How to Get a Freight Broker License in Texas

If you’re interested in getting your Texas freight broker license, you’ll need a little preparation before heading off.

The transportation industry is massive in Texas. Texas has more miles of highways and roads than any other state in the United States, which means the Lone Star State opens new doors for your business. However, while Texas is a transportation force, new brokers must also be prepared to keep detailed records while working out of state. You’ll need to track freight, maintain records, and oversee legal requirements.

If that sounds like a job you could do, you’ve come to the right place. Learn how to become a broker in Texas for trucking and hit the ground running in your new career.

What does a freight broker do?

Freight brokers connect shippers with carriers. They also help negotiate freight rates and ensure freight moves efficiently and at a fair cost. Shippers who need to find a carrier and want regular updates need a quality freight broker. They’re basically transportation managers who use their connections to smooth processes for shippers and carriers.

Much of a freight broker’s job involves talking with carriers and shippers and processing paperwork. While freight brokers can work from anywhere with a reliable cellular and Wi-Fi connection, they also need access to a computer and often purchase software to facilitate the easy movement of goods.

Why are freight brokers important?

Freight brokers are more than just go-betweens. They play an essential role in the freight industry. Here’s how they benefit shippers:

• Cost savings: Companies already juggle production, quality control, and customer service. Adding freight management to the roster means extra expenses, legal concerns, and employees. These costs might be more than a company can handle on its current budget and timelines. That’s where freight brokers come in.
• Simplifying transportation: Freight brokers help shippers avoid the time and effort needed to find carriers on their own. They have experience and connections.
• Improving supply chain efficiency: Freight brokers can help reduce delivery delays, ensuring goods arrive on time and within budget. 
• Addressing surprise issues: Freight brokers also address problems as they pop up. Instead of making shippers monitor their products and handle surprises, freight brokers keep everything moving smoothly.

Freight brokers can also benefit carriers by helping them identify opportunities, save money, and build their reputations. 

Becoming a freight broker in Texas

Becoming a freight broker in Texas involves following regulations and securing a license. While you’re not required to take a course, freight broker courses offer a great way to learn the job. They cover everything you need to know to ensure you’re ready for the job. Many providers offer courses. Choose from online-only, in-person, and home study courses designed to help you learn the basics of the freight brokerage business.

Freight broker regulations in Texas

While courses are optional, you need a freight broker license to operate out of Texas and other states. Federal regulations require freight brokers to register with the Federal Motor Carrier Safety Administration (FMCSA). Registering gets you your Motor Carrier (MC) number. Next, you’ll have to secure a $75,000 surety bond or trust fund to protect clients from liability. Finally, you need a process agent in each state you operate in. 

Brokers working in Texas and other states must follow federal regulations. If you’re only operating in Texas, you’ll need to check out the Motor Carrier Handbook. Intrastate brokers need to register with the Texas Department of Motor Vehicles (TxDMV). If you do not acquire a TxDMV Number, you will need a $10,000 bond. 

Interstate brokers who operate in Texas need a TxDMV Number and must adhere to FMCSA requirements. Since most freight shipments eventually cross state lines, you should get a federal broker license. 

Freight broker courses and programs in Texas

Freight brokers just need their licenses and bonds to become Texas brokers. However, working through an optional training program can help you gain the skills and knowledge you need to succeed as a Texas freight broker. Courses and programs of study vary in price and duration. 

Freight broker licensing and certification steps in Texas

To succeed as a Texas freight broker, you must have the appropriate paperwork filed with several entities. Here are the steps you’ll take to become a licensed Texas freight broker.

1. Complete your freight broker course

An effective course should tell you everything you need to know. You’ll learn:

• How to build a successful freight broker business.
• How to negotiate with shippers and carriers.
• How to market your business.
• How to process paperwork.
• The legal framework of the broker’s job within the industry.

While you don’t need freight broker training in Texas, it’s a great way to help you succeed quickly once you’re ready to start your business.

2. Register your business

Get a federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS). You can apply for one online at no charge. If you decide to form a limited liability company (LLC) or corporation for your brokerage, you’ll file a Certificate of Formation with the Texas Secretary of State. 

It’s also wise to register your business with the Comptroller of Public Accounts. While the Texas Department of Licensing and Regulation doesn’t list freight brokerages as a business type requiring a Texas license, you may be able to register with the state under the Transportation Network Companies section.

3. Apply for a USDOT number

To complete the next step, you’ll need a U.S. Department of Transportation (USDOT) number or operating authority. You can get that by filling out the online forms for the Unified Registration System on the FMCSA website.

