Wondering how to start a trucking company and earn more money? There are several steps and a few guidelines to follow before getting started. Here’s a step by step guide for how to start a trucking company.
Deciding to start a trucking company is a great idea and the timing is right. Trucking industry trends expect freight revenue to grow by 75 percent over the next nine years and with the trucking industry eclipsing over $726.4 billion in revenue for 2015, starting a trucking company now can be extremely lucrative. The trucking industry serves as a pillar in keeping things going and as long as people have demand for products, moving freight will be necessary for years to come.
Don’t be intimidated by the larger trucking companies with thousands of truck drivers and investors to provide capital. 90 percent of trucking companies are small fleets of six trucks or less so there’s space in the industry for you to learn how to start a trucking company.
Paperwork, documentation, and forms. They’re tedious and might seem redundant but are necessary for you to get your trucking company started and earn trucking authority.
If you haven’t already been assigned a US DOT number, you will need to register for a DOT number form before you can apply to obtain trucking authority. Keep in mind the old MCS-150 form is now only for updating existing US DOT number and not for obtaining a US DOT number.
To get a US DOT number you will need to use the new Unified Registration System. The processing time can take 20-25 business days according to the FMCSA.
If you already have a US DOT number and wish to apply for operating authority you can do so by completing this registration form and paying the associated $300 fee.
You will need to choose a process agent who can represent you in regards to court papers. You will need to have a process agent for each state your trucking company operates in. They are used if there ever is an issue where court papers are to be served to your trucking company in a state other than the state your company is registered in.
Once you’ve established your trucking company you will need to make sure that it’s properly insured. Liability insurance is required for trucking companies to cover potential damages or injuries caused by operating a commercial vehicle.
Shop around and get several quotes before making a decision on which insurance provider is best for your trucking company. Here is a detailed overview of the FMCSA insurance requirements to help get you started.
When starting your trucking company you can buy or lease trucks depending on what suits your needs best. If you have the working capital upfront to cover the cost and want to operate a small fleet with a few trucks, buying several trucks at once from a dealer might result in a discounted price per vehicle.
You can also look into leasing trucks which often times keeps the monthly costs down and can even have a lease-to-own option available. However, there are usually restrictions that apply to leasing that vary by dealer. You will want to take the time to search and compare dealer options and offers before choosing.
Lastly, there is also the option to purchase used trucks which can help save you upfront but can be costly down the line. You may find a used truck that is a few years old with over 400,000 miles on it for $40,000 to $50,000 less than a new one.
It might be a great deal but remember, on average, truck repairs cost an estimated $15,000 annually according to the ATRI and with used trucks, that number can be even more.
Choosing the correct equipment to haul truck freight can have a tremendous impact on your trucking companies earning potential. Although freight rates fluctuate week-to-week, typically flatbed truck loads pay the highest rate on average.
That is not to say that a reefer, van or step deck load won’t ever pay a better rate. Rather it’s just an overall average to consider before choosing the equipment type for your truck. Keep in mind that location also plays a major factor in determining freight rates.
Looking ahead: when you’re trucking company is set up, you can find truck freight to haul on free load boards like Truckloads. Customize your truck load searches by deadhead location and the trailer equipment type for you.
By registering your vehicle through the IRP in your home state, you will be allowed to haul interstate loads as well as freight through Canada without having to worry about additional registrations. You will be provided an apportioned license plate and cab-cards now display all jurisdictions that you cover.
The IRP registration fee for your apportioned plate will vary depending on state and vehicle weight, but typically the price ranges from $1,500 – $2,000. Use this list to determine what the cost will be for your state.
While there is a full list of costs to start a trucking company there are also costs to operate your company. Freight factoring is a great tool to help improve the cash flow once your trucking company is ready to haul loads. Operational costs like fuel, unexpected repairs, wages for your drivers and fees can all hinder your ability to generate positive cash flow.
Freight factoring with InstaPay handles collections from your clients and pays you in a day so you don’t have to wait over a month to get paid and can focus on expanding your new trucking company and haul more freight.