If you’ve got the vision and desire to start a trucking company, now is the time to make that vision reality. Starting any new business can be expensive and time-consuming. You don’t want to get overwhelmed by the paperwork and documentation before you even pick up a load.
That’s where CNS can help! As a leader in the trucking industry, we’ve helped many trucking startups and know what makes new companies successful. We’ve outlined the basic steps you’ll need to take to start a trucking company.
Our specialists can help you avoid getting bogged down in forms, because we take time to learn about your operation and help you become DOT compliant from the start. We won’t over-sell unneeded items or services that don’t ultimately help you get your business on the road.
Let us help you get started.
Step 1: Make a Detailed Financial Plan
A solid business plan will list expenses and revenue expected in your business. Be sure to include your own salary. Costs involved in a trucking startup include tractors, trailers, licensing, and registration costs. Also include the cost of insurance, and data tracking software and services.
The U.S. Small Business Administration website has downloadable templates to create your own business plan.
Step 2: Decide What Kind of Company You Want To Form
You may want a sole proprietorship, a partnership, or a limited liability company. Each of these has pros and cons, which vary by state.
To own and run a private company in the United States, you’ll need to form a limited liability company (LLC). This is a business structure that combines pass-through taxation (like a partnership or sole proprietorship), with the limited liability of a corporation.
CNS can prepare and file your LLC application with your home state. Or if you want to start a partnership or sole proprietorship, click here.
Step 3: Obtain a Federal Employer Identification Number (EIN)
This unique nine-digit number gets assigned to businesses in the United States by the Internal Revenue Service. Use this number to file your business tax returns.
CNS can obtain your EIN on your behalf. Click here to begin obtaining a Federal EIN.
Step 4: Become Compliant with Trucking Safety Regulations
- Obtain a USDOT Number
First be sure you even need a USDOT number. Obtaining a USDOT Number can be confusing and costly. Here’s where CNS can help by getting your number quickly and accurately. Click here to learn more.
- Obtain a Motor Carrier Operating Authority
Companies are required to have interstate operating authority (MC Number) in addition to the DOT Number if they do any of the following tasks:
- Operate as for-hire carriers (for fee or other compensation)
- Transport passengers in interstate commerce (or arrange for their transport)
- Transport federally regulated commodities in interstate commerce (or arrange for their transport)
CNS can file for your MC Number at the same time we apply for your DOT Number.
- File a BOC-3
A BOC-3 is a required United States filing that activates your Motor Carrier Authority. This filing assigns legal agents in the event court papers ever need to be served to your company by an outside state. It is required before federal operating authorities can be granted in the U.S.
CNS, unlike many of our competitors, does not charge an annual fee for a BOC-3 filing.
- Know the Heavy Use Tax (HUT) States
You may need to apply for further credentials if your company drives in the following states:
- New York
- New Mexico
- Plan to File Heavy Highway Use Tax (2290)
A trucking startup needs to be aware of special tax codes and procedures in accordance with State, District of Columbia, Canadian, and Mexican law. When a vehicle has a taxable gross weight of 55,000 pounds or more, the company has to electronically file a HVUT Form 2290.
Once this is filed, you will need to get a stamped copy of your Schedule 1. Companies are required to file all taxable highway motor vehicles registered in your name during the tax period when the truck first operated.
CNS can file your Schedule 1 with the IRS and provide you a stamped E-File copy. Click here to learn more.
- Secure a Unified Carrier Registration (UCR)
The Unified Carrier Registration (UCR) program requires ALL carriers (private, exempt, or for hire) to register their business with a participating state and pay an annual fee that is based on the size of their fleet.
Brokers, freight forwarders, and leasing companies also are required to register and pay a fee, unless they are also operating as a motor carrier.
CNS can complete your UCR filing after you obtain your DOT number. Click here to learn more.
- Get an International Fuel Tax Agreement (IFTA) Sticker
This agreement is between the lower 48 states and Canadian provinces and it simplifies reporting of fuel use by motor carriers operating in multiple jurisdictions. Alaska, Hawaii, and Canadian territories do not participate.
An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle. The carrier files a quarterly fuel tax report. This report determines the net tax or refund due and redistributes taxes from collecting states to states where it is due.
