License for Truck Dispatchers - What is required?
What are truck dispatcher license requirements? In this post, we will review a couple of different scenarios to give you a better idea of whether you should or should not get your freight broker license. However, before we move forward, let's make sure that you remember the differences between an independent truck dispatcher and a licensed freight broker.
As you may recall from our post, “Who Is an Independent Truck Dispatcher,” this type of dispatcher assists motor carriers with the load booking process. In contrast, the freight broker assists shippers and receivers with finding a suitable transportation company to transport their cargo.
Is a Freight broker License Necessary?
Now that we're done with definitions, let's review a real-life example. An email arrived from someone named Gina who says, “My husband is an owner-operator, and he wants me to get a freight broker license so I can help him find freight for his truck.”
Should Gina get a freight broker license?
Scenario 1: Find a Load With Specific Pick-up and Drop-Off Points
Let's imagine that Gina's husband is currently somewhere in Baltimore, Maryland, and he is trying to get back to his home base in Atlanta, Georgia. He calls his wife and says, “Honey, I really need to go home. The load that I had planned for my truck was canceled, and I need another load right now.”
As a licensed freight broker, Gina would have to pick up a database and start looking through the list of shippers in the Baltimore area. She would start calling them to see if any of them would like to ship something in the direction of Georgia.
Unfortunately, if she starts doing that, it may take some time before she reaches the right kind of shipper that actually needs her service. After that, she’ll need to negotiate the rate with them before she signs a contract, do her due diligence, exchange paperwork, etc. It's going to take some time, and it may be a couple of days. It may even be a couple of weeks. I mean, it’s a sales process.
What I am trying to say is that calling the shippers and offering her service as a freight broker to help them find a suitable trucking company to move their cargo will take time. Even if she finds a shipper willing to work with her the same day, there is no guarantee that their shipment will be going in the direction her husband wants to go, nor does it mean that this shipper will be paying a rate her husband finds acceptable. There are a lot of variables.
So, it will be very difficult for Gina to use her capacity as a freight broker to get her husband a load from Baltimore, Maryland, to Atlanta, Georgia, right now.
Instead, Gina could log into the load board as an independent truck dispatcher or representative for her husband's company as a motor carrier. She can set up a search from Baltimore, Maryland to Atlanta, Georgia, and see what the available options for the loads are.
Those loads are posted by freight brokers who already found those shippers, negotiated the rates, and did all the legwork. And now, they’re just trying to find a motor carrier who will transport this cargo for them.
So, all the freight broker legwork has been done already, and all they need is to find a trucking company. Gina, as a dispatcher, could get the information about the load. If it's a suitable option, she could help her husband complete the paperwork and dispatch him on the load so he can pick it up and take it to Atlanta, Georgia, where he intends to go.
As you can see, even if Gina has a freight broker license, there is really no use for it. She will not be able to use it to help her husband in this particular situation.
Now let's review an alternative scenario. What if Gina’s husband’s situation is more complicated than simply finding one load to send him home?
Scenario 2: Finding the Right Kind of Loads
Imagine that Gina's husband is at home in Atlanta, Georgia, and he's trying to leave and go somewhere else to make some money for his trucking company. However, her husband has a box truck. It's not a semi-truck, it's a box truck. And as you may or may not know, finding freight for box trucks is much, much harder than it is for the semi-trucks.
So, Gina goes on the load board and tries to see what available options are there. She finds out that there are very few, and they probably aren’t paying very well. So, her husband cannot really leave and start making money.
Furthermore, her husband tells her that he has a couple of friends with box trucks dealing with the same problem. They cannot find freight for their trucks.
In fact, they have a hard time finding dispatchers to dispatch them because, again, the freight is scarce, and most dispatchers don't want to deal with it. So, she could easily pick up quite a few clients as long as she could find some freight for them. But as we already know, there is no freight on the load boards.
So, she decides to take a more proactive stance and reach out directly to the shippers that might be shipping cargo that fits on the box truck and see if she could get those loads to her husband and potentially his friends.
Gina is pretty good at sales. So, she creates a target list and starts reaching out to these companies and making them compelling offers — which they might be interested in — and hopefully, she gets the response she expects.
Some companies start offering freight for her to move. Now, she can load her husband's truck and potentially his friends’ trucks. And some “load leftovers” could have been posted on the load boards for other carriers to transport.
Gina will need a freight broker license for this type of activity. This is because she is brokering freight, and it would be illegal for her to do so without a license. Plus, many shippers will not even talk to her otherwise. She won’t be able to post these loads on the load boards for other motor carriers unless she's registered as a freight broker with the load board.
Plus, as a licensed freight broker, she could form a team of freight agents that could go out there and do the sales on her behalf, and she could just basically be getting the commission for organizing and managing the work they do.
So again, are many different options and possibilities for what can be done or what you could do as a licensed freight broker.
If you are interested in learning about freight brokering, you can visit our other website, LearnFreight.com, where we also offer a course on the basics of freight brokering. You can learn more about it there.
Consider Your Goal, Then Ask Yourself Which Fits Your Needs: Freight Broker or Dispatcher?
But the main idea is for you to think about what it is that you want to do. What is your goal? If your goal is to help the trucking companies and provide assistance for them, then this falls into the category of truck dispatching. If you want to work with shippers, if you are good at sales and want to help the shippers and receivers find the right transportation companies to move their freight, then getting your freight broker license might be a better option.
Again, being a freight broker is a different type of business. It's also very lucrative and interesting. It's a bit more complicated in the startup than truck dispatching, but the option is available to you. You can decide which way you want to go, but first, you need to understand what you are trying to achieve.
I hope that Gina’s examples provide you with more understanding of the roles of truck dispatchers and the roles of freight brokers. By understanding these roles, you can determine which one might be more suitable for your business. And you can logically decide if you should go ahead and apply for a freight broker license and start operating as a licensed freight broker.
© By Alfa X Logistics May 2022
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