How to Get a Freight Broker License in Mississippi

Freight brokers serve as transportation intermediaries within the supply chain of the transportation industry. The typical freight broker is a middleman between shippers and carriers. Operating a freight broker business requires the broker to ensure that household goods and other cargo are safely shipped and received.

The position involves communicating with shippers, tracking shipments, troubleshooting, updating clients, contacting carriers and other administrative tasks. This includes receiving payments, sending invoices, negotiating rates and organizing data. Here, we address common questions like, "What is a freight broker?" and "What does a freight broker do?".

Requirements for Obtaining a Freight Broker License in Mississippi

The State of Mississippi has no requirements for operating as a freight broker under the Mississippi Statewide Freight Plan. However, the Federal Motor Carrier Safety Administration (FMCSA) is the federal regulator of the transportation industry. Every freight broker needs to be licensed through the FMCSA before setting up a business in any state.

To obtain your authority to operate as a licensed freight broker in Mississippi, follow these steps:

1. Apply for a USDOT number through the FMCSA at no cost. The application instructions are listed on the website.
2. Obtain a freight broker bond or trust fund agreement worth at least $75,000. You need to pay only a small percentage of this upfront. You can get a quote through a surety company.
3. Designate a process agent to file the BOC-3 form with FMCSA.
4. Pay the $300 application fee and submit your completed form OP-1 to the FMCSA.

Step-by-Step Process to Obtain a Freight Broker License in Mississippi

This guide will show you how to obtain your freight broker license one step at a time. This license will enable you to launch a small business and operate with your own authority; however, you also have the option to partner with other companies. Setting up these business agreements can be learned through freight broker training programs, or you can acquire the necessary skills on the job.

Step 1. Education and Credentials

Freight broker training is optional because the Mississippi Department of Transportation has no licensing requirements. However, many professionals still recommend taking freight broker/agent training from a community college or freight broker school. There are even online freight broker training programs that allow students to progress at their own pace. The training course usually has no prerequisites before allowing enrollment, which minimizes the total cost.

If you do not want to attend a freight broker training school, you can still earn a professional credential. The most highly regarded and widely recognized credential is the Transportation Intermediaries Association’s Certified Transportation Broker credential, or CTB. Displaying this credential demonstrates a high degree of commitment to the profession, and this can make a favorable impression on clients, partners and employers.

Step 2. Register a Business Entity

Register a business entity with the Secretary of State’s office if you plan to do business in Mississippi. To do this, you must select a business structure for your organization. The most common business structure is the limited liability company or LLC. This legal entity will protect your personal assets from the business’s liability, which is important in the event of a legal dispute.

Other business structures might be more appropriate for your purposes in some cases. You might consider one of the other corporate structures, for example. You might also consider forming a partnership or remaining as the sole proprietor. Workers’ cooperative enterprises are good for established groups who plan to pool their resources. Once you select the business structure, complete your freight broker registration with the Secretary of State. Approval might take more than a few business days.

Step 3. Obtain a Surety Bond

To secure a freight broker bond, you'll first need to request a quote from a surety company, preferably a reputable and experienced one. Your credit score plays a pivotal role in determining the premium you'll pay for the bond. The bond amount is set at $75,000, and the premium is typically a percentage of this. Rates generally hover below 3%, with applicants boasting strong credit histories often qualifying for even lower rates. The BMC-84 form is a key document that needs to be filed with the Federal Motor Carrier Safety Administration (FMCSA) as part of your freight broker license application. Alternatively, you can establish a trust fund agreement with a reputable financial institution, which can serve as a substitute for the BMC-84 surety bond in your freight broker licensure process.

Step 4. Get Cargo and Liability Insurance

Do freight brokers always need to buy general liability and cargo coverage? Yes. Obtaining insurance is done by getting a quote and paying the premium for the policy. Under federal transportation law, the shipping industry requires brokers to obtain general liability and cargo insurance. This policy ensures carrier safety, but it also protects shippers and trucking companies from liability.

Step 5. Designate a Process Agent

The process agent functions as a legal representative in the event of any incident involving freight brokers, motor carriers or freight forwarders. Receiving your broker authority comes with responsibility; obtain insurance, and designate a process agent for any legal issues. This process agent is the only entity empowered to file the necessary BOC-3 form with FMCSA. This must be done for each state where you plan to conduct business.

How Much Does It Cost to Get a Freight Broker License in Mississippi?

The total cost of becoming a licensed freight broker depends on a mix of fixed and variable costs. For example, you need to submit a credit score to obtain insurance and a surety bond quote. The amount you pay will be determined by your credit score. In addition, you might elect to get training or certification, which can cost several thousands of dollars.

Here is a breakdown of the most significant expenses for broker training, education or credentialing:

• Education: A community college program will cost around $2,000; online training is often cheaper.
• License fees: There is no fee to file with the FMCSA for a USDOT or MC number.
• Surety bond: Your credit score determines your premium, which you pay upfront. This is usually between 1% and 3% of the total bond amount of $75,000. Get a quote from a surety bond company for the exact amount.
• Insurance: The liability and cargo insurance quotes are also based on your credit score. Call an insurance company for a quote.
• Application fees: The application filing fee is $300.

FAQ

How Long Does It Take to Complete the Freight Broker License Application Process?

After completing the FMCSA OP-1 application and paying the fee, you can expect your license to arrive between four and six weeks.

What Happens if Your Freight Broker License Application Is Denied?

If the license is denied, review the reasons for this decision. Correct any errors, problems or issues with the application, and reapply.

How Long Is the Freight Broker License Valid For?

Always look at the expiration date issued on your license; remember to submit your renewal application in advance of this date.