- Obtain an International Registration Plan (IRP) Sticker
This registration gives reciprocity between the United States and Canada without the need for additional registrations. Under this Plan, only one license plate and one cab card is issued for each fleet vehicle.
Step 5: Become Compliant with the FMCSA
Great job! Taking these steps gives you DOT and Operating authority. Now you need to become compliant with the FMCSA. These items need to be maintained through the year.
CNS has reliable, cost-effective packages that keep you compliant and up-to-date.
Step 6: Obtain the Correct Insurance
Different types of insurance are available and often required to cover certain aspects of your trucking company.
- Primary Liability – After applying for an MC Number, you will need to post liability insurance with FMSCA. You must carry at least $750,00 in primary liability coverage to cover damages or injuries from at-fault accidents.
- Cargo Insurance – This insurance covers damage to the freight and/or theft.
- Physical Damage – Provides coverage for truck damage when you are not liable.
- Non-Trucking Use (Bobtail) – Covers liability in accidents that happen when you’re not hauling a load for someone else.
CNS partners with premiere truck/passenger insurance agencies to obtain the best coverage at affordable rates. Click here to learn more.
Step 7: Use a Driver Qualification File (DQF) Service
Trucking companies need to keep impeccable records in the event of an audit. Physical or electronic driver files allow you to pull an MVR report, look at previous employer inquiries, PSP reports and more.
CNS has solutions to keep your Driver Qualification Files up to date with regulations and ready to help you pass an audit. All of our driver files are monitored by actual DQF specialists to ensure documents don’t expire. We communicate personally about soon-to-expire materials to avoid computer overlooks. Click here to learn more.
Step 8: Join the Mandatory Drug and Alcohol Consortium
Anyone holding a Commercial Driver’s License needs to have a pre-employment drug test and be enrolled in a DOT drug and alcohol consortium.
CNS offers a low-cost, DOT-compliant service that covers DOT random testing through the year. Our service gives you a secure portal to track test results. We also have personal representatives to call when you have questions. Click here to learn more.
Step 9: Install a Compliant Electronic Logging Device
Per a 2017 Electronic Logging Device mandate, non-exempt carriers are required to install an FMCSA-registered and compliant electronic logging device.
Today’s ELDs can actually help you grow your business. ELDs offer many fleet management features like diagnostic tools and advanced reporting. With their reports, you can maximize your fleet efficiency and simplify your operations.
Step 10: Make Your Trucking Startup a Reality
We at CNS are excited for your new venture to become reality. We’re here to help you navigate the path towards starting a trucking company.
Our services and compliance specialists are on hand to get you up and running as quickly as possible.
The three areas that most violations come from are lights, tires, and brakes
Teaching a driver how to do a pre-trip and post-trip inspection is as important as teaching them how to drive the truck.
Some of the easiest things to catch during a driver inspection are also the most common violations written up on a roadside inspection.
Proper pre and post-trip inspections should take at least 30 minutes to perform thoroughly and will reduce vehicle maintenance and violation costs.
This guide was developed based on what DOT inspectors look for at roadside and what maintenance often look for before releasing a vehicle. We will focus on the major sections and important details a driver should inspect, including the:
- Front of the vehicle
- Wheels and axles
- Lights, tires, leaks, and brakes
- Side of the truck and trailer
Front of the vehicle
Drivers should look for any intersecting cracks or large rock chips on the windshield, especially in the driver’s line of sight.
Honking the horn, whether that is the air horn or steering wheel city-horn, and turning on the windshield wiper is a simple step to make sure they are working properly.
Then, turn on all lights, which include the three marker lights at the top of the cab, clearance lights, and headlights. Test your high-beams, turn signals, and four-way flashers.
Open the hood and look for any obvious defects.
An easy part for DOT inspectors to check is the pitman arm and steering linkage. If there is any amount of play or looseness where the two gears of the pitman arm meet, it is considered an out-of-service violation and drivers will have to park until it is fixed. Sometimes, if rust is appearing here, it is a good indication that it is not tight.
Finally, check the suspension components. If it looks like your vehicle is leaning to one side, it is a good indicator that there is something wrong with the suspension components.
