When it comes to transporting goods and delivering merchandise, a good number of small businesses opt to lease firms to save on operating costs and licensing expenses. While this might be a good idea for those unable to build their rig, in the trucking industry having your own authority means greater profit by cutting the middleman or third player.
If you are a small cargo firm, moving company, freight forwarder, truck delivery service, or a related establishment that wants to start and run a trucking business, getting yourself familiar with trucking authority is essential. Note that the very first benefit is the ability to make more money. By removing a broker or hiring company, you will avoid having to pay a fee on any contracts you receive.
This not only opens you up to make more money, but it also gives you control to grow your business as you see fit. You will also have the ability to decide which contracts to take on and who your clients will be. This means you can choose your own hours, the type of freight you will be hauling, and your own routes.
The initial one-time cost of registering a trucking authority range from $6,000 to $15,000, based largely on the type of business you will be operating. For starters, you will need your own truck, the price of which can run anywhere from $35K up to $120K. In addition to the cost of the truck, you will also need to factor in the start-up period before your revenue stream really gets going.
Different Types of Operating Authority
The kind of trucking company you are running will eventually dictate the type of trucking authority you need to obtain. According to the FMCSA website, the different types of operating authority include;
- Motor Common Carrier of Property except for Household Goods
- Motor Contract Carrier of Property except for Household Goods
- Motor Common Carrier of Household Goods
- Motor Contract Carrier of Household Goods
- Broker of Property except for Household Goods
- Broker of Household Goods
- The United States Based Enterprise Owned or Controlled By Persons of Mexico Providing Truck Services For The Transportation of International Cargo (Except Household Goods)
- The United States Based Enterprise Owned or Controlled By Persons of Mexico Providing Truck Services For The Transportation of International Household Goods
- Freight Forwarder Authority
- Motor Passenger Carrier Authority
- Mexico-based Carriers for Motor Carrier Authority to Operate Beyond U.S. Municipalities and Commercial Zones on the U.S.-Mexico Border
- Mexican Certificate of Registration for Foreign Motor Carriers and Foreign Motor Private Carriers Under 49 U.S.C. 1302
How to Get a Trucking Authority in the United States
If you intend to start your own trucking company and participate in interstate commerce, you are expected to have an active operating authority. The Federal Motor Carrier Safety Administration (FMCSA) requires you to have an active authority in all states to operate in the trucking industry.
Register Your Trucking Company
If you’re starting a trucking company, you are first expected to register your business in the state you plan to operate from. You also have to choose the business entity you want to create if you haven’t already. The most common types of entities are sole proprietorships and limited liability companies.
Obtain an EIN
If you decide to start a limited liability company (LLC) you will have to get an EIN issued by the IRS to operate your business. Although it is not mandatory to have an EIN with a sole proprietorship, however, it is highly recommended. If you do not get an EIN, you have to operate your business under your personal social security number, which could open you up to potential fraud problems.
Obtain your USDOT number
Note that all trucking companies are expected to register with the US Department of Transportation. A DOT number is the company’s ID number that provides all company information, including vehicle type, cargo, safety, and compliance. This information is available for freight brokers and shippers to access if you are hauling loads for them. Your USDOT number is renewed every 2 years or whenever company information is updated or changed.
Apply for Your MC Number
Also note that you are expected to have an MC number to participate in interstate commerce. You will have to file for your authority with the FMCSA. Once you’ve filed, you get your MC number immediately, but it is not active yet. You will have 20 days to complete your BOC-3 and get an insurance policy after you file.
Note that once those are filed with the FMCSA, your MC authority will become active within the next 2-3 weeks, and about 2 weeks after that, you will receive your authority certificate in the mail. It is necessary to note that you cannot legally drive your truck until you’ve filed your BOC-3 and insurance policy and your MC number goes active.
File a BOC-3 & Get An Insurance Policy
In the United States, you have more or less 20 days to complete this step. The FMCSA expects you to have a designated process agent in each state that can serve legal paperwork on your behalf – a BOC-3 shows that you do.
You are expected to also have an active insurance policy in place for you to drive your truck and your trucking authority to become active. If you make any changes to your name, address, or phone number, you need to update your BOC-3 and insurance policy to avoid going on an inactive list.
Pay your HVUT
You will have to pay your HVUT before setting up your IRP. The Heavy Vehicle Use Tax is an annual tax assessed on all heavy vehicles operating on public highways.
Set Up Your International Registration Plan (IRP) And Get Your Apportioned Plates
If you are operating your trucking company within multiple jurisdictions, you will also have to report all miles driven and pay taxes on them annually. For your IRP, you will need to register all fleets of vehicles that operate in more than one jurisdiction.
