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To become a Freight Broker in the USA, several requirements must be met to ensure compliance with industry standards and federal regulations. However, some states require you to meet their specific needs before you can legally broker freight in that State. This article will cover the state and federal requirements and each State's education requirements.
Freight brokers play a vital role in the logistics industry by acting as intermediaries between shippers and carriers. Their duties encompass a wide range of responsibilities that require a high level of professionalism and expertise. Some of the critical duties of a freight broker include negotiating shipping rates, coordinating the transportation of goods, tracking shipments, ensuring compliance with regulations, and resolving any issues that may arise during the shipping process.
Additionally, freight brokers are responsible for building and maintaining relationships with shippers and carriers and staying up-to-date on market trends and industry regulations to provide the best possible service to their clients.
So, How do you Become a Freight Broker in Colorado?
State of Colorado Requirements
When considering a career in the freight brokerage industry, individuals can become independent contractors or employees for an established brokerage firm or start their own brokerage firm. If you want to be an independent contractor for a brokerage, you only need to obtain Freight Broker Training and follow the brokerage firm's requirements. If you're going to open your own brokerage firm, follow all the steps in this article.
Decide your business structure (Sole Proprietor, Partnership, LLC, INC, etc.)
Register with the Colorado Department of Revenue
Create a business entity with the Colorado Secretary of State
Obtain an EIN from the Internal Revenue Service
Proof of U.S. Citizenship
USDOT Number
At least 21 years of age
Federal Motor Carrier Safety Administration (FMCSA) Requirements
Operating Authority allows you to broker freight anywhere in the USA and broker freight to Canada and Mexico. There are two types of domestic brokers, and you must decide which one you want to be.
Operating Authority
Broker of Property - Arranges the transportation of property (excluding household goods) belonging to others using an authorized Motor Carrier.
Broker of Household Goods - Arranges the transportation of household goods belonging to others using an authorized Motor Carrier (often a moving company). Household goods are personal items and property used in a dwelling (home).
1. USDOT Number
The USDOT Number is a unique identifier when collecting and monitoring a company's safety information acquired during audits, compliance reviews, crash investigations, and inspections.
Companies operating commercial vehicles transporting passengers or hauling cargo in interstate commerce must be registered with the FMCSA and have a USDOT Number. Commercial intrastate hazardous materials carriers who haul types and quantities requiring a safety permit must also register for a USDOT Number.
You are required to obtain a USDOT number if you are involved in Interstate commerce:
Trade, traffic, or transportation in the United States
Between a place in a State and a place outside of such State (including a place outside of the United States);
Between two places in a State through another State or a place outside of the United States; or
Between two places in a State as part of trade, traffic, or transportation originating or terminating outside the State or the United States.
All brokers must obtain a USDOT number. You may get your USDOT Number by clicking Here.
2. MC Number
Companies that do the following are required to have interstate operating authority (MC number) in addition to a DOT number:
Operating as for-hire carriers (for a fee or other compensation)
Transporting passengers, or arranging for their transport, in interstate commerce
Transporting federally regulated commodities or arranging for their transport in interstate commerce
When applying for an MC number, you will have the option to select Broker of Property or Broker of Household Goods. The FMCSA usually takes 4 to 6 weeks to complete the process and grant the MC Certificate. You may obtain your MC Number by clicking Here.
3. Surety Bond or Trust Fund
All brokers in the USA must have a $75,000.00 Surety Bond (BMC-84) or Trust Fund (BMC-85) insurance. This insurance protects shippers and carriers from bad brokers. It is a federal requirement, and you will not receive your MC Certificate until your insurance company files it with the FMCSA. You may obtain a quote by clicking Here.
4. Designation of Process Agents (BOC-3)
A process agent is a representative upon whom court papers may be served in any proceeding brought against a motor carrier, broker, or freight forwarder. When all Unified Registration System (URS) provisions are implemented, every motor carrier (of property or passengers) shall make a designation for each State in which it is authorized to operate and for each State traversed during such operations.
Before that time, only for-hire carriers are required to designate a process agent. Brokers must list process agents in each State where they have offices and write contracts. You may obtain BOC-3 by clicking Here.
5. Unified Carrier Registration (UCR)
Motor carriers involved in interstate commerce and other businesses subject to Unified Carrier Registration (UCR) must submit annual fees based on fleet size to supplement funding for state highway motor carrier registration and safety programs.
The UCR Agreement is established by federal law in the UCR Act, which is part of the federal highway reauthorization bill known as the Safe, Accountable, Flexible, Efficient Transportation Equity Act, A Legacy for Users ("SAFETEA-LU"), Public Law 109-59, enacted August 10, 2005. The UCR Act is sections 4301 through 4308 of SAFETEA-LU. In particular, the structure of the UCR Agreement is outlined in section 4305 of the UCR Act, which enacts §14504a as a new section in 49 USC. You may obtain UCR by clicking Here.
Optional Items to Obtain
All items above are required by the state and federal government. The items listed here are optional items that you may obtain. Most shippers will ask for some or all of these optional items before doing business with you or your company.
Contingent Cargo Insurance:Â Contingent cargo insurance is insurance for freight brokers that covers a complex claim between shipper and carrier. It provides coverage if a general cargo insurance claim doesn't function as designed. The standard policy is for $100,000.00
Business Owner's Policy (BOP): An exclusive form of commercial insurance that caters to the needs of small and medium-sized businesses. BOPs are a practical and affordable option for business owners, as they provide comprehensive coverage against various risks such as property damage, legal liabilities, and loss of income due to unexpected events.
General liability:Â Commercial general liability (CGL) insurance is a type of policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business's operations, products, or injuries that occur on the business's premises. BOP is a combination of both plus property insurance.
Workers' compensation: Known as workers' comp, it is an insurance policy offering wage replacement and medical benefits to injured employees. In return, the employee gives up the right to sue their employer for negligence.
Commercial Auto:Â Commercial auto coverage is a type of insurance designed to help protect you and your vehicles in case of an accident while on the job. Your auto insurance typically doesn't extend to company vehicles, so commercial auto coverage can help protect you and your business from the unexpected.
Professional Liability/Errors and Omissions (E&O):Â Errors and omissions insurance is a form of professional liability insurance. E&O insurance protects companies and professionals against claims of inadequate work or negligent actions made by clients.
Contingent Auto Liability:Â Contingent Auto Liability Insurance protects you when a motor carrier with which you've arranged cargo transport has insufficient insurance to cover an auto accident involving bodily injury or property damage.
Industry Insights
According to a report by Market Research, the global freight brokerage market has seen a consistent increase. The U.S. Freight Brokerage Market was valued at USD 1.164 billion in 2020 and is estimated to grow at a CAGR of 36.2% from 2021 to 2028, reaching USD 13.78 billion by 2028. The tremendous growth of the e-commerce industry worldwide has led to a significant rise in demand for shipping transportation.
Career and Salary of a Freight Broker
As the global economy grows, the volume of goods shipped worldwide increases rapidly. Companies increasingly rely on freight brokers' services to meet this demand and ensure that products are delivered on time and in good condition.
These professionals act as intermediaries between shippers and carriers, negotiating rates, coordinating shipments, and ensuring all necessary paperwork is in order. With the rise of e-commerce and the increasing complexity of supply chains, the role of freight brokers has become even more critical in recent years.
By providing expertise in logistics and transportation, they help companies improve their bottom lines by reducing costs and improving efficiency. As such, the demand for skilled freight brokers will continue to grow in the coming years.
Zippia reported that Colorado had 109 freight broker job openings in 2023. This number is expected to rise in the coming years, indicating a growing demand for professionals in this domain.
The average freight broker salary in the U.S. is $52,000; Colorado averages around $52,029. This is for W2 brokers; 1099 can make over $100k.
Freight Broker Training
Andre Erving Global offers many options for Freight Broker Training, with online and in-person courses available. Getting trained is the most critical part in the beginning, and staying updated with current laws and regulations often will make you stand out as an expert in the industry.
In Person - Â https://www.andreerving.com/hands-on