Wheels and axles
For wheels, check for cracks and loose or missing lug-nuts or wheel fasteners, and look for leaking hub grease.
It is an out-of-service violation for lug-nuts when:
- 10-lug wheels: 3 are missing anywhere or 2 adjacent to each other, or
- 8-lug wheels: 2 are missing anywhere
The steer axle is at the front of the power unit and has specific criteria that is different than other axles.
For example, to be in compliance, your required tire tread depth of a steer axle is higher compared to other axles, which are 4/32” depth and, 2/32” depth, respectively.
After the steer axle, we will move back to the drive axles. The first set of drive axles are either a single axle or group of axles that provide power to help move the truck down the road.
Trailer axles are at the back of the trailer. Some of these axles have sliding or tandem axles to help distribute the weight, to stay within regulations of maximum weight for a tandem axle.
If you are adjusting weight by sliding the tandem axles, you want to slide the axles toward the over-weight location. For example, if you are overweight at the rear of the trailer, then sliding the tandem axles further to the rear will help distribute the weight to the forward drive axles.
Tandem axles have notches on each axle. Each notch moves about 250 to 300 pounds to the other group of axles. Drivers may show up at a weigh station and find that they are more overweight then they were before, and that is because they are sliding the axles the wrong direction.
Lights, tires, leaks, and brakes
The three areas that most violations come from are lights, tires, and brakes. For example, low tread depth, damaged sidewalls, and inoperable light are easily visible and usually do not wear out on one trip.
It is important to check for flat or underinflated tires, fluids leaking, that all required lights are working properly, measure brake pushrod travel distance, brake pad thickness, and check brake can, hoses, and rotor surfaces.
It is an out-of-service violation for tires if:
- Underinflated tires are 50% or less of the sidewall rating
- There is a noticeable leak heard or felt in a tire
- The sidewall is cut, worn, or damaged
- There is a visual bump or bulge on any part of the tire, and
- If there is exposed belt or cord material
Leaks can come from the fuel tank, so make sure that it is securely mounted, and the fuel cap is the proper cap and is tight. Sometimes the cap is missing after fueling the truck because the driver forgot to put it back on. Be sure to check reefer trailers and auxiliary power unit tanks as well.
Side of the truck and trailer
Make sure that the air and electric lines are not lying on the deck area. The lines will rub while driving and eventually wear a hole in the lines, causing an air leak and the brake system to not work properly or even failing.
For 5th wheel assembly, make sure all components are secure, there are no cracks or damaged parts, and bolt tightness. Also, check for any rust driplines by the bolts. Rust will eventually cause bolts to be loose.
On the trailer, check for any damage on the trailer, trailer lights are working, any cargo securement devices are properly placed and tightened, and that there is a spare tire and tire chains secured properly.
Vehicle maintenance costs can be a huge line item for fleet companies and at times, hard to keep under control. Routine maintenance of your vehicles is a necessity to ensure that your biggest assets always stay on the road.
An experienced and knowledgeable vehicle maintenance partner can make all the difference.
CNS can effectively manage your vehicle maintenance to meet your specific driving demands. We effortlessly handle an unlimited number of preventive maintenance schedules for all the vehicles in your fleet.
Serving your customers is your business; maintaining your fleet should be ours. Depend on CNS to keep your vehicles on the road and benefit from our expertise and gain a partnership that is dedicated to your success.
Reducing driver turnover = Improved safety and reduced violation costs
Trucking has had a high driver turnover rate for decades and continues to climb above 90% for larger carriers and around 73% for smaller carriers.
Much of the driver turnover problem is caused by a large percentage of drivers leaving within the first 90 days of on-boarding with a new company.
While a complete hiring program includes a strong driver qualification process seeking stable drivers, meeting driver needs, healthy company culture, competitive driver pay, and more, carriers may solve a big part of the driver retention puzzle by focusing on a successful driver training program.
This includes covering important orientation and safety training quickly and, in many cases, across multiple locations to make sure all drivers are being adequately prepared.
Before we look at what a successful driver training program looks like…
Why is reducing driver turnover so important?
Reducing high driver turnover improves fleet safety and violation costs
A data firm, Vigillo, recently completed an analysis of driver turnover as they monitored FMCSA violations and crashes for nearly 2,000 trucking fleets in the United States.
