Even for those with experience in the logistics and transportation business, there could be some confusion as to what a freight agent is. Many companies and programs advocate creating your freight agent however, what exactly does it mean?
Armstrong Transport Group has been operating under an agent-based model of business for the last 15 years. On the most fundamental level, all employee in operations and sales is a contractor with a 1099 number who runs their own business that is under Armstrong Transport Group. Armstrong brand. With over 130 offices across the nation, we collaborate with agent’s offices which consist of one person up to offices that have more than 100 employees.
This article will discuss the traditional method of being an employee of a freight broker, or even starting the brokerage of your own. We will then go into the depths of the role of a freight broker 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.
Fight Brokerages the Employee Model
The term “freight broker” acts as a transportation intermediary. This means that they connect shippers with carriers through air, land, or sea to transport the goods.
Being a freight broker takes some time (generally 6 to 12 months) and prior experience in the industry, investment in software, business equipment marketing, and business equipment, as well as satisfying the minimum requirements for insurance and licensing. Once established successful brokers of freight will typically expand their operations through hiring salaried employees or hiring independent freight agents.
Being employed by a major logistics firm as an employee offers benefits: a steady income as well as benefits, commissions, and a vast support system. Additionally, it’s the best way to gain knowledge of the business and acquire the necessary skills to be successful as a successful transportation broker.
Employee Model:
Brokers typically employ people who have no prior knowledge, then place them in rigorous training programs, and then teach them about the business. The sales positions at freight brokerages are entrepreneur-friendly by design. The employees are educated and allowed to build the book of business.
It doesn’t matter if it’s days in the classroom or on the floor of a brokerage there’s the best way for you to become familiar with the field than calling to schedule 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.
Most employees are content with commissions and salaries. They are not successful until they achieve the success which is. Logistics professionals who interact with customers work many hours at the office, making numerous cold phone calls to potential customers, managing problems with load, and getting a now and then 3 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 is at $500 they 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? “
Industry:
In an industry that is entrepreneurial most successful brokers desire to become business owners or decision-makers. As an employee, there’s only a certain amount of distance you can go.
How do you go about setting up a business of your own? The most difficult part is the obstacle to entry. If you do not have the business plan, bank partner, or the cash to back it up The $75,000 bond as well as commercial cargo insurance as well as cash flow demands may be a challenge. Logistics firms operate on very small margins, and the majority of the money coming in goes out. Customers typically take between 45 and 60 days before they can make the payment, which strains cash flow more.
Brokers may seek benefits and guarantees to sign up to a new broker like payment in twenty days or paying premium rates, or providing cheap quick pay options. These strategies can affect the flow of cash. If you’re a proprietor of a company you’re accountable not only for logistical issues but also for all the back-office accounting and support required to keep the business run.
Freight Agent Programs
What if you’re looking to start your own business, but you’re not yet ready to build all the necessary infrastructure? That’s where the idea of freight agencies came into existence.
For instance, ABC Logistics is an agent for Armstrong Transport Group. The customer will receive all invoices and other corporate communications as Armstrong and rather than ABC Logistics.
The parent company offers all back-office support to the agency offices of its agents. These include accounts, collections claims, marketing, legal, and technology, which is anything that is not directly related to sales or operations. Agent partners’ most significant task is to issue credits, invoice clients, and then pay the carriers.
The office of the agent will operate under the authority of the parent company and use the cargo insurance. This parent firm will supply the transportation management software that allows them to make and manage loads. It also handles collection, shields the owner of the agent from debt that is not in their favor, and assists in settling claims between the carrier and the customer.
Arrangement:
The most popular arrangement is that the agency partner provides a portion of the gross profit with the agent. Certain companies pay a modest draw and charge 30-40 percent commission. Other companies give up to 80percent commission. The standard commission split in the business is 60 percent to the owner of the agency with 40% going to the business they represent. In many firms, there are extra charges for posting sites or services. Be sure to inquire about the charges your agency will be accountable for, and also what the agent’s partner is responsible for.
Agency employees are paid on contractors. This type of contract allows you the freedom to run your business the way you like. For a long time, health insurance benefits have been denied on 1099 contracts. Due to the growth of gig-based work, we’re seeing this trend changing. Armstrong is proud to provide dental insurance, indemnity health insurance, and vision insurance to our agents and their employees.
Before becoming an agent
- Have you got a mobile customer base that can follow you to your new venture?
- Are you proficient in the process of quoting 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, but they usually aren’t involved in the sales or operations. They focus on the back-office: marketing, accounting, technology, and legal services.
- Have you got a location and the equipment you require to do your job?
- Typically what you require to start is spare space in your house, a computer or laptop, and a cell cellphone.
- Are you willing to be paid precisely the work you perform?
- This could be an intimidating leap for someone who earns a steady income and is not connected specifically to revenues.
Are You Ready To Become A Freight Agent?
If you’re motivated well-organized, and willing to try something new and start your freight agency. This could be the right choice for you. You can run your own company without having to invest lots of money, to get your business up and up and running. Although agency owners can earn an unlimited amount of income potential. They also experience low times, slow periods, working breaks, and have to work more hours than before.
If you’re looking to take a risk with yourself or are interested in learning more about Armstrong contact us today. The company was named a top 25 freight broker from Transport Topics. Armstrong has the trustworthiness, reputation, and financial stability your clients and transporters require. Our team of recruiters is available to assist you with any queries you be having about the agent programs. We offer, including our technology for TMS. The ATGFr8 system, and the numerous support and rewards benefits we provide our customers.