You will need your truck’s VIN, title information, purchase cost and date, and the make and model of your vehicle to register for your IRP. Have it in mind that you will also need to have some kind of idea of the states you plan to haul in before you register. Once you have registered and paid the fee, you will receive your apportioned tags.
Create an International Fuel Tax Agreement (IFTA) Account
An IFTA agreement is with the lower 48 US states and Canadian provinces to simplify the reporting of fuel use taxes by truck drivers that operate in multiple jurisdictions. Have it in mind that you are expected to complete a fuel tax report at the end of each fiscal quarter, including all miles traveled in participating jurisdictions and all fuel purchases made. After you must have set up your IFTA account, you will get an IFTA license and two decals for each qualifying vehicle.
Complete a Unified Carrier Registration (UCR)
Note that a UCR permit verifies that you have active insurance in the states that you operate in. This requires that trucking companies register their vehicles within their operating state and pay an annual fee based on their fleet size. This registration is expected to be renewed every year and you will use your MC number and USDOT to apply.
Enroll In A Drug And Alcohol Consortium
All truck drivers are expected to register with a drug and alcohol testing center before they can get on the road. The FMCSA and USDOT require that all truck drivers have negative drug screens before hiring others or driving themselves.
Which Agency Regulates and Issues a Trucking Authority
The Federal Motor Carrier Safety Administration (FMCSA) is the agency tasked with regulating the trucking industry as a whole and also issuing trucking authorities. The FMCSA was established in 2000 as an agency under the U.S. Department of Transportation (USDOT). They have a variety of tasks including developing the standards for testing commercial drivers, collecting safety data, regulating compliance, and more.
Note that to enforce the policies and regulations in place, the FMCSA works with state and local governments. They work to reduce the number of injuries and accidents involving large commercial vehicles on the road. The FMCSA also works with somewhere around four million CDL drivers. The core duties of this agency include;
Have it in mind that any regulation that the FMCSA issues is automatically documented by the Federal Register and is added to the U.S. Code of Federal Regulations (CFR). The Federal Register is published every business day and includes proposed issues as well as final regulations of the government’s agencies.
Basically, it’s a daily newsletter with updates from the different government agencies. This means that every time the FMCSA amends or creates a new regulation, all agencies know about it, keeping them in the loop in terms of enforcement.
The FMCSA also has a ton of safety programs in place. Note that these programs not only help keep truckers in line, but they collect data that will allow FMCSA to implement new rules. The most renowned program that they have is on compliance, safety, and accountability. This program lets them hold drivers responsible for the part they play in keeping the roads safe.
Another safety component that they operate is the Safety Measurement System. Note that this system collects data from different carriers and uses it to keep collision and violation data up-to-date. They also have a Pre-employment Screening Program, which lets the FMCSA make smart hiring decisions. It gives them access to a driver’s crash records, inspection records, etc. in order to hire the best and safest drivers possible.
Training and Registration
The FMCSA also offers training programs. Notably, their training center reaches over 20,000 professionals every year! That is a large outreach! Also, note that they have training modules available for new applicants that walk them through the process of applying for a new registration with USDOT. If you are already working with the federal government then you don’t need to worry about this step! But, if you are a new driver, learning a little more about registration could be beneficial to you.
Frequently Asked Questions
What Are The Steps To Getting Your Trucking Authority?
These are the steps to get your trucking authority;
- First of all, establish your business entity
- Get USDOT number
- Get MC number
- Get insurance
- Describe process agent
- Complete UCR
- Do truck signage
How Do You Get Your Interstate Trucking Authority?
Get your interstate trucking authority by the following means;
- Get your EIN number
- Apply for authority with the FMCSA
- Get Insurance
- Get registered for UCR
- Get registered for IRP
- Get registered for IFTA
- Have a heavy vehicle use Tax
What Does It Mean To Have Your Own Trucking Authority?
Having your own trucking authority is an assurance that you have government permission to get paid for hauling freight.
What Are The Benefits Of Having Your Trucking Authority?
- Privilege of audition
- You have the privilege to do all of your own invoice, or hire someone of your choice to do it for you
- Privilege of registering your equipment at you your own choice of states
- Access to figure out new laws and regulations
- Freedom to do whatever you want, whenever you want to do it
- Privilege to fill out the brokers packets
Can You Sell Your Trucking Authority?
No! You can’t possibly sell your trucking authority.
What Are Different Trucking Authorities?
There are two major different types of trucking authorities, they are
- Carrier of Properties
- Carrier of household goods
How Much Does It Cost To Have Your Own Trucking Authority?
It costs about $80 to get your trucking own authority.
How Much Does It Cost To Start A Trucking Company?
About $6,000 to $15,000 is the right estimation for starting a trucking company.
