What does it mean to have your own trucking authority?
Having your own carrier authority means you have the government’s permission to get paid for hauling freight as your own trucking company. Operating Authority is issued through the Federal Motor Carrier Safety Administration (FMCSA) in the form of a Motor Carrier (MC) number.
There are different types of authority depending on what kind of cargo is being carried, and some carriers will need multiple authorities to cover multiple types of cargo. Some states require Intrastate Authority if you’re moving loads within a given state. Make sure you apply for the authority or authorities relevant to your business.
What are the benefits of having my trucking authority?
Once you’ve been working as a trucker or owner-operator for a while, it’s natural to want to move on to having your own authority. It’s a huge career growth opportunity, gives you complete independence, and can come with a pretty significant bump in pay if you’re running your business correctly.
There is a lot more work and responsibility involved, but it means you can hire your own drivers. Over time, you could have multiple trucks and drivers. It also means you’ll be responsible for finding and negotiating loads. If you’re planning to use a load board to find freight, Truckstop.com’s Load Board is a low-cost way to get started (Basic is just $39/month).
Where do I start?
If you’ve completed everything under the “Where do I start?” question above, then you can get started completing the list of items below. (Fees can vary depending on the state you live in, so they are not listed here. Visit your state’s Department of Transportation/motor carrier website for more information.)
Once you complete the Motor Carrier Identification Report (MCS-150)and Safety Certification Application, you’ll receive your USDOT Numberwhich you need to have a vehicle used in interstate commerce to move freight.
There is a mandatory 10-business day dispute period that occurs after your application is posted to the Federal Register in which anyone can protest your authority. Once it ends, you’ll need to post proof of insurance and your BOC-3 form which assigns an agent or business in all 50 states to receive and forward legal documents on your behalf.
Your authority will be reviewed by the FMCSA. You’ll receive a letter from them when it’s approved, at which point you’ll start working on the remainder of this list.
There are some circumstances that will require extra permits. Kentucky, New Mexico, and New York require weight distance permits to operate, and Oregon requires a permit and a bond. You’ll need the Standard Carrier Alpha Code (SCAC) if you’re moving military, government, international, or intermodal loads.
After the above is complete, you’ll be enrolled in the New Entrant Safety Assurance Program.
Within your first 18 months of doing business, you will have a mandatory “New Entrant” audit to ensure you’re compliant with federal regulations. To make sure you are, start keeping good records now.
Make sure you maintain:
What is the cost of obtaining operating authority (MC num
Published 12/05/2014 04:56 PM | Updated 12/18/2017 08:49 AM
The cost for each individual Operating Authority is a one-time fee of $300. Separate filing fees must be submitted with the application at the time of processing for each Authority sought. For instance, requests for Passenger Authority and Household Goods Authority will require two $300 fees ($600). Payments can be combined. If both authorities are the same type (like common and contract carrier authorities for a property), there is only one fee. FILING FEES ARE NON-REFUNDABLE.
There is a $14 charge for the processing of a name change and an $80 fee for requesting reinstatement of authority if it is revoked. For more information on operating authority fees, click here.
You can file for the following operating authorities with the OP-1 Application For Motor Property Carrier and Broker Authority (definitions can be found in 49 CFR 390.5):
The Costs that Cause Trucking Companies to Fail
Trucking companies constitute a significant industry in the United States (US) with there being over “500,000 trucking companies”, “15.5 million trucks on the road”, and where “80% of these trucking companies are regarded as small businesses totaling 6 trucks or less”. This sector employs an “estimated 8.9 million people employed in trucking-related jobs”, with the United States economy depending on trucks to “deliver nearly 70 percent of all freight transported annually in the U.S”. (Source: US Special Delivery)
Given the significance of the trucking industry in the US, it is important to understand how and why trucking companies succeed/fail in the context of the domestic economy. And in attempting to understand this, we see an immediate connection between the company’s success/failure and its ability to both predict and address the various costs that might be incurred through this business.
Fixed and variable costs – and an insufficient understanding of them — leads to the failure of trucking companies. The fixed costs include aspects like an investment in infrastructure, salaries, and vehicle insurance. The variable costs range from fuel prices and maintenance expenses to changing regulations and indirect driver costs; from routing and planning costs to customer satisfaction and business management costs.
Fixed Costs
Fixed costs are those that do not change over time, i.e., these are the costs that can be estimated, on a consistent basis, based on information that is available in the present moment. While such costs might increase incrementally over time, by and large, they can be calculated at the outset and provide the trucking company with a baseline of the financial investment that might be needed.
Some of the fixed costs involved in trucking are:
Variable Costs
While fixed costs can be calculated with some certainty, variable costs are – as the name suggests – less certain. Variable costs depend on a range of influencing factors (as described below), and the trucking company will need to spend a lot of time and attention in anticipating (and addressing) these expenses.
What are the variable costs that are specific to trucking companies?
Having your own carrier authority means you have the government’s permission to get paid for hauling freight as your own trucking company. Operating Authority is issued through the Federal Motor Carrier Safety Administration (FMCSA) in the form of a Motor Carrier (MC) number.
