With e-commerce valued at around $423.3 billion (and showing no signs of stopping anytime soon), getting involved in the transportation industry is more worthwhile than ever; whether you take the role of a less-than-truckload (LTL) driver or are more interested in freight brokerage, the job opportunities and possible profits are booming. This article will focus exclusively on freight broker bonds as obtaining one is one of the most important parts of establishing a freight brokerage company.
What are freight broker bonds?
As a transportation broker, your job is to match authorized and reliable transportation carriers to shippers; you are responsible for coordinating all of the shipping needs between various companies. However, freight management isn’t available to just any Tom, Dick, or Harry that wants to try their hand in the transportation industry: you need to prove that you’re qualified and capable, and the acquisition of a freight broker bond can prove both.
Freight broker bonds essentially act as an agreement between three parties (you, the government, and a bond agency) that acts as insurance for your customers. They are a type of surety bond that will protect your truckers and shippers from mishaps: it guarantees that should something happen, you have the money to honor your contracts and pay truck drivers/deliver loads. They go a long way in reassuring your clients that you are a trustworthy investment.
What does it cost?
Having a freight broker bond is a necessary part of becoming a freight broker as it adds credibility to your business. Unfortunately, they are expensive: the BMC-85 trust fund requires $75,000 in capital ready to place in a bank account, though the more affordable BMC-84 bond costs between $900 and $2,000 annually. The option you choose depends on the size of your business, the amount of money you have on hand, and how new you are to freight brokerage.
Fortunately, there are varieties of freight broker software (such as Brokerware) in place to help you manage this expensive investment. The broker system is complicated and costly, so platforms like Brokerware can help streamline the process. Once you obtain your freight broker bond, you can begin searching for clients to grow your business.