If you have a lot of experience with supply chain management and transportation and you’d love to arrange great deals for people looking to ship cargo from one place to the other, becoming a freight broker could be a great decision. You’ll get to work in a field that you love, and you can start a brokerage business for a surprisingly modest amount. There are challenges to this industry that you need to be prepared for, however, and you need to know a thing or two about running this kind of specialised business before you begin. Let’s take a look at a few things you’ll need to know before you get into the freight brokerage business.
You May Want to Niche Down
A lot of people who get into the freight brokerage business don’t really think about niching down; they instead try to cast as wide of a net as possible so they can attract as many clients as they can. While this can be a good strategy, focusing on one specific niche could be a much better decision for several reasons.
The biggest reason is that it will facilitate the process of finding shippers for clients. If you have requests for varying types of cargo, some of your regular shippers may have to decline you because they don’t handle them. This could leave you scrambling to find options or having to decline clients.
Another reason why you should consider niching down is because people who have a very specific type of cargo would rather work with a specialised team. Niching down will also greatly simplify your operations. So, consider the options and look at the pros and cons of specialising yourself versus going for a broader market.
You May Need to Focus More on Local Truck Freight
While people are still shipping things internationally by air, air cargo demand has reduced all over the globe, which is part of an overarching trend that has been going on since the beginning of last year. So, it would be wise to concentrate on truck freight and focus specifically on shorter distance routes as there is a trend towards short distance routes due to lower costs. You should also make sure that you keep an eye on global cargo trends in case things pick back up as it would allow you to eventually diversify your operation.
Insurance and Licences
Freight forwarding remains a tightly regulated industry, and you need to know which permits you need to apply for. You will also need to get some insurance. Regulations will vary depending on your council, however, so you will need to use the government’s licence finder tool to know which regulations will apply to you.
As far as insurance goes, you’ll need to look at things such as employers’ liability insurance, professional indemnity insurance, and public liability insurance, among others. The good news is that you will not have to insure the cargo as it will be handled by the third-party shipper, but you will still need to look into things like surety bonds and logistics liability insurance.
Businesses are constantly looking for better deals on shipping, especially in the times we’re in, and now could be a great time to get in the freight brokerage business. If you want to be successful, however, you must learn as much as you can about the industry beforehand and be ready for the challenges that come with it.
