Why Do Freight Brokers Fail?

April 8, 2025

Why Do Freight Brokers Fail?

The freight industry is booming and there are plenty of opportunities for new brokers to carve out successful careers. Yet, many freight brokers fail within the first year.

Why does this happen?

These failures are often caused by pitfalls like poor business planning, a lack of industry knowledge, and weak client relationships.

To help you succeed, we’ll cover the six common reasons freight brokers fail, and how to avoid them.

6 Common Reasons Freight Brokers Fail

Let’s take a look at the six most common reasons freight brokers fail.

1. Poor business planning

A new freight broker often launches their company without a well-defined business model, clear value proposition, or financial plan.

Unfortunately, if you don’t forecast revenue, track expenses, and plan for slow months, your business is unlikely to be able to sustain operations for long.

Instead, treat your business like any other serious enterprise. You need to:

Create systems for client management, dispute resolution, and licensing.
Lay out a clear and detailed business plan.
Set up proper legal structures.
Fully understand any licensing and insurance requirements.

If you do this, you’ll have a profitable and successful business for a long time to come.

2. Lack of industry knowledge

As you don’t need any formal education to enter the freight brokerage industry, plenty of people assume they don’t require any training at all. This is a big mistake – and one of the leading causes of failure.

So, give yourself a headstart and complete the 90-Day Freight Broker Course. In 100 hours, you’ll learn everything you need to succeed in the industry, like:

How to set up a brokerage.
How to choose the right software.
Dispatching and tracking loads.
Negotiating rates.

You get access to all this for $890 and, if you’re not satisfied, we’ll give you a full 30-day refund. The course is fully accessible with all materials available in video, text, and audio formats. Sign up for the waiting list today!

3. Weak carrier and shipper relationships

Brokers are essentially a bridge between shippers who need freight to be moved and carriers (like trucking companies) who can move it.

Therefore, it’s vital that brokers develop good relationships with their clients. Relationships that are weak or transactional can lead to missed loads, delays, and lost clients.

To maintain good relationships, you should:

Prioritize trust and communication.
Follow up consistently with shippers and carriers.
Provide honest, transparent pricing.
Always be available when issues arise.

4. Lack of cash flow management

Even experienced freight brokers can fail due to poor cash flow management. This is often because shippers may take 30 to 60 days to pay while carriers typically expect payment within a week.

So, if you don’t have proper cash flow systems in place, you may end up stuck between two parties and unable to pay carriers on time.

Here are some tips to avoid this:

Set up short-term credit lines.
Use factoring services to receive early payments.
Maintain an emergency fund for slow periods.
Be diligent with invoicing and collections.

5. Poor sales and marketing strategy

Sales and marketing are just as important in the logistics and transportation industry as they are anywhere else. You could be the most reliable broker in the world, but if you’re not generating leads, your business won’t succeed. A strong sales and marketing strategy should include:

Attending trade shows and networking events within the trucking industry.
Cold outreach via email, phone, and social media.
Building a professional website.
Nurturing prospects through follow-up sequences.

6. Failing to take advantage of technology

Some things, like disruption to the supply chain, are out of your hands. One thing you have control over, however, is your use of technology. Without using the proper software, you’ll struggle with organization, visibility, and efficiency.

Conversely, using the right software enhances a broker’s ability to satisfy current customers and attract new clients. Essential tech includes:

Load boards with real-time data.
Transportation Management Systems (TMS).
CRM tools.
Accounting and invoicing software.

Final Thoughts

While there are many pitfalls that can cause new brokers to fail, you should now know how to avoid them. To be successful, you need to treat your freight brokerage like a real business, embrace technology, and build strong relationships. Then, you’ll have the rewarding brokerage career you’re looking for.

FAQs

1. Will potential customers assess my track record as a freight broker?

Yes, potential customers will assess your track record to see if you demonstrate consistent performance, reliability, and problem-solving skills.

2. How long does it take a new freight broker to become profitable?

The time it takes for your business to become profitable depends on your sales abilities, market niche, and business plan. You may start generating revenue within a few months. However, consistent profitability often takes 6 to 12 months.

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