If you’re looking to go out on your own in the freight world, you’ve likely been looking at starting a trucking company and what it takes. The freight industry continues to be dominant hitting an all-time revenue record $719.3 billion a couple years ago. As long as people have a demand for products, the trucking industry will remain strong and necessary for the years ahead.
These massive fleets with hundreds of trucks can be intimidating… but fear not. It’s the little guys that have the numbers. 90 percent of the trucking companies on the road are small fleets of six trucks or less. If you’re looking to start a small trucking operation, you are still needed and utilized out there. From getting your CDL to cash flow management and choosing a freight factoring company, let’s look at what it takes to get started.
1. Get Your CDL
Before you get into the details, you’ll need to have a commercial drivers license (CDL) and a little experience. There are some companies out there that have a built-in training program and some will help cover the cost of CDL school. Many start as a company driver for another company.
2. Determine Your Company Type
- Sole Proprietorship
- Limited Liability Corporation (LLC)
- Corporation (C-corp, S-corp, etc)
You’ll find different pros and cons to each company structure. It would be a good idea to consult an attorney or accountant on this to determine what would work best for your business.
3. Compliance – when Starting a Trucking Company
- USDOT Number (MCS-150) – Update this every two years to maintain compliant.
- Operating Authority (MC Number) – You must have your operating authority before hauling loads or arranging freight.
- Heavy Vehicle Use Tax -The heavy vehicle use tax or HVUT is a fee assessed annually on heavy vehicles operating on public highways at registered gross weights equal to or exceeding 55,000 pounds. The gross taxable weight of a vehicle is determined by adding:
- the actual unloaded weight of the vehicle fully equipped for service
- the actual unloaded weight of any trailers or semitrailers fully equipped for service customarily used in combination with the vehicle, and
- the weight of the maximum load customarily carried on the vehicle and on any trailers or semitrailers customarily used in combination with the vehicle
- IRP -Individuals and companies that operate commercial motor vehicles across state lines are required to register and pay an annual fee based on the size of their fleet.
- IFTA -International Fuel Tax Agreement is an agreement between jurisdictions in the U.S. and Canada to collect fuel use taxes. IFTA jurisdictions include 48 states and 10 Canadian provinces.
- BOC-3 – All truckers-for-hire, brokers, or freight forwarders must file a BOC-3. This designates a process agent in every state who will accept and forward legal documents.
- Permits – Simple permits are required if you’re crossing into these states:
- Kentucky (KYU Number)
- New York (New York Highway Use Tax)
- New Mexico (New Mexico Weight Distance Tax Permit)
Locate additional assistance on the above with our partnering company, TurnKey Authority and can be very valuable when starting a trucking company.
A carrier is required to obtain Liability and Cargo insurance. It is recommended that you obtain a $1,000,000-liability policy and a $100,000 Cargo policy. It is necessary to obtain insurance within the first two weeks after your MC number is filed to avoid delays in the processing of your authority. Your authority may be dismissed if you fail to get your insurance on file within the first 60 days. Waiting beyond a year to obtain your insurance will cause you to have to start the authority process over again as well as repay all applicable fees.
5. Equipment – Buying or Leasing a Truck
When starting a trucking company, you may look at either purchasing or leasing a truck depending on what works best for your initial circumstances. If your up-front capital permits, you may even be looking at buying more than one truck which can result in a possible volume discount from a dealer.
Leasing a truck will often keep your regular monthly costs down. Lease-to-own options may be available as well. Purchasing a used truck may be a good fit as you save on the front end, but maintenance costs might be a heavy factor sooner.
6. Invoice Factoring (Cash Flow Management)
A common difficulty in the transportation industry is cash flow management issues. All too often, your customer may request (or require) terms beyond 30 days before payments are made. Unfortunately, your regular expenses such as fuel, insurance, maintenance, and payroll must be paid sooner than later. This is where freight factoring can come in handy. You’ll receive cash in advance, so you can utilize your current money in the business.
Unfortunately, there are some of these folks on the road that we have to deal with from time to time.
Shell Rotella officially unveiled its hyper-aerodynamic StarShip concept tractor-trailer in March, three years after the company announced the project’s initiation. Bob Sliwa, head of AirFlow Truck Company, talks about the rig’s making and its key fuel-saving features here. Sliwa and AirFlow headed the production of the StarShip.
The time has arrived. October has come and gone, kicking in the mandatory use of Electronic Log Devices and issuing fines for those caught not operating in a compliant manner. April 1st has arrived and the Federal Motor Carrier Safety Administration’s mandate has gone full force. This requires most commercial vehicles to have a compliant ELD in the cab to track the driver’s hours of service.
There has been quite a bit of resistance throughout the industry from owner-operators, not to mention the amount of misunderstanding and confusion of the rules and timing.
