How to Select a High Quality Freight Broker

There are several reasons to use a freight broker, perhaps you have purchased an item across the country or need to get an item (s) shipped to your customer and you’re looking for an easy, cost effective way to get it done. Whatever the reason may be, this guide has been put together to help you select a high quality freight brokerage company.

LEGAL

Do they have a Freight Broker Bond and operating authorities?

As of October 1st, 2013 Freight brokers are required by the FMCSA (Federal Motor Carrier Safety Administration) to have in place either a BMC-84 or BMC-85 freight broker bond in the amount of $75,000 U.S Dollars in order to maintain an active operating authority. The BMC-84 is a surety bond provided by an insurance company who is willing to guarantee the 75K in case the broker defaults on payments. The insured (broker) will pay a yearly premium of $1,000 to $12,000 in order to get this insurance in place. The BMC-85 removes the insurance company and is put in place by the broker themselves or a bank by putting $75,000 into a trust fund. The main benefit to a trucking company is that they have a bit more of a guarantee that they will get paid and that a less reputable broker isn’t going to take the money from the customer and run without paying the trucker. The benefit to the shipper is very similar in the idea that they don’t have to fear that after they pay the broker the trucking company is going to come after them later if the broker takes off. This has helped reduce the amount of fraud in the industry as the broker now has to be financially stable before they even start. This is all fine if your in the USA or using a U.S. based broker but if you’re in Canada its a little different story. Currently the only province in Canada that regulates freight brokers is Quebec, who requires brokers to be registered with the CTQ. However in order to get active authorities the FMCSA stated that Canadian Brokers need to obtain the bond as well. This has left many brokers Canadian brokers in a grey area as the U.S. says they need it while Canada says they do not. Even if a Canadian broker wanted to get a bond it is very tough to find a U.S. or Canadian insurance company to quote it or offer it for a decent price. In conclusion, it is a good idea for all brokers to have it as it is beneficial to everyone and chances are if a Canadian broker has obtained a bond they are extremely financially stable.

INSURANCE

Do they have proper insurance to protect your goods for transport?

Chances are that the trucking company the freight broker or Freight brokerage company hires for you will have more than enough insurance to cover the value of your goods in the case of an accident but it is a good idea for the broker to have insurance as well. You will want your broker to obtain proper insurance l just in case the trucking company is running with expired insurance or the broker forgets to check the trucking companies insurance in the first place. Either way you want to make sure you are covered. A reputable freight broker will have this insurance in place and will likely provide a copy of it before you have a chance to ask for it. You will want to see a minimum of 1 million liability, 250k cargo (unless the value of your goods is higher of course) and an errors and omissions policy is always a good idea.

REFERENCES

Can you find non bias references or referrals?

A good freight broker will likely have reviews on Google about past shipments, however keep in mind that these may be higher on the negative side as a person who had a good experience is much less likely to take the time out of their schedule to write a review in the first place. The best place to start would be from a friend or college who is in the shipping business. Chances are they have used one or more freight brokers before that should be able to point you in the right direction. The broker may also be able to provide references but unless it’s from a big reputable company it is likely not going to be very useful.

Experience

Has the freight broker ever done this before?

Another important part to look for is if the broker has any experience brokering freight. You will want to make sure they know what they are doing as moving freight isn’t as simple as calling a trucking company and sitting back. They may have experience in moving dry van freight but no experience moving Agricultural equipment. Different types of freight have a lot of different requirements to get it shipped. If the item is crossing internationally you will want to make sure the broker has experience doing that as mistakes may end up costing 1000’s of dollars. An experienced broker will be able to answer pretty well any question you may have about moving freight.

These are just a few of the key areas to look at before choosing a freight broker to move your freight. A broker that scores well in the above 4 areas will ensure your shipment is moved fast, on time and on budget.