A freight broker serves as the intermediary bridging the connection between a shipper and a carrier. The shipper, which can be an individual or a business, is the party responsible for the goods being transported. On the other hand, the carrier is the entity entrusted with delivering the freight on behalf of the shipper.
Brokers play a pivotal role in sourcing suitable carriers for the shippers they collaborate with. Their primary goal is to secure favorable rates through negotiation on behalf of their clients. Conversely, brokers can also perform the inverse function, identifying multiple shippers for a single carrier. This relationship provides carriers with a more consistent stream of customers compared to if they were to find shippers themselves. By acting as the intermediary, freight brokers bring together shippers and carriers in the freight industry. However it’s important to note that the freight broker is not responsible for the safety and delivery of the shipper's merchandise. This responsibility falls upon the carrier.
Although brokers do not engage in the physical transportation process, they facilitate effective communication between shippers and carriers. Brokers aid both parties in tracking their shipments and promptly informing them of any modifications or delays.
There are usually two things that determine a freight broker’s salary: base salary and commission rate. Some brokerages only pay via commission, however.
In 2023, the average salary of a US freight broker was $52,390 with an average hourly rate of $25.19; entry-level yearly salary for a US freight broker was $35,000. On average, a freight broker’s base salary ranges between $35,000 and $77,000. The base salary of a freight broker relies on three factors:
In addition to the base salary, freight brokers also receive a commission for their work. Brokers are given a commission based on the gross profit margin of the project. The gross profit margin is the difference between the price charged to the customer and the price the broker pays the carrier. Refer to the example below to get a more clear understanding of this concept:
$8,000 charge to customer - $7,000 paid to carrier = $1,000 gross margin
The commission would then be a percentage of the gross margin amount. Commission rates usually range between 13% and 15% of the gross margin. In this example, the freight broker would obtain a commission between the amounts of $130 and $150 for that particular job. In the US, the average commission rate for freight brokers is $33,000 per year.
Overall, a freight broker makes $52,390 base salary and $33,000 commission in a year, which gives us a grand total of about $85,390 per year.
When looking at freight broker salaries, it is important to pay attention to both the base salary as well as the commission rate. Because some brokerages only pay their brokers through commission, it is also important to look at the earning potentials of each state. Earning potential means how much money freight brokers can make in a state regardless of the state’s base salary.
The states with the highest annual freight broker salaries are the following:
The states with the highest annual freight broker earnings are the following:
The states with the lowest annual freight broker salaries are the following:
The states with the lowest annual freight broker earnings are the following:
If you are thinking about where to open your brokerage or to become a broker, you should first think about how you want to make money. You must ask yourself if you wish for your main source of income to come from your base salary or your commission rate.
If you are not sure if being a freight broker is right for you, it is also useful to look at similar professions and their pay. Becoming a freight broker requires you to obtain a freight broker license and the BMC-84 surety bond. The process of becoming a freight broker costs a bit more than some related jobs that do not require licensing or bonding. Keep reading to find how a freight broker salary compares to other related occupations.
A freight agent is an individual or a company that acts as an intermediary between shippers and carriers in the transportation and logistics industry. Similar to a freight broker, a freight agent facilitates the movement of goods by connecting shippers who have products to transport with carriers who have the capacity to move those goods. Freight agents typically work under the umbrella of a licensed freight broker or a freight brokerage firm. They may operate as independent contractors or as employees of the brokerage.
The average annual salary of a freight agent is $47,280. Their wages are usually anywhere between $35,520 and $75,610.
A freight forwarder is a logistics specialist that helps manage both domestic and international shipment of goods for businesses and individuals. They handle various aspects of the shipping process, including documentation, customs clearance, transportation, and coordination between different carriers and parties involved. Their goal is to ensure smooth and efficient movement of goods across borders while minimizing complexities for their clients. In contrast, a freight broker primarily acts as an intermediary within domestic logistics, facilitating connections between shippers and carriers, negotiating rates, and managing transportation arrangements within a single country or regional context.
The typical yearly earnings for a freight forwarder amount to approximately $52,888, with wage ranges typically spanning from $31,000 to $89,000.
A freight dispatcher focuses on coordinating transportation operations, optimizing routes, and communicating with drivers to ensure efficient and timely delivery of goods. In contrast, a freight broker acts as a middleman between shippers and carriers, negotiating rates, arranging shipments, and facilitating connections for the transportation of goods. While both roles contribute to logistics, dispatchers emphasize operational coordination, while brokers emphasize the commercial aspects of transportation.
On average, a freight dispatcher earns around $51,394 per year, and their income usually falls within the range of $44,486 to $59,973.
A logistics broker specializes in managing broader supply chain operations, including transportation, warehousing, inventory management, and distribution, to ensure seamless and efficient movement of goods. On the other hand, a freight broker primarily focuses on arranging transportation services between shippers and carriers, handling domestic or international freight shipments, negotiating rates, and ensuring timely delivery. While both roles involve intermediary services in logistics, a logistics broker's scope extends beyond transportation to encompass various aspects of the supply chain.
The typical annual earnings for a logistics broker amount to approximately $103,000, with income typically ranging between $100,000 and $108,000.