The Consideration and How to Start Freight Forwarding Business

When we are talking about freight business, it is about a big business. Freight is a transportation of goods which deliver across the world. It is the most prospective one.

Basically, there are two types of freight business. Both of them have own benefits and downsides. The types of freight business are freight brokerage business which does not handle any shipments and freight forwarding business which directly handle shipments. The higher prospect is the freight forwarding business since it is more economical. Are you interested in running freight forwarding business?

You have to know how to start a freight forwarding business. See Adelaide freight forwarders.

The Freight Forwarding Business

As explained before, the difference between freight brokerage and freight forwarding is from the field of shipment that handled. Freight brokerage prefers to act as coordinators between suppliers and carriers. Meanwhile, freight forwarding directly relates to shipments.

A freight forwarder usually could collect some goods from the certain customer then store them in a warehouse or even directly deliver them. When the goods need to be delivered overseas, a freight forwarder takes an action. So, here are some considerations on how to start a freight forwarding business:

Air Shipping Container

Startup Cost of Freight Forwarding Business

Different from freight brokerage business, freight forwarding business has the more expensive start-up. Although the amount of startup depends on products that will be handled, the cost is still higher than freight brokerage. So, how to start a freight forwarding business?

To start the freight forwarding business, you need at least one vehicle as transportation, potentially packing materials, and also a secure storage facility of shipments. Then, if you have a plan to commission with other companies, you need to purchase a logistical software.

Get A Freight Forwarder License

After you get the start-up, you have to get a freight forwarder license as the important step on how to start a freight forwarding business. You can register yourself under FMCSA (Federal Motor Carrier Safety Administration) so that you can run your business legally.

You have to get FF number by completing the OP-1 form as an operating authority number. By having FF number, it will give you an authority to work across states. Basically, there are two terms for freight forwarding which has the application fee of $300 for each term. If you want to cover both, you can fill the fee for both.

Freight Broker Bond

After getting all the license and legal document, you have to require a legal compliance as a guarantee which is $75,000. Although it seems tough, it is one of the procedures on how to start a freight forwarding business. You do not need to pay the whole amount, but you can use the bond premium. It means that you only have a small percentage from bond cost.

For the standard bounded, there will be around 1.25% to 5% of the bond amount. However, if the credit is getting worse, the percentage will increase up to 13%. After all finished, you already have guaranteed to work as a freight forwarder.