How to start a freight broker business in Canada
Freight brokers play an incredibly important role in the shipping industry in Canada, facilitating connections between clients that need to ship their products and carriers that will make it happen. Working with a freight broker is highly beneficial for both parties, as they help negotiate favorable rates and fill jobs faster.
Working as a freight broker in Canada is a fast-paced yet rewarding job, and it can also be quite lucrative. With strong networking skills and an entrepreneurial spirit, you can start your own freight broker business, which allows you to control your own schedule and choose your own clients. Here’s everything you need to know to start a freight broker business in Canada.
How does the freight industry in Canada work?
Due to the nature of Canada’s geography, ground shipping is the most cost-effective product delivery option for many companies. Truckers carry cargo loads between major cities using Canada’s highway system. Many Canadian shippers and carriers also deliver loads to cities and towns in the United States just across the border.
This process starts with a shipper, who needs to get goods from point A or point B. These goods could be raw cargo or finished products, depending on their stage in the supply chain. For many shippers, the most efficient option is to outsource to a third-party carrier that offers trucking services.
For shippers, the biggest challenge here is often finding reliable carriers with the right type of truck available. Many carriers also struggle to find clients, particularly as they’re just starting to build a business. This is where the freight broker comes in. Freight brokers connect shippers and carriers, organizing these shipments to streamline the business.
Understanding the role of a freight broker
Freight brokers play an invaluable role in the shipping industry. Not only do they connect shippers and carriers, but they facilitate many aspects of the shipment to make sure everything runs smoothly and save time for both parties.
Over time, freight brokers build up an established client base of both carriers and shippers, which helps them connect these two parties quickly based on vehicle needs, route type, and more. Additionally, the freight broker will help both clients negotiate appropriate rates based on the shipment, and will help with contracts and documentation once the shipment is finalized.
Additionally, freight brokers can help coordinate various aspects of these shipments. This includes scheduling pick-up and drop-off times, planning routes, and more. Providing this extra level of support when needed makes freight brokers invaluable to their clients.
Necessary skills and qualifications for a freight broker
There are a variety of skills that are helpful in becoming a freight broker. Many of these skills are things that you can learn on your own, but it is also incredibly helpful to attend a freight broker school. These courses dive into the specifics of the logistics industry as well as teaching a variety of key business skills, such as money management, sales, and more. Many people will also work as an assistant for a larger freight brokerage before launching their own business.
In order to succeed as a freight broker, you’ll need very strong communication, networking, and interpersonal relationship management skills. This is because you’ll be consistently dealing with many different types of shipping professionals, whether it be through email, over the phone, or in person.
Additionally, freight brokers need very strong organization and time management skills. You’ll need to be able to simultaneously keep track of many different orders, and you’ll have many tasks to complete in a relatively short period of time. You’ll also need to be able to self-motivate and plan your own schedule efficiently.
How to start a freight broker business in Canada
The first step to becoming a freight broker in Canada is registering your business with the government, which is necessary for legal and tax purposes. You’ll need to register your business with the federal government as well as with your provincial or territorial government. It is often helpful to consult a lawyer during this process to ensure that your business is properly set up.
You’ll need to decide how you want to structure your company - many freight brokers opt as sole proprietorships, but you could also operate as a partnership or even a corporation if other people are involved. This is also when you’ll need to choose a name for your business.
The next step is to register your freight brokerage with the Federal Motor Carrier Safety Administration and USDOT. Although these are US agencies, they regulate Canadian brokers too, and registering with them will allow you to work in both countries. Registering with USDOT takes about six weeks and has an associated one-time fee of $300. After you’ve registered with USDOT, you’ll be able to complete the process and obtain a MC number.
Part of this process involves completing a BOC-3 form to designate a process agent. Your process agent will receive legal documents on behalf of your business, and they need to be located in the same province as you.
If your brokerage is based in Quebec or Ontario, you’ll also need to register your freight brokerage with your provincial government. If your brokerage is based in any other Canadian province or territory, you won’t have to register at the provincial or territorial level.
Finally, you’ll need to set up a freight broker bond, which serves as a form of business insurance. This bond should be at least $75,000 and is required by FMCSA.
Operating a successful freight broker business
The key to getting a successful freight broker business off the ground is a strong marketing strategy to build up a client base. There are many ways to do this, including cold outreach, digital marketing strategies, and even in-person networking. Once you build up your contact list, you can also use referrals to find new clients.
Additionally, you can use technology to streamline your business and get things done faster. Software programs like Rose Rocket allow you to manage quotes, track shipments, process invoices, and handle many different aspects of your operations all in one place. If you’re looking to learn more about how a TMS software can help your brokerage grow, book a demo below – one of our logistics experts would be happy to speak with you!