Freight brokering can be an incredibly profitable career to pursue, but the commission-based structure can be confusing to entry-level brokers and pros alike.
If you’ve found yourself asking how your pay works, whether your commission percentage is fair, or how you can increase your take-home income, you’ve come to the right place.
In this article, we’ll explain how freight brokers are paid, break down which factors determine the commission you receive, and offer three practical tips on how you can increase your commission percentage.
How do freight brokers get paid?
The way freight brokers are paid can vary widely depending on employment structure, who you work for, and the location you’re based in.
However, regardless of these factors, you’re likely to be paid in two key ways as a freight broker – salary and commission.
Let’s break it down.
Freight broker pay part 1: The salary
While not true for all freight brokers, some will receive a base salary for their work – and some may even be paid a salary solely, although this is rare.
A base salary can be a great perk for a freight broker, as it provides the security of a reliable income regardless of sales performance. This can also be an option if you opt to function as an independent freight broker and have more control over how your pay works.
Freight broker pay part 2: The commission
Commission-based pay forms the bulk of most freight brokers’ compensation; for some brokers, this will form the entirety of their pay slip.
Varying commission and employment structures are key reasons freight broker salaries vary widely.
But how is commission calculated, and what’s a fair percentage to expect as a freight broker?
Commission in the freight industry: An overview
In a given freight load transaction, there are a few key figures involved:
- The price charged to the shipper for transporting the load (gross revenue)
- The price paid to the carrier for transporting the load
- The difference between these two prices (net revenue)
For example, if a shipper was charged $4,000 and a carrier was paid $3,000, the net revenue would equal $1,000.
Unlike other industries, freight brokers receive their commission based on the net revenue – that is, the total profit for the transportation of the load. While not irrelevant, the total price that the shipper was charged is not the final deciding factor when it comes to the freight broker receiving their share.
We’ll return to this industry-specific detail later to share one way you can increase your commission – without changing your commission percentage.
Commission percentages in the freight industry
There isn’t a set commission structure or percentage within the logistics industry, and exact rates may vary widely.
On average, freight brokers can expect to receive 40-50% commission, with possible increases based on experience.
Crucially, this doesn’t apply to freight brokers who own their brokerage. In this setup, the freight broker takes 100% of the profit of transactions.
However, for the most part, freight brokers will be working within a structure where their commission percentage is decided by others.
With that in mind, what can you do to ensure the percentage you receive is the best you can get?
Three ways to boost your commission percentage as a freight broker
Tip 1: Choose your logistics brokerage wisely
The first way to ensure you get the commission percentage you deserve is to take your time picking the brokerage you work for.
Logistics companies, brokerages, and 3PLs are not created equal. It’s more than worth researching as you hash out your applications to ensure you’re applying to companies that will value your work – and compensate you accordingly!
Tip 2: Negotiate from day 1
Following on from tip 1, it’s worth noting that it can be very difficult to negotiate your commission percentage – or base salary – after you’ve signed the dotted line on your new contract.
The best time to negotiate is after receiving a job offer but before accepting. This vague space before accepting an offer provides the golden opportunity for you further to prove your competency and worth to the company and see them increase your benefits accordingly.
With studies revealing that only 37% of people choose to negotiate their starting salary, this is a massively under-utilized way to kick off your career on a higher base pay or commission percentage.
Tip 3: Optimize shipping (and repeat)
Since the commission that freight brokers receive is based on net revenue, there are two ways to increase your commission-based pay – without receiving an increase in your commission percentage:
- Maximize the price charged to shippers
- Minimize the fee paid to carriers
In practice, this is as simple as optimizing your shipping – something you or your brokerage are likely already aware of!
In addition to simply charging more and paying less, optimizing shipping can include innovative solutions such as offering LTL OTR shipping or intermodal shipping options.
Increase your freight broker commission percentage today with Jansson
Negotiating your commission percentage once you’ve said yes to the job can be tough. Look no further if you’re looking for a logistics firm that’ll prioritize your commission compensation from day one.
Here at Jansson, we offer a competitive commission structure allowing you to receive a percentage of up to 70% on all loads booked and shipped.
If that wasn’t enough, we also pride ourselves on being highly accessible to applicants, with no prior experience required for our freight role and all necessary training.
To kick start your logistics career and gain the commission percentage you deserve, reach out to Jansson today!