How to Get a Freight Broker License in Five Steps

Freight Broker

Whether by truck, rail, pipeline, or other means, massive amounts of freight travels through the US every day. To put this into perspective, trains move around 1.7 billion tons of freight every year, and the trucking industry generates over $700 billion in economic activity annually. To call the freight market massive is an understatement. 

Making it all work requires an army of professionals – including freight brokers who make connections between shippers and transporters. The Bureau of Labor Statistics projects that demand for qualified freight brokers will increase by 30% between 2020 and 2030, adding almost 60,000 new brokers. With higher demand comes lots of job opportunities and better pay, making freight broker look like an appealing career option. 

If you plan to pursue this path, you will need to get a freight broker license before you can broker a single deal. That’s the law in all 50 states. Brokering a deal without a license leads to strict penalties including permanent loss of license, potentially. 

Getting a freight broker license (also known as a cargo broker license or truck broker license) should be your first and biggest priority. We have outlined the most common requirements below:

Step 1: Pick a Business Structure

A freight brokerage is a business and will need to operate as such. That means selecting and then declaring a structure for the business:

  • Individual/Sole Proprietor
  • Partnership
  • Corporation

The right choice may not be obvious. Plus, there are pros and cons to each of these options, and long-term implications as well. That’s why many entrepreneurs, freight brokers or otherwise, consult with a lawyer or accountant about which structure to select. A consultation is not a requirement to get a license. Rather, it’s a resource that some (but not all) freight brokers rely on to build the best foundation for their budding business. You will need to report which structure you choose on the freight broker license application. 

Step 2: Obtain a Motor Carrier Number

The next step is to obtain a motor carrier number from the Federal Motor Carrier Safety Administration (FMCSA): the agency that regulates freight brokers and grants licenses. You will need to request a number by submitting the OP-1 Form, which functions as an initial application for a freight broker license. The form requires general business information (including business structure). Applicants will need to select either “Broker of Household Goods” or “Broker of Property (except Household Goods)” under Section III designating the Type of Operating Authority. Plan for a $300 application fee.

Online applications will immediately receive a motor carrier number. Applications mailed to the FMSCA will get a number within four weeks. The application process cannot proceed until you have a number, making it especially important to take this step early and correctly.

Step 3: Secure a Surety Bond

Every freight broker will need to prove they have a type of surety bond known as freight broker surety bond before being granted a license. This process can seem confusing and daunting at first, especially compared to the other steps on this list, but it’s quite simple to obtain a surety bond. Before explaining how to get a bond, however, it’s important to cover how one works. 

Freight broker surety bonds hold a broker financially liable for misconduct that causes damages to clients or the public at large. When a broker does something illegal or unethical, the parties hurt by that behavior may file claims against the surety bond for compensation equal to the damages caused. The surety that backs the bond guarantees immediate payment in full for all valid claims. Afterward, the broker that caused the claim must repay the surety – with interest and fees added – or have the debt sent to collection and the bond contract terminated, which would invalidate the freight broker license. 

Securing a bond involves finding a trusted surety agency, completing an application, and submitting to a credit check. The surety will then quote a premium price unique to each applicant. The license requires a $75,000 surety bond, but the bond cost will be a small percentage of the total, less or more depending on credit. 

Bond coverage goes into effect upon paying the premium, at which time the surety agency will provide a document proving as much. The FMCSA will need a copy of this document to verify bond coverage. You will need to obtain a freight broker surety bond upfront, then keep it active and in good standing for the duration of your career. That involves renewing it every 12 months, at which time the surety will reevaluate credit and quote a new premium price. 

Step 4: Pick a Process Agent

A process agent serves as a representative for a freight broker in the event that broker must be served with court papers. Essentially, process agents are a way to hold brokers legally accountable, similar to how surety bonds hold them financially accountable. Brokers will need to work with a process agent in each state where they have an office or write contracts, but there are also companies that can offer blanket coverage in all states. Once selected, the process agent must fill out Form BOC-3 for submission to the FMCSA. 

Step 5: Register the Business

Part of the final steps before getting your freight broker license is to register with the Unified Carrier Registration: a nationwide database of broker registrations, financial liability information, and fee disclosures. By joining this registry, a broker agrees to abide by rules that apply to everyone in the industry and pay all required fees to the state where the main office is located. Brokers should also familiarize themselves with all rules relevant to freight transport in the states where they conduct business. Knowing these rules could help you prevent expensive infractions later, including claims against the freight broker surety bond. 

Take the Next Step With Viking Bond Service

When you arrive at step three – securing a surety bond – rely on Viking Bond Service for everything you need. We can get you a quote for a bond within 24 hours in most cases. And unlike other surety agencies, we don’t immediately disqualify people with bad credit. Our mission is to help more people get the surety bonds they need without stress, hassle, or inflated costs. 

Request a quote at your convenience. There is no fee and no obligation to go further. Our team is also happy to answer your questions and provide more info about anything. Contact us in writing or call 1-888-2-SURETY (1-888-278-7389).