Let’s take a look at the key bullets that you should know about when it comes to this ELD shenanigans.
1. A driver that does not have a legal and compliant ELD in the cab after April 1 can be placed out of service
2. Many are just learning about specifics of the penalties for non-compliance with the ELD mandate
- If required to have a compliant ELD and found without one, the driver will be placed out of service. The OOS order will be in effect for 10 hours. At the end of the OOS period, the driver will be allowed to make their scheduled stop using paper logs. The driver should not be dispatched again without an operating ELD.
- The fines for driving without an ELD will likely be similar to being cited for not possessing a paper log (before the ELD mandate).
3. Most motor carriers and drivers are required to use ELDs but there are some exceptions
- Drivers operating under the short-haul exceptions may continue to use timecards
- Drivers using paper logs for not more than eight days out of every 30-day period
- Drivers operating a power unit part of the driveaway/towaway shipment
- Drivers who are driving or towing a recreational vehicle that is part of driveaway/ towaway shipment
- Drivers who are operating vehicles with an engine model year older than 2000
4. Hours of Service (HOS) rules are the same
While some believe the hours of service rules have been altered, they are the same. Some have been able to skate past certain rules in the past and the ELD may be pointing out these non-compliance issues that have always been in effect.
5. The AOBRD grandfather provision explained
The grandfather clause in the ELD rule excuses carriers and drivers as long as they were using a compliant automatic onboard recorder device before Dec 18, 2017.
6. Ensuring your ELD is compliant
The carrier is responsible for making sure their device is registered with the FMCSA. Be sure to check both the registration and revocation list periodically. That list can be viewed here: https://3pdp.fmcsa.dot.gov/ELD/ELDList.aspx.
7. Annotate when necessary
When drivers were using paper logs and something went wrong, they’d make a note on the paper log. The same goes for the ELD use. It has the same capability. These notes will be imperative for you and your company as well as those enforcing the mandate.
If you’re still in need of a compliant ELD for you truck, check our one of our partners, www.drive-eld.com. They provide one of the most cost-effective devices out there right now. Also, if you work with us (www.SteelheadFactoring.com), we’ll get you an additional discount.
Where are Freight Rates Headed?
There seem to be a lot of thoughts on where rates in transportation are headed. Right now, there are a couple key factors playing a big role in the future of what the rates will look like. Tight capacity is giving trucking companies the upper hand in negotiations over longer freight contracts. We may see contract rates rise as much as 10% this year. Some attribute the hike in rates we’ve seen so far to the implementation of the ELD Mandate after taking effect December 18. This has caused productivity issues and a crunch in capacity. We very well might see a larger issue in April when law enforcement cracks down even more with ELD monitoring. Truckers that don’t have the ELD appropriately in place by April will be placed out of service.
WHY CHOOSE INVOICE FACTORING
Carrier and Freight Brokers choose to factor their invoices primarily because they are unable to currently meet the cash demands as well as grow their business. They may continue to factor even after solving cash flow problems because they value the factoring company’s backroom services.
HOW ARE CASH FLOW ISSUES CREATED?
Start-up Carriers & Brokers
- Some start-up companies are under-capitalized from the start and lack sufficient cash to meet and stay current with their payables right from the beginning.
- Some use up their initial cash reserves for staffing, opening their office, and investing in activities/materials to generate business.
Existing Carriers & Brokers
- Some experience Rapid Growth creating an increase in current A/P and A/R resulting in a decrease in available cash.
- Some do business with Slow Paying Customers that limit the conversion of A/R into spendable cash, adding to the A/R covering A/P issues.
- Some experience Losses from Non-Paying Accounts which uses up cash reserves.
- Some are affected by Economic or Business Downturns creating the loss of business and revenue faster than expenses can be reduced.
WHAT DO THEY WANT FROM A FACTOR?
- A seamless way to obtain quicker cash from their invoices
- A friendly, convenient system of transacting business with their Factor
- Additional services or benefits adding to the value of the relationship
Discover how Invoice Factoring can assist in the growth of your trucking company to take you to the next level. Call 800-727-3377 or visit Freight Factoring to get more information about speeding up your payments.
Brake test… check.
Lights in working order… check.
Confirm the straps are secure… I’m sure it’s fine.
This segment is getting the thoughts, feelings, and feedback on autonomous trucks in the marketplace. Self-driving trucks has really been stirring things up in transportation and this gives the opinions from five different personalities in the trucking industry.
The lineup includes:
George Parker (The George & Wendy Show)
Ken Bebout (owner of KLB Trucking)
LA Rookie (2nd place – World’s Toughest Trucker)
Kenny Long (You Drive U / Trucking with Authority Podcast)
Brandon Martin (Hammerdown Dispatch)
See more here: