Not every freight broker business has the right setup for you, but it can be hard to find your own freight while also delivering the loads. To be successful in the trucking industry, you need to know the basics of how to find the best freight brokers before you even get your operating authority. You could just Google search for a freight brokerage and see what you find. However, we don’t want you choosing someone just because they have a clever company name. Here we are going to give you some insider knowledge so you know better what you should be looking for.
When it comes to finding freight as an owner-operator, you have several options. There is a good chance you will work towards finding a broker to find freight. Brokers work as intermediaries between your business and shippers. While you are wondering how to find freight brokers, other people often ask: “How do freight brokers find shippers?” They do this through connections they have established with shippers and supply chains, as well as monitoring the load boards like DAT to find quality truckloads. They make a profit by negotiating rates with shippers and carriers. Once they negotiate a rate with the shipper, they will offer a lower rate to you, the carrier. The difference between the two rates is the broker’s commission to pocket. It is important to remember that a broker’s profit goes up as your rates go down, so knowing how to negotiate fair rates is extremely important.
So how do you know if the broker you choose is being fair? Besides knowing your operating cost and the current rates (based on location/distance, type of freight, and weight), it is crucial to look for certain traits and red flags when partnering with a broker. By being selective with who you use for brokering, you can choose partners that will be beneficial to your business, not sink it. We rounded up the good, the bad, and the ugly to give you a cheat sheet next time you are searching for quality brokers to maximize your freight rate potential.
Verify that the Broker is Insured
Verifying that a broker is insured is an essential step for small business truckers when it comes to finding new business and also protecting your business as an owner-operator. It’s important to ensure that the broker you’re working with has valid insurance coverage because, in the event that they fail to pay you for an LTL load or other, you’ll need to file a claim to collect your payment. By verifying that the broker has current insurance coverage, you can rest assured that your claim will be covered if you’re not compensated for the load you deliver.
To check if the broker you’re working with has valid insurance, you can use the search engine on the Federal Motor Carrier Safety Administration (FMCSA) website. This search engine allows you to look up a broker’s USDOT number, MC number, or name to confirm that they are in good standing with the FMCSA. You should also verify that the broker has a surety bond, which is a type of insurance that ensures that carriers get paid if the broker defaults on payment.
In addition to verifying that the broker has current insurance coverage and a surety bond, it’s also important to confirm that they have proper authority. A broker license with a “B” after it ensures that they are licensed through the FMCSA. Don’t partner with a broker that doesn’t have the proper authority, no matter how enticing the load is or how high the freight rate they’re offering. By taking these steps, you can ensure that you’re working with a reputable broker that will protect your business interests.
Only Partner with Licensed Brokers
Partnering with a licensed freight broker is crucial for your business as an owner-operator. It’s essential to check whether the broker has a valid license before accepting a load from them. A broker’s license number will have a “B” after it, indicating that they are licensed through the Federal Motor Carrier Safety Administration (FMCSA). A valid license ensures that the broker is authorized to operate as a middleman between carriers and shippers.
Choosing to work with an unlicensed broker may seem like an easy way to get a high-paying load, but it comes with significant risks. An unlicensed broker may not have the necessary authority or experience to manage your load properly. They may also be unable to negotiate the best rates with shippers, putting your business at a disadvantage.
When you partner with a licensed broker, you can trust that they are knowledgeable about the industry and are up to date with the latest regulations and requirements. They will also have access to a wide range of shippers and loads, giving you more opportunities to maximize your profits.
Communication is Key
As a carrier, you can’t always predict when outside elements like weather or traffic might interfere with your load. However, minimize your surprises by learning how to find freight brokers that communicates with you throughout the process. A quality freight broker will provide you with the information you need to haul that load and how you will be matched with loads in the future. By requesting that a broker provide you with a clear-cut process from pick up to drop off, you have a transparent partnership with no surprises down the road.
Run a Credit Check
Don’t run the risk of getting stiffed or slow paid on a load with any broker. Warm calls through referrals are great, but you always need to do your due diligence as a business owner. This will save you the headache of having to file a claim down the road. Run a credit check on any broker to make sure that they are in good standing financially. You should also check how many days, on average, it takes them to pay and if they have ever defaulted. Many factoring companies provide this service for free so that you are able to credit check at your leisure. You can also run a credit check yourself through a paid service like Ansonia before diving into a partnership with a new broker.
Choose a Broker with Experience
As an owner-operator, you understand how difficult the first year is when starting your business in the trucking industry. Although there are exceptions to the rule, choosing a broker that has been in business for three to four years allows you to benefit from the experience and shipper relationships he’s been able to accrue since he started. You want these to become strong relationships. By choosing an experienced broker, you will have more security that you are receiving the best rates.
Utilize Other Resources to Compare Rates
Don’t just take the broker’s word for it. Stay up to date on what the going rate is by utilizing other resources. Using an experienced dispatcher from time to time allows you to see if they can negotiate a better rate and evaluate if your broker is offering you the best freight rates in the current spot market (Freight Broker vs Dispatcher: What is the Difference?). Also, it is beneficial to diversify what resources you use to find loads. By utilizing a variety of resources like load boards, dispatchers, and brokers, you are able to access more data to secure higher-paying freight.
Evaluate Your Business’s Track Record
Have you been late on past loads? Or unreliable with following through on a freight agreement? It’s understandable that quality brokers want to partner with quality carriers they can count on. If a carrier backs out on a load last second, it can damage the relationship between the broker and shipper too. A broker must ensure that he can rely on a carrier to follow through with the load to protect his reputation with shippers. By evaluating your own track record as a carrier, you can ensure that your reputation will attract quality brokers who want to partner with your business.
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