Successfully navigating the international shipping industry is a significant challenge, even for a multimillion-dollar business. It is a complex process that requires specialist knowledge regarding transportation law, freight logistics, taxes and tariffs, and other important legislation.
It is also expensive and time-consuming, often involving negotiations with shippers, logistics companies, and manufacturers. Because the process is involved, many businesses hire freight brokerage companies to handle the international shipping process so that they can focus on other areas of their company.
Why Hire a Freight Broker Agent?
If your business decides to seek help with international shipping, you’ll likely work with a freight broker agent. An agent is essentially a freight industry professional who works on behalf of a freight brokerage operation.
However, there are independent freight brokers too. Freight agents identify customers, negotiate shipping fees, and orchestrate pickups and deliveries for clients.
Whether your business is expanding to the international marketplace or you need help managing overseas shipping, consider working with freight brokerage specialists. A freight agent can negotiate on your behalf, securing low shipping rates and sourcing valuable shipping partners.
This can help maximize your potential for success while reducing the likelihood of costly errors. Before deciding to hire an agent, freight brokerage business, or an independent broker, it’s essential to understand the critical differences between freight experts.
Difference Between Freight Brokerage Experts
Although the terms freight agent and freight broker are often used interchangeably, both roles have distinct differences. The core difference is that a freight broker is an officially licensed business within the transportation industry, while a freight broker agent is more like a salesperson working for a freight agency or broker.
A freight broker agent is a customer-facing role that doesn’t usually involve running day-to-day operations within the business.
A freight broker is an organization that works with shippers and carriers to help both parties turn a profit and navigate a successful deal. Unlike a freight forwarder, a broker doesn’t take responsibility for any goods involved in the trade.
As intermediary parties, brokers don’t own any of the shipping vehicles. They have a team of professionals who help facilitate shipping agreements between buyers and sellers.
Depending on the type of deal that both parties agree on, the responsibility for the goods can change at different stages of the journey. For example, with free on-board shipping (FOB) origin, the title of goods transfers from seller to buyer as soon as the goods are shipped.
With FOB destination, the seller is responsible for the shipment until it reaches the buyer’s location. A freight broker often negotiates this term as part of the overall brokerage process.
Agencies involved in international or domestic freight brokering must obtain a license from the Federal Motor Carrier Safety Administration (FMCSA). This ensures freight brokerage industry standards are maintained and helps prevent fraud and missed payments. If a broker fails to comply with the FMCSA requirements, they risk legal issues.
For international shipping, brokers must also earn a surety bond. This prevents the US Customs and Border Protection (CBP) from incurring a financial loss if the importer doesn’t fulfill its financial duties (e.g., pay taxes and tariffs). A freight broker license for international shipping can only remain valid while their surety bond is in place.
Experienced freight brokers provide knowledge and expertise in logistics and international trade. They use their industry experience and professional network to offer their clients expedited delivery times, reduced shipping rates, and improved supply chain efficiency.
Some organizations may even provide a team of industry experts, making them an excellent resource for large international shipping deals. Since they often work with multiple clients simultaneously, brokers benefit from high-volume shipping discounts.
Freight broker agent
While a freight broker handles the legal and compliance aspects of shipping, the freight agent works on behalf of the broker. They manage the day-to-day operations, including liaising between shippers and carriers.
A freight broker agent typically works for a brokerage or agency. They operate closely with clients and shipping companies to plan shipping arrangements. Some agents may also take on client sourcing responsibilities, building their client database, and acquiring new accounts and contracts for their company.
One of the major differences between an agent and a broker is that agents don’t have to be licensed brokers with the US Bureau of Transportation. However, many successful freight brokers only hire licensed freight broker agents.
In some cases, brokerages suggest that potential agents complete freight broker courses to learn the basics of freight brokering. A certificate of completion can be advantageous when job hunting. It helps them progress through a freight agent program, freight broker school, or even online freight broker training before earning their brokerage license.
While a freight agent requires a freight broker to operate, freight brokers can operate without employing freight agents.
Typical responsibilities of a freight broker agent include:
- Scanning carrier schedules and shipping options for potential customers.
- Reaching out to their freight agent network, logistics associates, and load boards to find carriers willing to match their clients’ demands.
- Negotiating with shipping companies to secure the best possible freight rates for their clients.