Can You Be A Freight Broker And A Carrier?
Yes, you can be both freight and a carrier because in some cases, a carrier can take the brokerage license as a secondary source of revenue. And freight brokers can also act as carriers as long as they are not transporting cargo that is double brokered.
Is It Better To Have Your Own Authority In Trucking?
Having your own trucking authority might not be the best because your operating expenses will be much higher (as an owner operator) with your own authority. And much attention is required in maximizing your top-end revenue while cutting expenses to boost your profits from each load.
Can You Start A Trucking Company Without Driving?
Yes, you can start a trucking company with out driving, all that is required is to employ a professional driver to manage the company (business) with.
What States Require Intrastate Authority?
The states that require intrastate authority are;
What Are The Steps To Start A Carrier Business?
The following are the steps to start a carrier business;
- Write business proposal
- Establish a legalized company
- Obtain the necessary business licenses and permits
- Purchase or lease the right equipment
- Choose the proper insurance coverage
- Be aware and observant about your income and expenses
- Look out for (goods) loads to enlarge your business
What Do You Need To Start A Carrier Business?
The following are the tips you need to start a carrier business;
- Find your area of specialization
- Avoid unnecessary expenditure
- Get a legalized structure
- Look out for customers
- Get referrals
- Specify your rates
- Make your service exceptional
What Is The Oldest Trucking Company?
The oldest trucking company is Jones Motor Group company which was established since 1894 and still in existence.
How Much Does Dot Authority Cost?
Dot authority costs about $300.
Who Has The Largest Trucking Company?
United Parcel Service (UPS) is the largest trucking company in the world with revenues which exceed US dollar of 71.86 billion.
How Much Does Dot Authority Cost?
Dot authority costs is about $549 per year, for three dot authority which cover all your federal fees, USDOT number, designation of process agents (Form BOC-3) and also your MC number.
How Do Freight Brokers Get Paid?
Freight brokers are usually paid through this means;
- Net revenue
- Gross margin and gross revenue
20. How Do You Get Loads With Your Own Authority?
These are the following ways to get loads with your own authority;
- Get a freight broker to find loads
- Pay a dispatching service
- Dependency on the load boards
- Search for loads
- Lease-on with a company
21. What Is The Best State To Start A Trucking Company?
Oklahoma is the best state to start a trucking company because the owner (operator) is in the center of the United States which enables you to operate both in the east and west coast jobs.
22. Why Do Most Trucking Companies Fail?
Most of trucking companies fail because of lack of patronage, high operational costs, low-paying freight and too many accounts receivables that are involved.
23. What Does It Take To Get Your Own Authority?
Getting your own authority might give you a higher income though, but it also means you have more liability, expenses, and paperwork to take care of.
24. What Is The Difference Between An MC And Dot Number?
A USDOT number (U.S. Department of Transportation number) is an interstate operating authority and authentic identifier assigned to a moving company executing interstate movement by the Federal Motor Carrier Safety Administration. While Motor Carrier number is an interstate operating authority and unique identifier assigned by the (FMCSA) to moving companies operating in interstate commerce, and also hauling cargo across state lines.
25. Who Is The Number 1 Freight Company?
FedEx Freight company.
26. How Much Can You Make With Your Own Authority?
With your own authority, you can make up to $100,000 to $150,000 per year.
27. What Are The Top 10 Trucking Companies?
The top ten trucking companies are;
- Old Dominion Freight Line
- TFI International
- Landstar System
- YRC Worldwide
- J.B Hunt
- XPO Logistics
- United Parcel Service (UPS)
28. What Are Mc And Dot Numbers?
Motor Carrier numbers are another form of an interstate operating authority and unique identifiers assigned by the (FMCSA) to moving companies operating in interstate commerce and also hauling cargo across state lines.
29. How Much Do Owner Operators Make Per Mile?
The owner operator usually makes about 70% of the load per mile, which gives him about $1.75.
30. Is Box Truck Business Profitable?
Yes, box trucking business is one of the profitable businesses in the state which is very competitive.
31. Why Do You Need Your Own Authority?
Having your own authority enables you to remove the middleman and gain direct access to the receivers, shippers and even load matching services in order to obtain freight. Though it requires more work and responsibilities, but it pays better
32. Who Needs An Mc Number?
Companies that Operate as for-hire carriers (for a fee or other compensation) Transporting passengers, or arranging for their transport, in interstate commerce require Mc number.
33. What Is The Highest Paying Truck Driver Job?
The highest paying driving job is weekly pay, which is about $2,000.00 per week.
34. How Long Does It Take To Get Authority?
It takes up to 20 days in getting the authority, so long as your insurance and process agents are on file at the FMCSA.