Their analysis found that a group of fleets with high driver turnover had 1,177 total crashes. The low driver turnover group had just 303 total crashes.
“There is a pretty strong correlation between the safety culture that exists at a motor carrier, which can be measured in CSA, and turnover rates,” said Vigillo CEO Steve Bryan.
Their data revealed that fleets with high driver turnover had:
- 189% more driver out-of-service rate
- 300% more vehicle out-of-service rate
- 181% more hours-of-service violations
- 224% more crash indicators
- 640% more hazmat violations, and
- 182% more controlled substance violations
According to FMCSA annual violation data, fleets regulated by the DOT have paid over $27 million annually in fines, which breaks down to an average of $5,074 per case for violations. With HAZMAT, this average nearly doubles.
Many of these violations will also place the truck out-of-service until the issues are fixed. Being placed out-of-service for 10 hours while a maintenance shop is fixing the truck can cost a fleet around $900 more.
This is why it is so important for fleets to reduce high driver turnover.
But how? A successful driver training program is a critical starting point.
What is included in a Successful Driving Training Program?
On-the-job training and orientation
On-the-job driver training
Some fleets, such as Crete Carriers and Shaffer Trucking, require several weeks on-the-job training with senior driver evaluators.
New drivers are evaluated carefully on their ability to maintain control of the tractor, shifting gears properly, backing the trailer correctly, paperwork preparation, and interaction with customers.
On-the-job training is intended to provide drivers with an accurate picture of the life that professional drivers lead.
Orientation is standard across all companies, but fleets with lower driver turnover are using it to reveal their company culture and help drivers smoothly transition into the new company.
A company handbook should be issued and covered during orientation along with more information on basic paperwork preparation, company safety policies, rules for logbook preparation, and handling hazardous materials.
Orientation should have an emphasis on communication, company expectations and the role of a truck driver. Drivers need to know they have somewhere to turn for help, including Safety Managers, HR staff, or even co-workers..
This is also the opportunity to pass out company swag, such as hats, insulated coffee mugs, shirts, and more.
Near-term customized video training
Each driver comes with their own experiences, skills, and flaws. A strong driver qualification process, on-the-job training, and driver orientation can highlight areas where a new driver can improve.
For example, if driver trainers notice a habit of hard acceleration or hard braking, they should make sure a video training schedule includes driving fundamentals and defensive driving topics.
Similarly, if there is a pattern of logbook errors, include logbook training and hours of service rules into their video training schedule.
All custom schedules should be accompanied by common new driver training, such as reviewing common maintenance and pre-trip inspection training, what to expect during a roadside inspection and how to treat inspectors, highlight drug testing processes and marijuana regulations, seasonal safe driving tips, cargo securement training, etc.
Customized training should also be measurable using quiz assessments to track driver performance. If their assessment score is low, then the training needs to be retaken.
Focusing on new technology
The idea that trucking is as simple as, “get in a truck and drive,” is such an old idea. Trucking is a sophisticated job that drivers are doing, and technology has made it even more complex.
Today, new technology and equipment analyzes and optimizes nearly every facet of fleet efficiency. This includes electronic logging devices, dashcams, and fleet management software that driver must be trained to use.
According to a recent KeepTruckin survey, only 21% of drivers are happy with the quality of their ELD solution, and 73% of drivers experience one or more ELD issue per week.
This is why driver training and new driver onboarding is so crucial. In the first few months of their employment, a driver may feel frustrated with your ELD solution and quit.
Fleets need to make sure that drivers thoroughly understand the ELD they are using and new drivers should have their first several logs audited to ensure they are following company policy and Federal guidelines.
Company managers should be able to use their ELD reports to highlight negative driver habits and customize driver training programs to correct issues before they become an expensive problem.
What else can be done to reduce driver turnover?
Going beyond driver training to reduce high driver turnover
A successful driver training program is complicated.
It includes clear communication from:
- driver orientation
- driver qualification file management
- ELD reports and management
- on-the-job training
- customized driver training, and
- driver training that includes a video platform, in-person training, and regular safety meetings
Managing everything on your own is overwhelming and missing any little detail can lead to audits, fines, and high driver turnover and having someone handle your driver training can be helpful, but may not be enough.
