Freight Broker 101: How To Obtain a Freight Broker License

Freight brokers are responsible for the loads they arrange and must be licensed to bear such significant liability. A license gives a broker the authority to connect shippers and carriers to move loads. If you are thinking about becoming a freight broker or starting your brokerage, this guide is for you. We cover how to obtain a freight broker license but don’t just stop there. We also explain additional requirements like processing agents, liability insurance, bonds, trust funds, and unified carrier registration. If this sounds overwhelming, don’t worry, we also provide a tip to simplify the process of becoming a freight broker. 

What are the steps to obtaining a freight broker license?

The process of obtaining a freight broker license involves a few steps. We will walk you through each one below. 

1. Apply for a Pin 

The first step is to apply for a pin. A pin is a Motor Carrier (MC) that verifies your identity and intent to become a broker, and it is provided by the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA is the branch of the U.S. Department of Transportation that oversees commercial vehicle safety throughout the country. Log on to this FMCSA website and apply. You will see that a credit card is required. Providing this information functions as a digital signature, and no charges are made. 

2. Wait for the Pin

The second step is to wait for the pin to arrive. Although the application is processed digitally, the pin is transmitted via paper mail. It takes a full 4-7 days for the pin to arrive. Keep this timeline in mind when you are planning your licensing timeline.

3. Submit an MC Authority License Application

Once you receive the pin number, you can submit the MC Authority application. Be aware that many fraudulent and misleading applications are marketed to new FMCSA applicants. Submit your application through the FMCSA website to ensure you are registering correctly and securely. Follow the registration link and proceed through the steps. 

4. Wait 4-6 Weeks 

Once you complete your application with the FMCSA, it will take 4-6 weeks to process the application. You will receive a notification once the application is approved, but you can check the status online anytime. 

After the 4-6 week processing period, you will receive your license. While this is a significant accomplishment, it is not the final step to becoming a freight broker. In addition to a license, you need liability insurance, a bond or trust fund, processing agents, and possibly unified carrier registration. 

5. Liability Insurance

You do not need liability insurance if you operate only as a freight broker. However, some professionals choose to operate additionally as a carrier or freight forwarder. These individuals must have liability insurance and provide proof of insurance to the FMCSA.

6. Bond or Trust Fund

Freight brokers must have a $75,000 bond or trust to obtain their license. There are two different types of bonds – the BMC-84 and the BMC-85. The BMC-84 includes a yearly premium but does not require collateral. The BMC-85 is similar, but it does require freight brokers to post $75,000 of collateral with a bank. 

7. Unified Carrier Registration

Once you have the BMC-84 or BMC-85, you can obtain a Unified Carrier Registration (UCR). The UCR is a federally mandated program requiring individuals or companies participating in interstate travel to pay an annual registration fee. Freight brokers need to apply through this website and pay $76. 

8. Processing Agents

For every state in which you plan to have an office or make contracts, you need to have a processing agent who can be served papers if a claim is filed against your brokerage in that particular state. You can hire freight agents, or you can partner with a commercial firm that provides you with a freight agent for a fee. Submit a BOC-3 form to the FMCSA to designate the processing agents in each state. 

Join the First Star Logistics Team as a Freight Broker!

If the process of obtaining a license, insurance, bond, UCR, and processing agents seems overwhelming or challenging, you are not alone. It is a substantial endeavor to meet all the requirements independently. While freight brokers can embark upon an entrepreneurial career, many recognize the benefits of working through a logistics company that assists with the requirements, covers insurance and bonds, and has in-house processing agents. 

First Star Logistics is a unique asset-based global brokerage company with over 60 years of experience. We are looking to expand our brokerage department by hiring enthusiastic individuals wanting a fast-paced career in the logistics industry. We empower our freight brokers to succeed by allowing you to create your goals, networks, and make your own money. We provide a freight broker training program so that you can start out as a trainee or as an experienced broker. Our talented freight brokers enjoy the highest commissions in the industry, weekly pay, proprietary software, potential sign on bonus with book of business, 24/7 freight agent support so you can be as productive as possible, and more customer saturation. To join the First Star team, apply today.