How to Get Your Freight Broker License – A Step-By-Step Guide
As journalist Steve Albini says, “the backbone of this country is the independent truck.” Freight shipping is an indispensable part of modern life, and there is a complex ecosystem to support it. An integral piece of the support structure is the freight broker.
The freight broker acts as a middleperson between an entity that wishes to transport property and the motorized carrier who does the actual transportation. Freight brokers don’t touch the actual cargo themselves — they act in a more logistical role. In order to obtain a Freight Broker License, an applicant will have to go through the Federal Motor Carrier Safety Administration (FMCSA), a division of the United States Department of Transportation (DoT).
Once an individual has met the FMCSA’s Freight Broker license requirements, they will be authorized to link prospective drivers with shippers.
**NEW:** Download our FREE e-book guide containing comprehensive information on getting licensed and staying compliant, whether you are an aspiring, newly started or experienced freight broker!
Application for Broker Authority
In order to make you life easier in regards to the application process, it’s best to start by obtaining a DoT ID number. You will, at various stages, be asked to provide a DoT ID number, so it’s best to have one before you jump in. After you’ve done that, the first official step is to visit the FMCSA’s website to file the OP-1 form, the Application for Motor Property Carrier and Broker Authority. On the form itself, select the “Broker of Property (except Household Goods)” option, since you are applying for Broker Authority.
There’s a $300 filing fee for the OP-1 application, and as is often the case, it is faster to apply online than by mail. After receiving a satisfactory application, the FMCSA issues a Motor Carrier Number.
The next step is to obtain a Surety Bond and apply for proof with the FMCSA. The Freight Broker Bond (BMC-84) acts as insurance in the event that the shipper is unable to pay for a shipment. Should the shipper default, the Freight Broker covers the cost; if the Freight Broker is unable to pay, the Bonding agency incurs the cost.
An application for a Freight Broker Bond is accompanied by a credit check and a background check. Though some firms only issue bonds to applicants with excellent credit scores, Lance Surety has options for those applicants with less-than-stellar credit. Though a good credit score helps, there’s no guarantee that a good credit score will lower the bondholder’s renewal rate.
Since the cost of a typical shipment is high, Surety Bonds for Freight Brokers are worth at least $10,000, though $75,000 bonds are common. For a $10,000 bond, annual premiums are typically between $500 and $3,000. For the $75,000 bond, brokers can expect to pay between $1,800 and $10,000 per annum.
Once the BMC-84 Bond has been obtained, the application must go to the FMCSA for verification. Ordinarily, the applicants have to send the form themselves. However, if you choose to work with Lance Surety, we will file the application electronically. It is typically accepted within 24 hours, and you can view your active bond coverage on the FMCSA’s website.
Latest posts by Vic Lance (see all)
- How to Become a Mortgage Broker - November 21, 2017
- Car Wash Owners in NYC: New Rules Regarding Your Surety Bond - November 16, 2017
- How To Be A Successful Freight Broker [Infographic] - November 16, 2017