What if there was a complete and affordable DOT Compliance Program to handle all the tedious and difficult office paperwork?
DOT Compliance Programs (PSM)
At CNS, our DOT Compliance Programs focus on Proactive Safety Management (PSM),a mindset that will ensure your fleet’s safety and compliance is always in order and ahead of the FMCSA.
Our PSM Motor Carrier Program includes:
- ELD management
- Driver Qualification File Management
- New driver on-boarding
- Driver safety meetings
- CSA score management
- Policies and handbooks
- Vehicle maintenance
- and more
To make it easy we like to break down the steps into 3 stages.
The first stage is setting up your Business Entities and DOT authority. Choose your business name. You need to verify that the name you have chosen is available through your home-based state. After confirming your business name is available, you need to choose how you will want to set up business structure – whether an LLC or Sole Proprietorship, S Corp, Partnership, etc. is best for your new company. Once you have your company name and business structure finalized, you need to obtain your Employer Identification Number (EIN). You need this to set up your business entity, to pay employees, file your 2290, etc. Next, you need to apply for the type of business structure through your business state. This can take a couple of days or weeks depending upon your base states process.
The second stage is obtaining your DOT number and Motor Carrier number. If you are planning to be “For Hire” (meaning hauling someone else’s property) interstate, you need to set up a Motor Carrier Number which can take up to 21 days to become active. If you will be “For Hire” intrastate you need a Public Utility Commission (PUC) number, depending upon your state.
During your wait for the “For Hire” authority to complete its process, you need to start shopping for commercial auto insurance. The filings from the insurance MCS-90 needs to be filed prior to becoming “Authorized for Hire.” Choosing the right agent is very important when it comes to trucking insurance. Just because you have worked with an agent on your homeowner or car policy doesn’t mean they would be the right agent for you. Work with an agent the specializes in trucking insurance and who knows what coverages you need. It never hurts to get multiple quotes and compare. During the quoting process you need to have your truck and trailer VIN, as well as a qualified driver and driver’s information for processing your quotes (may vary from insurance carrier to carrier).
The next item you need to ensure that your Motor Carrier number will become active is a BOC3 filing. A BOC3 filing is process agent that can receive legal paperwork on your behalf in every state. Along with “Interstate” classification is a filing called a UCR, which is Unified Carrier Registration. This is a mandatory annual fee for interstate carriers to help pay for law enforcement to receive training on new laws and regulations.
When your DOT and MC is active it is time to get your vehicle titled and registered. By waiting until your MC number becomes active to title your vehicle you will save on unnecessary sales tax. If going out of state, you need to register your vehicle through the International Registration Plan (IRP) through your base state. You will then apply for an IFTA sticker. If traveling in NY, KY, OR, and/or NM you need to apply for individual HUT Permits before traveling in those states. Lastly for licensing, you need to file your Heavy Highway Use Tax (2290) within 30 days of registering your truck.
The third stage we classify as Compliance setup. You will be audited by the FMCSA on your compliance practices within your first year of operation. Get prepared and ace it to set the standard of health and compliance within your new company.
- Driver Qualification Files – Anyone driving a Commercial Motor Vehicle will need to complete a driver qualification file. The file will consist of a drivers application, Certification of Violations, Motor Vehicle Record, etc. It is important to complete and maintain a DQF file throughout the year as you can receive fines if not in compliance.
- Drug and Alcohol Consortium – Anyone driving a commercial motor vehicle over 26,001 lbs., otherwise known as a CDL driver, must complete a pre-employment Drug Test as well as be enrolled into a random drug and alcohol consortium. Potential fines for noncompliance can be as high as a $11,000 per violation.
- Vehicle Maintenance – You should keep organized files for each unit that you have under your authority. This would be any work orders, receipts, and annual inspection for your vehicles.
- Accident Register – According to FMCSA regulation, you must keep an accident register for each year and hold the completed accident register for three years.
Now that you are licensed properly, and you have properly set up your compliance you will be ready to hit the road. For a more information, or to outsource all of your compliance, insurance and/or licensing needs, contact CNS and or NIS to get setup for success.