7 Steps To Start Your Hotshot Trucking Company

how to start a hotshot trucking business

If you’ve got the vision and desire to start a hotshot trucking company, now is the time to make that vision reality.

Hotshot trucking is simply hauling for a single customer that is needed in expedited fashion. Hotshot carriers are usually short-haul trucking operations that specialize in delivering time-sensitive, project-critical loads.

They are often associated with commercially driving an F-350 pulling a gooseneck or 5th wheel trailer to haul construction materials, cars, sheds, horses, etc.

If you are looking to haul commercial loads, it is easier to get hired anywhere with a Class A CDL. A clean driving record and a CDL gives your hotshot business a starting point to build your reputation as well as your customers. 

5 Reasons to Get Your CDL When Hauling Hotshot

However, starting any new business can be expensive, time-consuming, and will likely overwhelm you with 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 hotshot 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 and the services we offer individually or as a fully manage DOT Compliance Program.

How do I start a hotshot trucking business?

Before the process begins, be sure to make a detailed business plan that lists expenses (your salary, purchasing or leasing a vehicle and trailers, licensing, insurance, and registration) and revenue expected in your business.

As a new venture hotshot trucker there are many start-up requirements you may need, including:

  1. DOT Medical Exam for Medical Card
  2. Federal Employer Identification Number (EIN)
  3. USDOT Number and MC Number
  4. Commercial Insurance
  5. BOC-3 Process Filing Agent
  6. IFTA Registration (if applicable)
  7. DOT Compliance

If you are a short-haul (intrastate) trucking carrier, you mostly stay within a 150 air-mile radius and report back to the same location to end your day. These operations usually function locally, and it is an attractive way to bring in new drivers who want to be home each night.

However, you may have extra flexibility in where and what you can haul. You will need a CDL to haul across state lines (interstate) or outside of the short-haul barrier, which leads to a few more requirements before getting started.

Step1: DOT Physical and Medical Card

Before even applying for your own LLC, it is important to make sure you qualify to be a truck driver.

This is a requirement mandated by federal law for anyone planning to drive a commercial motor vehicle (CMV), including hotshot drivers.

Be sure to schedule a DOT physical exam from a trusted medical examiner. A DOT physical is a test of your general health, mental, and emotional well-being and will include:

  • urinalysis
  • blood pressure/pulse rate
  • vision test
  • hearing test
  • physical examination

We offer DOT exams at our location in Lititz, PA with our Certified Medical Examiner (CME), and we also have mobile DOT physicals available.

Step 2: Federal Employer Identification Number

Next, you will need to obtain an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned to businesses in the United States by the Internal Revenue Service.

You will use this number to file your business tax return, open a business bank account, and receive payments from customers.

Our DOT Licensing Specialists can assist you in setting up your EIN, no matter what state you are in. In addition, we can help you decide what type of business you want to identify as, whether it be an LLC, Partnership, Corporation, S-Corp, etc.

Step 3: USDOT Number and/or Motor Carrier Number

Depending on what your company will be doing, you may need a USDOT Number or both a USDOT number and a Motor Carrier (MC) Number.

Companies that operate commercial vehicles transporting passengers or hauling cargo in interstate commerce must be registered with the FMCSA and must have a USDOT Number.

You will also need a USDOT Number if you plan to haul hazardous materials commercially intrastate for types and quantities requiring a safety permit.

In addition, companies are required to have both a DOT number and an interstate operating authority (MC 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)

As you start your own authority and obtain your DOT Number and/or MC Number, the most important requirement to activate them is commercial trucking insurance.

Step 4: Hotshot Commercial Insurance Coverages

For commercial insurance, there are 5 critical hotshot insurance coverages needed to protect your business that can be customized for your specific needs.

As a new venture hotshot trucker there are many start-up licensing requirements you need, and the licensing rules require companies to meet certain insurance liability requirements.

For instance, primary auto liability, also known as Bodily Injury Physical Damage (BIPD), is required by the FMCSA at a minimum coverage of $750,000 to obtain your MC authority.

The 5 critical insurance coverages needed for your hotshot company are:

  1. Primary auto liability – $750,000 minimum
  2. Non-trucking liability
  3. Cargo coverage – $100,000 minimum (recommended)
  4. Physical damage coverage 
  5. Uninsured motorist insurance

There are few insurance providers that will give a new trucking company a commercial insurance quote. We find that Progressive usually offers the best startup insurance quotes.

Get multiple quick quotes with our sister company, CNS Insurance, to see your commercial insurance rates.

Non-trucking Liability: All time spent in a truck isn’t billable, but it is insurable. When you use your truck for non-business purposes, you need insurance coverage. Non-Trucking Liability offers liability coverage for property damage or bodily injury to a third party when trucks are being used for non-business purposes.

Cargo coverage ensures the contents of the trailer, temperature-control machinery, and other appliances or accessories that keep cargo secure. Coverage is custom and calculated based on the type of commodities hauled and the requirements of the shipper.

Physical damage coverage: Any time you drive, you are exposed to risk. Your truck could be damaged in an accident or from another disaster. It could be stolen or vandalized. Any of these issues could put your truck out of commission and compromise your business. While not required on your truck unless your vehicle is leased, it does offer 24-hour collision coverage for damages to your tractor or trailer.

Uninsured motorist coverageIf your truck/trailer is damaged or you sustain injuries in an accident that is caused by a party that does not have sufficient Auto Insurance coverage, this coverage will pay for your injuries.

Step 5: File a BOC-3 (interstate carriers)

A BOC-3 filing is required in the United States to activate your Motor Carrier Authority. This filing assigns legal agents if 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.

Step 6: Get an International Fuel Tax Agreement (IFTA) Sticker (interstate carrier)

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.

Keeping track of all the requirements, receipts, mileage logs, etc. can be complicated, which is why our DOT Compliance Specialists will file your IFTA fuel taxes for you.

Step 7: Become DOT Compliant

Now you need to become compliant with the FMCSA. These items need to be maintained through the year.

You are required to keep impeccable records in the event of an audit. These driver files include MVR reports, previous employer history and inquiries, PSP reports, and more.

If you have a commercial driver’s license, you will need a pre-employment drug test and be enrolled in a DOT drug and alcohol consortium.

We at CNS are excited for your new venture to become reality. We’re here to help you navigate the path towards starting your hotshot trucking company.

Our DOT Essentials Program is a great place to start and our DOT compliance specialists are on hand to get you up and running as quickly as possible. The DOT Essentials Program includes many of the above-mentioned filings and registrations and is one of the most commonly used DOT Compliance Programs by our clients.

For more information, contact us at 888.260.9448 or info@cnsprotects.com.

Tips For New Drivers Rushing To Become Owner-Operators

Start a Trucking Company in XX Steps

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.

Tips For New Drivers Rushing To Become Owner-Operators

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:

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.

Fill out a complete quote or quick quote to get started.

If you have any questions or concerns, please call us at 800.724.5523 or email info@cnsinsures.com.

Trucking companies brace for Coronavirus impact

Coronavirus

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.

>>> How are truck drivers affected by the Coronavirus? <<<


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.

For more information, contact us at 888.260.9448 or info@cnsprotects.com.

Video Blog: New Venture Part 1

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 CNS Insurance agency director talking insurance for new ventures.