There are different types of authority depending on what kind of cargo is being carried, and some carriers will need multiple authorities to cover multiple types of cargo. Some states require Intrastate Authority if you’re moving loads within a given state. Make sure you apply for the authority or authorities relevant to your business.
What are the benefits of having my trucking authority?
Once you’ve been working as a trucker or owner-operator for a while, it’s natural to want to move on to having your own authority. It’s a huge career growth opportunity, gives you complete independence, and can come with a pretty significant bump in pay if you’re running your business correctly.
There is a lot more work and responsibility involved, but it means you can hire your own drivers. Over time, you could have multiple trucks and drivers. It also means you’ll be responsible for finding and negotiating loads. If you’re planning to use a load board to find freight, Truckstop.com’s Load Board is a low-cost way to get started (Basic is just $39/month).
Where do I start?
- Figure out what kind of authority you need. Authority is based on the cargo being carried, and some carriers need multiple authorities to cover multiple types of cargo. Learn more on the FMCSA website. Some states require Intrastate Authority if you’re moving loads within a given state. Apply for the authority or authorities relevant to your business.
- Decide on a name for your business. If required, file your business with your state. Typically this is done through the Secretary of State, but check your state’s official website to be sure. FYI: Some states require you to file your business under an assumed name or DBA (doing business as). Check your state’s official website to be sure.
- Decide on a business structure. Talk to an accountant to determine how you’re going to organize your business to maximize your financial and operational success. Research Limited Liability Companies (LLCs), C Corporations, S Corporations, Partnerships, and Sole Proprietorships to make the right decision for your business.
- Get an EIN. Visit the IRS website for an Employer Identification Number (EIN) which you’ll need for tax purposes related to your business.
- Get preapproved for primary liability and cargo insurance. If you wait until the end of the process to learn that you aren’t approved for insurance to protect you in the event of an accident, you’ll have spent a lot of time and resources unnecessarily—don’t skip this step!
- Get an MC number. Visit the FMCSA website to get your MC number.
- You need to know where your freight is coming from so you have something to move. Get familiar with load boards if you don’t have customers lined up, and start building relationships with quality brokers that you can work with in the future. Learn about services offered through Truckstop.com’s Load Board.
What are the steps to getting my trucking authority?
If you’ve completed everything under the “Where do I start?” question above, then you can get started completing the list of items below. (Fees can vary depending on the state you live in, so they are not listed here. Visit your state’s Department of Transportation/motor carrier website for more information.)
- Apply for your authority.
Once you complete the Motor Carrier Identification Report (MCS-150)and Safety Certification Application, you’ll receive your USDOT Numberwhich you need to have a vehicle used in interstate commerce to move freight.
There is a mandatory 10-business day dispute period that occurs after your application is posted to the Federal Register in which anyone can protest your authority. Once it ends, you’ll need to post proof of insurance and your BOC-3 form which assigns an agent or business in all 50 states to receive and forward legal documents on your behalf.
Your authority will be reviewed by the FMCSA. You’ll receive a letter from them when it’s approved, at which point you’ll start working on the remainder of this list.
- Secure your UCR permit.
- Pay your HVUT.
- Register for an IRP.
- Set up an IFTA account.
There are some circumstances that will require extra permits. Kentucky, New Mexico, and New York require weight distance permits to operate, and Oregon requires a permit and a bond. You’ll need the Standard Carrier Alpha Code (SCAC) if you’re moving military, government, international, or intermodal loads.
- Enroll in a Drug and Alcohol Testing Program.
After the above is complete, you’ll be enrolled in the New Entrant Safety Assurance Program.
Within your first 18 months of doing business, you will have a mandatory “New Entrant” audit to ensure you’re compliant with federal regulations. To make sure you are, start keeping good records now.
Make sure you maintain:
- Driver qualification files/employee records
- Driver logs
- Safety records
- Hours of Service (HOS) records
- Accident reporting
- Maintenance records
- All Drug and Alcohol Testing Program records and reports
What is the cost of obtaining operating authority (MC num
Published 12/05/2014 04:56 PM | Updated 12/18/2017 08:49 AM
The cost for each individual Operating Authority is a one-time fee of $300. Separate filing fees must be submitted with the application at the time of processing for each Authority sought. For instance, requests for Passenger Authority and Household Goods Authority will require two $300 fees ($600). Payments can be combined. If both authorities are the same type (like common and contract carrier authorities for a property), there is only one fee. FILING FEES ARE NON-REFUNDABLE.
There is a $14 charge for the processing of a name change and an $80 fee for requesting reinstatement of authority if it is revoked. For more information on operating authority fees, click here.
