Quote:
Originally Posted by Phil99
Can you help me understand what "getting your own authority" is? Is it like running any other business (say a cabinet shop)? I know when I had my own fabricating shop for 15 years I had to have a business license and work with the state and federal gov. concerning all the paperwork and taxes involved. And I agree, it was nice in some ways to close down my shop and just start designing and selling for another company.
Trucking is one of the most regulated industries in this country. We are required to maintain a lot of records and belong to a drug consortium. We are required to keep track or our time and cannot legally work more than 70 yours in an 8 day period of time. There are regulations about securement, weight, and many other things in which we must deal on a daily basis. We come under federal, state, county and local regulations in some cases. In order to haul freight you must have operating authority. You either lease to a carrier who has authority or obtain your own authority. Authority is basically permission to operate in interstate commerce and is granted by the U.S. government. Intrastate authority is granted by some states for those who only operate within their borders or pick up and deliver the same load within a particular state. I believe there are about 11 or so states who have intrastate authority. You only need interstate authority if you operate across state lines. You obtain interstate authority by applying to the feds. There is a one time filing fee of $300 and it takes about 3-6 weeks from the time you apply until you receive your authority. The cost of intrastate authority varies from state to state. California and Texas are two of the most expensive. In order to get authority there are minimum amounts of insurance which they require. This is where many have a problem. Most insurance companies require from 1-2 years of driving experience before they will cover you. Progressive will cover you for the liability part with some restrictions. Insurance is one of the most expensive aspects of getting your authority. The more experience and the better your MVR the better your rate. There are some who pay in excess of $12,000 per year for motor carrier insurance. I recall one poster who was quoted $36,000/year for insurance, but I think that he lived in New York. I pay about $3,700 for liability and cargo, but I have been at this for many years and have a good track record and MVR. Most shippers and brokers require $1MM liability and $100M cargo insurance. Where you live and run has a lot to do with your rate as does the type of cargo you haul.
When I finally decided to start my shop it was after I spent a few years working in other shops learning the process. I had to go out and buy the necessary tools (that would be a truck in this situation) to build cabinets, go out and contact builders/customers to buy my product/services, then do the work and collect the money. Is the trucking industry something like this?
Thanks much,
Phil
When you are a motor carrier you get freight from shippers or brokers. While running a truck isn't complicated, it does take time to learn the basics and how to successfully operate a trucking company. That is true whether you lease to a carrier or run your own authority.
There are primarily two reasons most businesses fail, lack of capital and lack of experience. Trucking is a very capital intensive business. It can cost a lot of money just to fill your tanks. A breakdown can cost hundreds, if not thousands of dollars. Unless you have the funds or credit to make repairs when your truck breaks down you are out of business. I had one truck that I spend over $11,000 on repairs last year. That is not the norm, but it can and does happen. A blown engine can run from $10-18,000. I put a transmission in one truck last year and by the time I paid the wrecker, motel for my driver and repairs I had spent over $8,100. A blown turbo a couple of years ago cost me $2,700 including parts and labor. I paid over $1,300 to put in a clutch earlier this year. Breakdowns will occur whether the truck is new or older. Even a new truck may have repairs that are not covered under warranty. And while the truck is down you have no income. The transmission that I replaced had my truck sitting for 5 days waiting for parts.
Take your time and learn all you can. This can be a rewarding business. But it is also a demanding business. People come from many different backgrounds. There are those with a high school diploma to Ph D's out here driving. This is not something you can learn out of a text book.