Even for those with experience in the logistics and transportation business, there could be some confusion as to what exactly a freight agent is. Numerous companies and programs encourage the idea of starting your freight agency however what exactly does that mean?
Armstrong Transport Group has been using an agent-based model of business over the past 15 years.
This article will discuss the more conventional route of being an employee of a freight broker or even starting an own business. Then, we look into the definition of a freight agent and what it takes to succeed, the way agents are paid and the things to think about before making the transition to a freight broker agent.
freight brokers A Model for Employees
The term “freight broker” is a transport intermediary. This means that they connect shippers to carriers – through air, land-sea, rail, or land for the transportation of the goods like dewartices.
Being a freight broker takes some time (generally between six and 12 months) as well as professional experience, investments in equipment for business, software marketing, and business equipment, as well as satisfying the minimum requirements for licensing and insurance. Once established successful freight brokers usually expand their businesses by hiring salaried staff or hiring independent freight agents.
As per Business News Daily, employees are hired to complete specific tasks at the instructions of their employer. Independent contractors On the other hand usually are given the task or project they need to complete, with no company oversight of the time and manner in which they perform it.
Being employed by a major logistics firm as an employee comes with benefits: a steady income and benefits, a commission, and a vast support system. It’s also the best way to gain knowledge about the business and build the necessary skills to be successful as a transport broker.
Brokerages typically hire people who have no prior knowledge, then place them in an extensive training program and then teach them about the business. Sales positions in freight brokerages are entrepreneurial. The employees are educated and are given time to develop the book of business.
It doesn’t matter if it’s days in the classroom or the brokerage office there’s the best way for you to become familiar with the field than calling to reserve dispatch drivers and trucks. Without proper training and infrastructure, it’s tough to begin in the field of transportation. There’s plenty to be aware of and to master from federal regulations, to best practices, and even things to keep an eye out for.
Model:
Most employees are content with an income and commission. They are not successful until they achieve the success which is. Logistics professionals who deal with customers spend all day in the office, making numerous cold phone calls to prospective customers, handling problems with loading, and also receive an occasionally 3.30 a.m. emergency call.
A lot of brokers who excel at their work think about the possibility of earning more. If the margin for the load of $500 is 500, the broker might think, “Why am I only making 12% ($60) after the customer pays the shipping? Should 88% of the profit go to my employer? Are my customers loyal to the organization I represent or me? “
In an entrepreneur-driven industry, the majority of successful brokers are looking to become business owners or decision-makers. As an employee, there’s only a limit to how far you go.
What are the advantages of setting up your own business? The most difficult part is the obstacle to entry. If you do not have the business plan, bank partner, or cash to support you and the $75,000 bond, as well as commercial cargo insurance or cash flow needs, could seem daunting. Logistics companies operate on small margins, and the majority of the money coming into the company is then going out. Customers typically take between 45 and 60 days to make payments, straining the cash flow even more.
Brokers may seek benefits and guarantees to sign up to a new broker, for example, the ability to pay in just the next 20 days, paying higher rates, or providing affordable quick payment alternatives. These strategies can affect the cash flow. If you’re a proprietor of a company you’re accountable for not just operations but also all the back-office and accounting assistance required to make your company successful.
Freight Agent Programs
What happens if you’d like to own your own business, but you’re not enough prepared to construct all the infrastructure required? This is how the concept of freight agencies was born.
For instance, ABC Logistics is an agent for Armstrong Transport Group. The customer will receive all invoices and other corporate communications from Armstrong and rather than ABC Logistics.
The parent company offers all back-office support to agents’ offices. These include accounts, collections claims, marketing, legal, as well as technology -anything that is not directly related to sales or operations. Agent partners’ primary task is to issue the credit card, invoice their customers, and pay the carriers.
The office of the agent will operate under the authority of the parent company and use its cargo insurance. This parent firm will offer transportation management software to manage and manage loads. Additionally, the parent firm handles collections, protects the owner of the agent from debt. That is not in their favor, and helps in the settlement of claims between the carrier and the customer.
Partnership:
There are expenses associated with this kind of partnership. The most commonly used option is that the agency partner provides a portion of the gross margin to the agent. Certain companies pay a modest draw, and a 30-40 percent commission, while other companies provide up to 80percent commission. In many firms, there are extra charges for posting sites or services. Be sure to inquire about the charges your agency is responsible for and what your agent’s partner is responsible for.
The agencies are paid in contractors. This type of contract allows you the ability to manage your business the way you like. The past was when medical insurance benefits have been denied for 1099-compliant contractors. Due to the growth in gig economies, we are witnessing this trend changing. Armstrong is proud to provide dental, health insurance with indemnity and vision insurance to our agents and their employees.
The most important things to consider before becoming an agent
- Have you got a customer that will be with you to the new business?
- Are you proficient in formulating prices, loading, and locating carriers?
- The majority of agents (at most in the beginning) are involved in all aspects of the business. You have the assistance of your agency partner, however, they typically do not get involved in the sales or operations. They focus on the back-office: marketing, accounting, technology, and legal services.
- Have you got access to a space and the equipment that you require to get started?
- Typically what you require to start is a spare room at your home, a laptop computer or laptop, and a cell cellphone.
- Are you ready to be paid exactly the work you perform?
- This could be an unnerving leap for anyone who earns an income that isn’t linked in any way to the revenues.
Are You Ready To Become A Freight Agent?
Starting a freight company could be the right choice for you. You can run your business without having to invest lots of money. To get your business up and operating. Although agency owners can earn an unlimited amount of income potential. However, they could also face low times, slow periods, working holidays, and may work more hours than before.
Get in touch with us today. Named a top 25 freight broker from Transport Topics, Armstrong has the trustworthiness, reputation, and financial stability. That your customers and their carriers need. Our recruiters are on hand to assist you with any queries you might be having about the agent programs. We offer, including our software for managing TMS systems. Such as ATGFr8, and the numerous support and rewards. Benefits we provide our customers.