4. Complete your FMCSA license application

Next, you’ll fill out the required paperwork on the FMCSA site. This includes the Application for Motor Property Carrier and Broker Authority (Form OP-1). After the FMCSA evaluates the application, you may receive a Motor Carrier (MC) number. Each operating authority type requires a $300 fee, payable when you submit your application.

5. Get the right types of insurance

When you have your MC number, you’ll contact your insurance company. They’ll work out the appropriate coverage for your freight brokerage business. Expect to purchase property damage, injury, and cargo insurance. Your insurer has 90 days from the day the FMCSA issues your MC number to file proof of insurance on your behalf. If you miss the 90-day deadline, your application will be dismissed.

6. Apply for your surety bond

Once your insurance is in place, you can apply for your surety bond. Getting a surety bond involves submitting to a credit check. If your finances are in good shape, you may qualify to pay just 1.25% to 4% of the $75,000 required bond amount. If you have problematic credit, expect to pay 5% to 12% of the $75,000 bond as a yearly premium.

7. Choose a process agent in each state where you’ll operate

After you get your broker bond, you’ll need to hire or designate a Texas process agent by completing a Designation of Agents for Service of Process form, as required by state law. If you plan to operate in other states, you must hire a process agent in each state and put their contact information in this form.

Getting started as a freight broker in Texas

You can move forward with your freight broker business plan after you are set up with your MC number, FMCSA license, insurance, and bond. It may cost just a few thousand dollars to start out as a freight broker, especially if you can work from home. After you’ve got the essentials for operating in Texas, you’ll need the following:

• Equipment: You’ll need a reliable computer and quiet office space to work. Brokers talk to clients through video, phone, or in-person meetings. Make sure you have the office supplies needed to keep detailed records.
• Internet: You also need a solid internet and phone connection. The faster you can find information and respond to clients, the better.
• Freight broker software: Transportation management software helps track shipments, manage loads, and find carriers. Getting the right software can make your job more efficient and accurate.
• Marketing materials: You have to promote your business. A website, business cards, and brochures let the world know you’re looking for clients.
• Funding: Open a bank account to manage your business finances. You’ll likely need some initial funding to pay carriers and cover early expenses.

Freight broker salary expectations in Texas

Freight brokers must fulfill several key requirements before starting a licensed freight brokerage. Once you’re a licensed broker, you can earn up to $100,000 per year.

While you can earn a solid living as a freight broker, your area and business success will influence your salary. The good news? The freight industry is still growing. E-commerce is a huge industry, and consumers will likely expect product availability and fast shipping for the foreseeable future. Freight brokers are a critical part of the process. They help manage all the different carriers and shippers, ensuring products flow seamlessly across countries and states. 

Several factors will influence your salary, including:

1. Experience: New brokers typically start off with lower incomes. You’ll need to build a client base while competing with experienced brokers. You’ll see higher income as you improve your negotiation skills and connections.
2. Freight: The freight type you deal with can also affect income. Specializing in high-value or sensitive goods increases income. These freight types require more expertise and risk, which demands a higher freight broker fee.
3. Demand: Industry demand changes with the market and your location. Peak seasons and periods of economic growth drive up demand. Additionally, areas with better transportation networks need more freight brokers. The demand for your services directly affects your salary.
4. Brokerage type: Are you working as an independent broker or as part of a larger brokerage? Independant brokers take on more risk but earn higher cuts. Brokerage groups have established connections and more stability.
5. Luck: It takes hard work and a drive to learn to succeed as a freight broker. The harder you work, the better you’ll get, and the more you’ll earn. There’s also some luck involved. Lucky brokers might find themselves hitting the right freight, demand, and market, securing higher returns faster.

The career outlook for Texas freight brokers

If you want to understand how to become a freight broker in Texas, you’ll be pleased to learn that the industry is growing, so there’s plenty of opportunity for success. The market was valued at $51.7 billion in 2023. It’s expected to see a compound annual growth rate (CAGR) of 6% between 2024 and 2032. Freight brokers will likely see increasing demand as the industry expands.

Find quality carriers and shippers with Truckstop

Freight brokers face lots of challenges on the job. One of the main ones is finding quality carriers and covering loads. You have to monitor carriers, oversee traffic and trucks, and make quick decisions. Making these connections and balancing everything can be difficult. However, the right partner can make all the difference when you’re just starting out.

Truckstop provides access to an online tool to help freight brokers build a strong business. The Truckstop Load Board is an essential tool for brokers. It can help you match available trucks with shipments that need to be moved and start strong in your Texas career. If you’re interested in becoming a Texas freight broker, Truckstop can help. Check out the Truckstop Load Board Demo and start your journey today!