Truckload rates for flatbeds, refrigerated and dry vans are at record highs right now and are expected to remain historically high next year as we ease out of pandemic and online shopping stays at record levels and businesses are stocking back up.
This demand, as well as drivers getting out of the independent contractor mess, has led to a record 59,000 authorities being applied for by new motor carriers in 2020 and this year looks no different as around 51,000 motor carriers have already received carrier authorities.
Avery Vise, FTR’s vice president-trucking, who presented findings during a company webinar last week, said “the applicants were not driver newbies, but company drivers who have gone out on their own or owner-operators that had been working under a lease arrangement with larger carriers but became fully independent either voluntarily or after being cut loose during 2020 when the COVID-19 pandemic shut down much of the nation’s economy.”
While many of these new carriers have driving history, going on your own brings a new set of complications to become successful.
How To Start Off On The Right Foot
To receive your authority, you must have insurance on file. To avoid paying for insurance coverage you do not yet need, talk to your insurer to have it become effective approximately two weeks into the start-up process.
Getting your own operating authority is usually a straightforward process but there are many steps needed before and after you get your authority, which will take 21 days or more to get approved. We can assist you with each step individually or as part of a full compliance program which we will discuss more in a moment.
The following are some if the items you will need to complete:
- Register for a company name
- Obtain a Federal Employer Identification Number (EIN)
- Obtain insurance
- Set up IFTA and mileage tax accounts
- Obtain intrastate authority, if applicable
- Obtain Hazmat permits, if applicable
- File the Unified Carrier Registration (UCR)
- File the IRS Heavy Vehicle Use Tax
- Establishing driver qualification Files, equipment maintenance schedules, and equipment files
- Pass your first annual vehicle safety inspection
When you are ready to start moving freight, cash flow is often a problem because it may take 45 to 60 days before getting paid for your first load. It is best practice for new carriers to have operating capital to sustain your business for up to two months.
As a new entrant, it is required to follow Department of Transportation (DOT) regulations and they will want to see some established records and processes during your New Entrant Safety Audit that will happen within the first 12 months of operation to complete the New Entrant Program.
Motor carriers should not delay responding to the DOT auditor because ignoring their requests—especially the “no contact letter” or “demand letter” for scheduling an audit—could lead to fines of up to $10,000 and/or suspension of their operating authority.
Compliance Navigation Specialists is an industry leading compliance company that will help you stay in compliance and help provide records you will need to keep your commercial insurance rates as low as possible.
Our safety management programs are perfect for combining multiple services and focuses 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
Do you still need commercial trucking insurance?
It never hurts to get a quote and try saving money on your insurance premiums. Give our sister company Norther Insurance Specialists a call anytime to discuss getting a quote.
Before we can get you an estimate, we are going to need some information.
Trucking and the Coronavirus
With the world focused on the fear of illness and global spread of this year’s coronavirus (COVID-19), trucking companies brace for a secondary threat as well, as the freight market slows.
Prior factors affect the trucking industry
Businesses had already stuffed their warehouses with imported goods at the end of 2019, trying to get ahead of the tariffs placed against China. Then, as concerns over the virus itself grew, this slowed import shipping. Trucking companies with work in and around ports have felt the impact already.
Current factors add burden
Currently, several factors are impacting the trucking industry and putting the brakes on freight. First, the national shift for many businesses to encourage their employees to work from home. Secondly, consumers have drastically reduced their daily activities, without choice in most states.
Each state has implemented some sort of guideline to follow, each on a different level, but with the same end goal, to create social distancing. Most states are closing schools, preventing operation of non-essential businesses and even preventing gatherings of 50, 25 and even 10 people.
With a number of major events being cancelled, such as the Mid-America Trucking Show and sporting events (eg. NCAA tournament), the trucking industry has taken a big hit as well, since the need for truckers to carry the necessary supplies to these events has vanished.
Transportation market follows industry market
Garrett Bowers, President of Bowers Trucking in Oklahoma commented to Transport Topics news outlet: “If industry is stifled, transportation will follow.”
Trucking companies can expect to find themselves pinched tightly between all these factors. And, of course, layered on top of these concerns is the well-being of their drivers as they send them out across the nation, where they could be more susceptible to contracting the Coronavirus.
Many companies are now conducting pre-shift screenings and temperature checks to further protect their employees.
Some companies, mostly those immediately affected near the ports, have begun reducing capacity and laying off independent owner-operators in response to the downturn.
But across the country, companies feel the hit of this pandemic. Fleets have been absorbing a cost burden from being unable to return empty containers, as well as administrative costs.
Hoping for a rebound
There is definitely potential for a rebound in the trucking industry once shipping from China and other countries resumes normal pace. However, this potential rebound will have a delay that can impact many companies.
Companies should anticipate and plan not only for reduced rates and capacity, but also for difficulties at the loading docks. If shippers must reduce their own workforce due to coronavirus-related illnesses or quarantines, loads may not be ready when truckers arrive.
Companies should prepare for a double-headed approach to address both the current slow-down and the eventual recovery when shipments begin to surge to make up for delays.
Trucking Startups, Hiring Drivers and CDL Training
No matter what your current situation is in the trucking industry, we have a service that would be valuable to you, like CDL training, starting your own trucking business or hiring new, qualified drivers.
If you have been laid off, this might be a good time to start training to get your CDL. There will be a need for more drivers as businesses and events resume normal operation in the coming months.
If you are already a driver in the trucking industry, this may be the perfect time for you to start your own trucking company. Securing loads will not be an issue once the economy bounces back.
If you are a trucking company, you will most likely need to be hiring qualified drivers in the near future, and you will need to get good, qualified drivers very quickly, as well as manage all of the files for those drivers.
New Venture Part 1. If you are interested in obtaining your own authority, watch this clip outlining what you need to get started. Rob, an account manager for CNS, will give some pointers on what needs to be completed and in what order.
Part 2 will be with Ron Haws Northern Insurance Specialists agency director talking insurance for new ventures.