You can file for the following operating authorities with the OP-1 Application For Motor Property Carrier and Broker Authority (definitions can be found in 49 CFR 390.5):
- 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
- United States-based Enterprise Carrier of International Cargo (except Household Goods)
- United States-based Enterprise Carrier of International Household Goods
- United States-based Enterprise Owned or Controlled by Persons of Mexico Providing Truck Services for the Transportation of International Household Goods
- OP-1(FF) — Application for Freight Forwarder Authority
- OP-1(P) — Application for Motor Passenger Carrier Authority
- OP-1(MX) — Application to Register Mexico-based Carriers for Motor Authority to Operate Beyond U.S. Municipalities and Commercial Zones on the U.S.-Mexico Border
- OP-2 — Application for Mexican Certificate of Registration for Foreign Motor Carriers and Foreign Motor Private Carriers under 49 U.S.C. 1302
The Costs that Cause Trucking Companies to Fail
Trucking companies constitute a significant industry in the United States (US) with there being over “500,000 trucking companies”, “15.5 million trucks on the road”, and where “80% of these trucking companies are regarded as small businesses totaling 6 trucks or less”. This sector employs an “estimated 8.9 million people employed in trucking-related jobs”, with the United States economy depending on trucks to “deliver nearly 70 percent of all freight transported annually in the U.S”. (Source: US Special Delivery)
Given the significance of the trucking industry in the US, it is important to understand how and why trucking companies succeed/fail in the context of the domestic economy. And in attempting to understand this, we see an immediate connection between the company’s success/failure and its ability to both predict and address the various costs that might be incurred through this business.
Fixed and variable costs – and an insufficient understanding of them — leads to the failure of trucking companies. The fixed costs include aspects like an investment in infrastructure, salaries, and vehicle insurance. The variable costs range from fuel prices and maintenance expenses to changing regulations and indirect driver costs; from routing and planning costs to customer satisfaction and business management costs.
Fixed Costs
Fixed costs are those that do not change over time, i.e., these are the costs that can be estimated, on a consistent basis, based on information that is available in the present moment. While such costs might increase incrementally over time, by and large, they can be calculated at the outset and provide the trucking company with a baseline of the financial investment that might be needed.
Some of the fixed costs involved in trucking are:
- The truck(s) & other equipment
- Vehicle insurance
- Salaries & benefits
- This includes the drivers, accountants, legal team, sales team, media/publicity team, and any other full-time staff members that the trucking company needs — both to keep current business and to invite prospective clients
- Benefits (like health insurance), which companies will have to consider providing in order to hire and retain a qualified staff
Variable Costs
While fixed costs can be calculated with some certainty, variable costs are – as the name suggests – less certain. Variable costs depend on a range of influencing factors (as described below), and the trucking company will need to spend a lot of time and attention in anticipating (and addressing) these expenses.
What are the variable costs that are specific to trucking companies?
- Fuel prices
- Fuel prices change based on a complex interaction between geographical factors (like where the fuel comes from and goes to) and political conditions (the relationships between the nations that the fuel is being transported between).
- Trucking companies need to keep a finger on the pulse of such geo-political interactions and account for how shifts in these macro conditions might affect the cost of running the company.
- For example: does it look likely that US-Iran relationships will worsen in 2019? And if so, how might this worsening relationship impact the cost of fuel in the States?
- Repair & Maintenance
- Just like fuel prices, the costs of repairing and maintaining trucks are also less predictable, and anything — from changes in weather to drivers’ personal well-being — can affect how vehicles can be damaged and how often these damages are likely to occur.
- A forward-looking trucking company will not only factor in the expected costs of maintenance and repair (like wear and tear to tires) but also keep in mind contingency factors that might emerge (accounting for the number of trips that might need to be made to earthquake prone areas, for example).
- Changing regulations
- If state or national regulations change, what would the trucking company need to invest in order to address a change in codes of compliance?
- Does the company have enough of a financial buffer in place to mitigate such a change in circumstance — for example, if all the vehicles in the company were to need a particular technological upgrade so as to comply with new regulations?
- Routing and planning costs
- What are the tools – both in terms of additional technological equipment and additional human resources – that the company might need to purchase/invest in, in order to ensure that the most efficient routes are being chosen for the company’s deliveries?
- As navigation and mapping technologies continue to develop, for example, might the trucking company need to hire consultants that come in and train the company’s staff members on how to use these new tools efficiently?
- Based on the routes that are planned, and based on current and prospective business that the company has on its client list, what might be the additional costs incurred as tolls, permits, local licenses, and other such fees?
- Customer satisfaction costs
- What are the costs that might come into play if/when customers need to be reimbursed for delayed or damaged shipments?
- How will the company invest in retaining its clients, in the case of disputes?
- Are there publicity campaigns that might need to be undertaken, in response to emerging disputes, to ensure the company’s good standing within its customer base?
- Indirect driver costs:
- How much might need to be spent on drivers’ food and lodging while they are on the road?
- How do these costs change based on the individual driver and on the nature of the routes themselves?
- Do particular routes end up being more expensive than others, based on the cost of living shifts in different areas of the country?
- What are other unanticipated costs that might arise for drivers while they are on the road?
- Business management costs
- Is there likely to be a need to hire independent contractors/additional staff members based on prospective clients that request the services of the company?
- What if there might be unanticipated costs in reaching new markets and clients?
- Based on the nature of the office space and its ownership status, what happens if the costs increase significantly?
