What is a good profit margin for a freight broker?
Freight brokers make their money in the margin between the amount they charge each shipper (their customer) and what they pay the carrier (the truck driver) for every shipment. Although it varies from one transaction to the next, healthy freight brokers typically claim a net margin of 3-8 percent on each load.
Depending on your expertise, your salary range can be anywhere from 10% to 35% commission for each truckload. Ultimately, the average broker ends up getting margins of around 15%. This percentage is a portion of the total amount of money that customers give you. So, how much do freight brokers make?
Yes, freight brokers can indeed make 7 figures – many have successfully grown 6, 7 and even 8 figure businesses.
The national average salary for a freight broker in the United States is $62,105 per year , with an average additional compensation of $28,000 per year for commissions.
According to a Freight Waves survey, the average commission is 13% to 15% of a load's net revenue. Example: A shipper pays $4,000 to a licensed freight broker to move a load. The freight broker negotiates $3,000 with the trucking company to transport the load, leaving $1,000 net revenue.
On average, the yearly freight broker salary in the U.S. is $71,500 ($36.67 per hour). Entry-level positions begin at $45,000 per year, while most experienced professionals earn up to $107,500 per year. As a freight broker, you can start your own trucking business and become your own boss.
To be a successful freight broker, you can't stress about the things you can't control. When an issue arises, act quickly, solve what you can and communicate your solution with all impacted parties.
The type of freight
Flat-bed loads are good-paying loads because they're usually heavier or larger cargo, and the driver often has to help secure and cover the load. Dangerous goods, such as fuel, chemicals, or other unstable cargo, are better-paying as well.
Yes, being a freight broker is stressful.
This, combined with the significant amount of work it takes to organize and manage shipments, often results in freight brokerage being a stressful job. However, many people find this stress worth it for the money they earn and the freedom of being their own boss.
- Lack of control: When you use a freight broker, you're giving up some control over your shipping process. - Dependence on technology: Freight brokers typically rely heavily on technology, so if there are any problems with their systems, it can cause delays in your shipments.
Is it better to be a freight broker or agent?
Freight agents have less liability in comparison to a freight broker. Freight agents need freight brokers to operate, whereas freight brokers can operate without freight agents. A freight broker will have a more consistent brand look and feel across its office(s) versus freight agents that operate under the broker.
- Referrals. In answer to the question of “how do brokers find loads,” the number one answer is referrals. ...
- Make Freight Tracking a Priority. ...
- Load Boards. ...
- Warm Calls. ...
- Cold Calls. ...
- Advertising and Marketing Campaigns. ...
- Shipper Lists. ...
- Re-Engage Old Accounts.
State | Annual Salary | Hourly Wage |
---|---|---|
New York | $73,975 | $35.56 |
Vermont | $72,702 | $34.95 |
California | $71,405 | $34.33 |
Maine | $69,342 | $33.34 |
W-2 brokers typically earn a base salary with a commission directly tied to their profits. According to a recent Freightwaves survey, median pay in this model is $40,000 salary plus an average commission rate of 13.2% on gross profits.
The average commission for a freight broker is 13%-15% of the gross margin. The final income depends on what types of freight are involved and what carrier performs the delivery.
Freight Brokerage has the potential to yield high annual revenues with exciting profit margins! Depending on various factors, including number of customers, volume of shipments, and profitability on those shipments, a freight broker can make between $50,000 (inexperienced) and $500,000 (very experienced) per year.
The average age of freight brokers is 40+ years years old, representing 54% of the freight broker population.
To go from being a good freight broker to a successful one, you need to consider developing some essential skills like understanding market trends, gaining knowledge and experience, and Identifying good customers and carriers. Beginning a freight brokerage is not without its problems.
The fact is, the freight brokerage business is very fragmented with thousands of brokers and the majority of freight brokerage firms does less than $5 million per year in sales. It's important to note that while gross revenue is great, the key lies in running a profitable and sustainable business.
In a nutshell, being a freight broker is no walk in the park. If only we could rely on data analytics and all customers were identical, life would be easier. But with billions of tons of cargo being shipped across the US every year, we need to find a way to stand out from the crowd.
How do freight brokers make commission?
Freight broker commission is calculated on the gross margin of a booked load. You can determine gross margin by subtracting the amount the shipper is charged from the amount you (the broker) pay the carrier. The margin left over directly impacts how much money a freight broker earns.
Freight Brokers use prospecting to expand the size of their sales funnel. They'll reach out to leads (potential shipper contacts) and nurture them into “opportunities” (leads who have been warmed up over time).
Freight brokers make their money in the margin between the amount they charge each shipper (their customer) and what they pay the carrier (the truck driver) for every shipment. Although it varies from one transaction to the next, healthy freight brokers typically claim a net margin of 3-8 percent on each load.
- Estes Express Lines$77,913/yr.
- Ashley Distribution Services$74,796/yr.
- Central Transport$74,212/yr.
- UPS Inc. Founded: 1907. Revenue: 97.3 billion USD (2021) ...
- FedEx Corp. Founded: 1971. ...
- XPO Logistics. Founded: 1989. ...
- J.B. Hunt Transport Services Inc. ...
- Knight-Swift Transport Services. Founded: 1990. ...
- YRC Worldwide. Founded: 1929. ...
- Schneider. Founded: 1976. ...
- Landstar Systems. Founded: 1968.