legislation and the overall improving economy, it’s natural that the industry needs more new brokers. While some exited the field because of the stricter conditions, others need to come in with new energy in this lucrative business.
In the time since the number of active freight brokers declined in the wake of the 2013 legislation, there has been steady, but insufficient, growth of brokers. Since January 2014, the number of freight brokerages in business has increased 15 percent.
Although significant, that increase doesn’t match the demand of the market. Because the industry is evolving and modernizing, it’s also a great opportunity to enter with fresh forces and take part in its rejuvenation.
Freight brokerage salaries - Solid income
Althought the growing demand for brokers is certainly a strong point for starting a freight brokerage business, the financial aspect of the job is also important. Freight broker salaries across the U.S. run $30,000 to $80,000, which means many brokers make more than the average national salary.
The average salary of a freight broker in 2014 was $43,960, and this is often the salary range for budding brokers. With years in the business — gaining experience and forging strong connections with shippers — you can double this with ease. The more reputable and experienced brokers can earn upwards of $90,000.
Because freight brokers play a key role in the movement of goods across the U.S., freight brokering as an occupation is here to stay. Brokers ensure that shippers can move their loads and that carriers have enough freight to move, which makes them a central figure for the transport of goods.
Freight brokerage - A more stable industry
When the freight broker bond increased to $75,000 in 2013, it made it difficult for some brokers to stay in business, especially those with lower financial status and problematic credit. Because the bond price often is based on the broker’s credit score, the lower it is, the higher the cost becomes.
Still, many freight brokers managed to cope with the changes and became a part of a more stable industry with higher standards and better security for shippers working with brokers. As a result, a large portion of new brokers are boasting much higher credit scores and overall finances, which are needed for easier and cheaper bonding.
With thousands of freight broker scheduled to renew their surety bonds this autumn, it’s another chance for all of them to showcase the strength of their businesses and to reduce their bonding costs.
The future of freight brokering
With increased demand for brokers and stable and growing income, freight brokering has become a more solid industry with increasingly sustainable growth since 2013. All these positive factors also contribute to a better image of the business, one that is trustworthy and highly profitable.
What’s your experience in the freight brokering business? Do you still consider it a good business to be in and why? We’d love to hear your thoughts in the comments section below.
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping freight brokers and forwarders get bonded and start their business.