Thursday, March 22, 2007

4 Frequently Asked Questions for Freight Brokers

What is a Property Broker?

A Property Broker is the term established by the Federal Motor Carrier Safety Administration (FMCSA), a division of the United States Department of Transportation, to describe licensed individuals, or companies, who help make a shipper and an authorized carrier successful in the transporting of freight, commonly called a freight broker

What are the requirements of an FMCSA Property Broker?

Each company or entity is required to obtain a "surety bond" with an approved bank or insurance company, and maintain "process service" agents in all 48 contiguous states.

What is a surety bond?

Each company or entity must prove they are capable of paying the various truck lines, airlines, railroads, or any other entity being used by the broker.

An individual's credit, and/or financial strength, is investigated with extreme thoroughness. Only then is a "bond" issued.

Accordingly, if for some reason the broker fails to pay the transportation company, the bonding company must pay. As you can imagine, the bonding company is very careful about who they insure.

Is freight brokering a growing sector of the transportation industry?

As of this writing, there are over 14,000 licensed transportation brokers in the United States of which only 50% are operating in a full time manner. Freight Brokers accounted for over 10%, around $60 billion, in revenues from the Transportation Industry. In a recent article, the Wall Street Journal reported "transportation brokerage, and logistics" as the fastest growing segment of the transportation industry.

Read more FAQs tomorrow.