To start your own freight brokerage business, you must obtain freight broker authority.
But what exactly is it, and what are freight broker authority application requirements? Furthermore, how much does freight broker authority cost?
In this comprehensive guide, we’ll answer these questions and more. We’ll cover:
- Freight broker authority requirements
- Step-by-step instructions on how to get freight broker authority
- Freight broker authority costs
- Frequently asked questions about becoming a freight broker
So, if you’re considering a new career as a transportation broker, keep reading to find out how to get DOT broker authority. And when you’re finished, be sure to read more in our ‘Freight broker job requirements’ article series:
- Freight broker license requirements
- Freight broker surety bond requirements
- How to get freight broker authority
What is freight broker authority?
Freight broker authority is a license or operating authority that empowers a person or company to legally act as a middleman or intermediary between shippers and carriers in the transportation of goods.
Obtaining freight broker authority entails:
- Registering with the Federal Motor Carrier Safety Administration (FMCSA)
- Complying with all relevant regulations and requirements
- Obtaining a freight surety bond and maintaining liability and cargo insurance
Once granted, it enables the person or freight broker company to arrange freight shipping, negotiate rates and contracts with carriers, and handle administrative tasks such as tracking and invoicing.
What are freight broker authority requirements?
There are several freight broker requirements. These include:
- Getting a USDOT number and motor carrier (MC) number from the FMCSA
- Obtaining a BMC-84 surety bond or trust fund agreement of at least $75,000
- Setting up cargo and liability freight broker insurance
- Designating a process agent in each state where the broker operates
- Passing a background check for the transport brokers license
- Passing the FMCSA’s broker authority application process (including the freight broker license test)
- Paying all required freight broker license application fees
- Maintaining accurate records of all transactions
- Following FMCSA rules and regulations
Broker authority vs carrier authority
Carrier authority and broker authority are two different types of operating authority required for transportation businesses to operate in the U.S.
Broker authority, also known as freight broker authority, is required for businesses that arrange for the transportation of cargo owned by others, typically shippers or consignees. Brokers do not own or operate any trucks or equipment themselves, but instead act as intermediaries between shippers and carriers. They are responsible for arranging transportation, negotiating rates, and managing cargo logistics.
Carrier authority, on the other hand, is required for businesses that own and operate their own trucks or equipment to transport cargo on behalf of others. Carriers are responsible for the actual transportation of the cargo, including loading and unloading, and are subject to certain safety regulations set by the FMCSA.
How much does it cost to get your own authority?
Generally speaking, the FMCSA charges $300 to apply for broker operating authority.If you use a third-party service provider for trucking authority packages, you could be charged up to $1,000 more.
It’s important to note that the $300 processing fee is in addition to fees for other freight broker requirements. You’ll also need to budget for surety bond costs, business registration fees, freight broker course fees, etc.
6 steps to apply for freight broker authority
Are you wondering how to get your own authority? Here are the general steps to apply for broker authority in the U.S. so you can get a trucking broker license.
- Obtain a USDOT number: If you don’t already have a USDOT Number, you will need to obtain one. This number is a unique identifier for your business and is required for operating as a freight broker.
- Complete the OP-1: You complete an online application known as the OP-1 form. This form is used to apply for various types of operating authority, including freight broker authority.
- Pay the application fee: There is an application fee that needs to be paid when submitting the OP-1 form.
- Provide proof of insurance: You must provide proof of a surety bond or trust fund agreement with a minimum coverage of $75,000. This ensures that you have the ability to cover any potential liabilities.
- Designate a process agent: You must designate a process agent for each state in which you intend to do business. A process agent is a representative who will receive legal documents on your behalf in the event of legal action.
- Submit the application: Once you have completed all the necessary steps and gathered the required documentation, submit your application to the FMCSA for review.
It’s important to note that the steps for how to get broker authority may be subject to change, so it’s advisable to consult the FMCSA website or seek professional assistance to ensure you have the most up-to-date information.
Start your new career as an in-demand freight broker
Once you finish freight broker training, the hard part is over. The licensing and operating documentation is straightforward, the required fees aren’t exorbitant, and the field’s long term growth outlook is quite positive. If you’re ready to start a promising new chapter in your career, consider the freight brokerage industry.
FAQ
No, the responsibilities of a freight agent vs freight broker are very different. A freight broker is specially licensed to arrange the transportation of goods on behalf of shippers and carriers. A freight agent is an individual who works for a freight brokerage company, helping to find and negotiate carrier rates and communicate with shippers.
First, you’ll need to have at least a high school diploma or an equivalent education. Then you apply for a freight broker authority through the Federal Motor Carrier Safety Administration (FMCSA). This involves submitting the required documentation, such as proof of a $75,000 surety bond or trust fund agreement, to demonstrate your financial responsibility.
Broker authority, also known as operating authority, refers to the legal permission granted by the Federal Motor Carrier Safety Administration (FMCSA) in the U.S. that allows an individual or company to operate as a freight broker. This authority is necessary for individuals or companies who want to arrange for the transportation of property by authorized carriers.
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