- Ensuring carriers can facilitate the customer’s precise needs. For example, some items require refrigeration during transit. Therefore the shipping company must have appropriate cooler storage on board.
- Tracking the transportation of shipments in real-time, providing clients with regular updates, and ensuring their goods arrive safely and on time.
- Processing all necessary paperwork to ensure compliance with customs agents and transport law.
- Handling the deal’s financial aspects, including payments between shippers and carriers.
- Helping optimize loads for efficient transport. For example, this may involve determining whether full container load (FCL) or less than container load (LCL) is more economically viable.
- Solving issues with the shipping company, motor carrier company, or other parties involved in the transportation process.
- Performing additional responsibilities for their agency or brokerage, including customer service or business administration duties.
Freight broker agents must stay up-to-date on international transportation laws, standards, and practices. They should also be aware of relevant fluctuations in freight rates, inflation, fuel prices, and currency value.
Networking is essential to develop reliable contacts in the industry. Depending on the location of their clients, some agents work outside of regular business hours.
A significant portion of a freight agent’s time is spent negotiating with carriers for shippers or sourcing new clients. They must regularly employ sales and marketing techniques as well as negotiation tactics.
Independent freight broker agent
Independent freight agents have a similar role to standard freight broker agents. However, they work for themselves rather than a brokerage or agency. There are no restrictions regarding client acquisition or career opportunities as an independent salesperson.
Many independent agents work for brokerages as independent contractors. While they may operate under the authority of a licensed organization, they are not employees.
If an independent agent wants to create a startup business and establish a registered corporate identity, they must undergo training and acquire a freight broker license. However, this is not necessary if they wish to continue working as an independent contractor.
How Do Freight Brokers Make Money?
A successful freight brokerage business essentially earns its money through effective negotiations. The difference between the amount of money a shipper is willing to pay to transport its goods and the actual shipping rate negotiated by the agent is the brokerage’s take. This difference is called the spread.
Freight broker agents may earn a basic salary plus commission. A 2019 survey found that an entry-level position broker agent earned approximately $40,000 per year, with a 13% to 15% commission of gross margin.
Experience level is a major factor when determining the salary of freight brokers. An agent with extensive business experience not only earns a higher base salary, but they are also likely to have a higher commission cap.
What’s more, seasoned brokers manage more valuable loads and may have better closing skills than beginner freight agents. Over the years, acquiring national accounts or developing key strategic relationships with a major truckload carrier, business owners, or other successful freight agencies can help accelerate the careers of freight brokers.
How to Become a Freight Agent
The logistics industry is constantly evolving. Becoming a freight broker agent is an exciting career with plenty of progression opportunities. According to the US Bureau of Labor Statistics, close to 100,000 agents are currently employed.
Although the pandemic caused unprecedented difficulties for international trade, the global shipping container market size is expected to expand at a compound annual growth rate (CAGR) of over 6% by 2026.
In 2021, the Wall Street Journal reported that freight operators’ profits surged, despite the supply chain challenges throughout the pandemic. It is a growing, service-based industry that continues to provide employment opportunities.
Although not necessary, in-depth training is an excellent way to become a skilled broker. Subscribing to a freight broker training program equips you with the skills and knowledge to become a successful broker.
Whether you work for a freight broker business with an agent-based business model or become an independent broker, it can be a flexible career. You can work remotely as a freight broker agent, establishing a work-life balance that fits your needs.
Other important steps in getting your career started include:
- Applying for a US Department of Transportation (DOT) number and freight broker authority
- Securing a freight broker surety bond
- Applying for Unified Carrier Registration (UCR) – this is essential for domestic freight brokerage and interstate commerce
- Creating a professional email address, compiling marketing materials, and searching for clients
Work With a World-Class International Shipping Company
No matter what industry you’re involved in, working with a trusted leader in the global logistics and intermodal transportation industry can help your business prosper in the international marketplace. At Asiana USA, we provide world-class shipping services to help with your market expansion. We offer direct shipping and freight forwarding services, in addition to packing, warehousing, and customs services.
Whether you’re struggling to manage current demands or need a reliable shipping company to handle international orders, we can help. Our skilled and experienced team works with you to develop and implement best practice strategies for your business.
For a logistics provider you can trust, contact Asiana USA today at (855) 500-1808.