Are you a prospective owner-operator looking to start a trucking company? It’s an enticing business opportunity for those who want to earn more money and enjoy more freedom. However, before you even think about investing in a truck business, there are many things you may want to consider first.
How much does it cost to start a trucking company? What is the owner-operator startup cost? How do you start a trucking company with no money? Perhaps these are a few questions that you have top of mind.
In this article, we’ll explain the different costs you can expect to face before jumping into a trucking business investment.
Startup costs for trucking companies
The trucking company startup costs usually include the following:
Commercial driver’s license (CDL)
If you were previously a commercial driver, you perhaps already have your CDL license. In case you don’t, you’ll have to go to a CDL training school, pass a written exam, acquire a CDL permit, train with a supervising driver, complete all required training, and pass your CDL skills test. Every state has a different cost to obtain a CDL license.
USDOT and MC Number
Before starting your own trucking company, you’ll need a United States Department of Transportation (USDOT) number and a Motor Carrier (MC) Number. A USDOT number identifies you as a carrier that’s operating in interstate commerce and an MC number identifies you as a carrier who transports regulated commodities in interstate commerce. You can file for both through the Federal Motor Carrier Safety Administration (FMCSA) website for $300.
Freight truck cost
New trucks are costly, so you’ll need to consider how many you can afford to purchase at first. Some business owners start with just one truck and work their way up. Alternatively, you may want to work in purchasing a small fleet right away into your business plan, along with a plan to recoup the cost as time goes on. A new commercial truck can cost on average $113,000 to $125,000, while used trucks can go for around $40,000 to $50,000 less.
Insurance
As a lease owner-operator, insurance is one of the most important fixed costs that you’ll encounter. The amount of insurance you pay per truck will depend on several factors, including the age of equipment, commodities hauled, and location of your truck. Fleets typically spend up to $10,000 per truck. Check out these FMCSA insurance requirements for more details.
Recent years have seen a surge of nuclear verdicts, some fleets are paying settlements of up to $280 million. This is having a huge impact on rising fleet insurance costs. One way to combat these costs is to implement a driver safety solution with video, like Lytx’s video telematics solutions.
Business entity
You may want to set up your trucking company as a limited liability company (LLC). The state-filing fees for an LLC vary from $50 to $300 depending on the state that you are filing in, with an average state-filing fee of $127.
Ongoing costs
How much does it cost to start a trucking company? The total can be divided into the following ongoing costs:
- Fixed costs: Some of your fixed costs will include the price of your truck unit, regular maintenance, yearly permits, taxes, and your insurance costs.
- Variable costs: The variable costs will include fuel costs, various repair costs, and fines. About 60 to 70% of your operating costs will come from these variables.
- Cost per mile: According to the American Transportation Research Institute (ATRI), the average trucking cost per mile in the US is $1.82. This means, if one of your trucks drives 100,000 miles in a year, you’ll have to spend $182,000 to keep that single truck on the road.
Additional costs
How much do you need to start a trucking business? Consider these additional costs as well:
- BOC – 3 form: The cost of filing a BOC-3 form ranges between $20 and $40. It is necessary to fill out this form if you plan on doing interstate business as it establishes that you are legally able to operate in each state that you drive.
- International Registration Plan (IRP) credential and International Fuel Tax Agreement (IFTA) decal: You’ll also have to incur the IRP credential and IFTA decal costs in order to operate across state lines. The former is based on the percentage of miles you operate in each state (average cost at $1,700 annually), while the latter is a lot cheaper at about $10 per year.
- Heavy Highway Vehicle Use Tax (HVUT): The maximum HVUT is $550 per year. It’s a fee assessed annually on heavy vehicles operating on public highways at weights equal to or exceeding 55,000 pounds. The cost is determined by adding the unloaded weight of the vehicle (and any trailers) with the maximum load typically carried.
- Load board: A load board is an online matching system between truck drivers and shippers that allows freight to be claimed and shipped. Working under your own authority means you’ll need your own load board, which usually costs between $35 and $150 per month.
- Fleet technology: Most trucking companies today have at least one technology to help with safety, DOT compliance, productivity, and maintenance. These technologies can include video telematics, ELD’s, GPS fleet tracking, and driver alert systems. Some trucking companies use multiple vendors for these technologies, and others use one system, like Lytx, for all of their fleet technology needs.
Now that you know the answer to “How much does it cost to start a trucking company?”, get started! Once your trucking company has all the basics down, Lytx can help you ensure operational efficiency and safety across your fleet. Comprehensive fleet management solutions can help increase visibility into your fleet operations, improve fleet safety, track vehicles, and streamline fleet compliance. We’re focused on saving lives on our roadways and providing you with critical insights on the road and on the job through the power of video telematics.
Contact us today to learn how we can help you start your own trucking company.
Source: https://www.lytx.com
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