Freight Brokerage Monthly Operating Costs?

Dang. Hope he's ok.

 

Yes, that’s for a year. It can be anywhere between $700 and $7000 depending on your credit. Per year.

Aside from the initial start-up costs (operating authority, surety bond, decent computers with antivirus software, decent laser printer, fax, business cards, website, set up business [corp, llc, dba, etc], obtain process agents, transportation attorney to set up your shipper package/contracts and carrier package/contracts, set a business bank account, set up a sound filing system and office files, prepare initial marketing to send to shippers, etc)…

Aside from that - it’s advisable you have a factoring company, transportation attorney to set up your business and transportation accountant. The monthly operating costs are very marginal: primarily, you’re prospecting - on the phone contacting shippers and trying to get business. Aside from that, you’ll need some software which can be purchased monthly or yearly (each averaging at about $50 to $100 per month):
1) Loadboards/TMS
2) Accounting software like quickbooks,
3) RMIS for carrier verification, credit monitoring subscription for shipper business worthiness,
3) Databases like Salesforce
4) cloud services compatible to your business needs (price varies)
5) antivirus (up to $100 per year)
6) website (relatively inexpensive)
7) fax number or cloud based fax software (relatively inexpensive)

The most difficult part of sustaining a new brokerage is the problem of cash flow, especially the first 4-6 months. Most carriers expect to be paid within 20-30 days and most shippers actually pay 40-90 days after POD. Factoring is essential to build your trust with carriers and for your own cash flow. Develop a niche and focus on a specific area, trailer type or type of freight…

Good luck!

 

Also take into account that many of the customers out there take advantage of new brokers. When you call to solicit business from them, being new, they will expect you to quote really low, and most often take a loss. Meaning your going to quote them say 5000 but pay 6000 to the carrier to move the load. They want to know that the load will get moved regardless of cost, and that you have the ability to absorb that hit and still be in business. Also take into account claims, especially if youre running perishables. Most customers will require the reefer unit to be downloadable and the unit remains on continuous setting. If there is a discrepancy at delivery, and the unit is too old to download or that is a carrier runs his reefer on cycle instead of continuous, it will be an immediate claim. Broker insurance wont cover that, carrier insurance will deny it as driver negligence. If the carrier doesnt pay, you as the broker will be liable to pay. Not a fun time when you owe 50,000 to customer and the carrier goes dark on you.

 

you won’t be in business long if your losing 1k per load.

 

I just lost 1200 recovering a load today but made enough during the week to take that hit and keep it moving. Try taking 100,000 loss on some berries and stay in business thats the real challenge.

 

I do grape loads every year. Hire competent companies to deliver your loads and verify they have the proper coverage to cover a loss. You can also carry insurance to cover a loss.

But that’s not what I’m talking about. you said new brokers will be expected to take a loss on a load. Only receive 5000 but you pay the truck 6000 to deliver it. That’s stupid and anyone who does that is also stupid.

 

Of course i'm no fool. I buy the spike insurance on a load valued that high. Cost about 90 a load for 100,000 in valuation.

Doesnt matter how "reputable" a company is. I had a dingus run his reefer on cycle and refuse to pay for the claim because he didn't see anything wrong with the product, even though the self life was cut by half. Insurance refused and im stuck paying the customer 20,000 out of pocket and chasing this guy in court.

I see brokers landing new customers all of the time and taking a loss on the first few loads to garner the new business and get put on the email list for spot bids on lanes. Then they end up making money once they get the business and the trust of the customer they are moving for. I've done it myself too, in fact i run a lane for one customer where i lose 300-500 on every week, they know it and do not care. But my point was that customers will try to take advantage of that situation, when a new broker is cold calling them everyday trying to land new business. They will purposefully tell the new guy a much lower rate than they usually pay in an attempt to get the inexperienced broker to take the load.

Stupid is as stupid does i suppose, and to each his own.

 

Your best bet is to get a job working as an entry level broker at a big firm, learn as much as you can, and break off on your own after a few years. You're highly unlikely to be successful otherwise. It's a cutthroat, messed up industry

 

It does sound like a messed up industry. I here people complaining about stuff that should be considered “ comes with the territory “ IMO . However I do not broker but work with them. When a broker asks something which seems unreasonable I take care of it, the next time the broker calls me about another load I tell him I don’t want the load. He usually asks why, at that time I tell him what was unreasonable with the previous load. Most of the time they understand, sometimes they continue to ask why not, I tell them that’s why I have my own numbers.