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Starting A Trucking Business – What you need to know

Part 1. The Future of Trucking in the U.S.

Despite the financial challenges currently facing our nation, and despite the problems facing industry sectors such as banking, housing, and retail, opportunity is knocking, and it is knocking loudly. Yes, it’s true that despite the ups and downs of the stock market, one segment of the American economy remains as healthy as ever. Impervious to any recession and immune from any depression, there is one industry in the United States that is always thriving. Furthermore, this industry is one industry that can't be exported to other countries, and it can't be replaced by technology. That industry is the trucking industry.

Trucks are one of the most critical components of our nation’s economy, and while new technologies have been developed to affect almost every industry, the trucking business is “trucking along” just as it always was. The fact is that although the price of goods may change, and the kind of goods being delivered may change, and although the destinations of those goods may change, the goods still need to be delivered. And they still need to be delivered by a truck. True alternative methods just do not exist.

For example, though it is growing in certain areas of the country, rail capacity is largely limited. History has shown that shipping goods by air freight is not cheap, and has a deleterious effect on the price of the goods when arriving at market. Besides, a truck is still needed to take the good to the plane and from the plane. And the future of the industry is even brighter. $6.2 trillion of product shipments, or 74.3 percent, of the $8.4 billion value of all product shipments in the U.S. in 2002 was carried by trucks over the nation’s highways. A new port project in Jacksonville, Fl. and related contracts with Asian shippers are estimated to increase domestic shipping by close to 10% all by themselves.

Trucking represents an opportunity for a new career

Thus, this environment represents an opportunity for many Americans whose careers have been derailed by the current economic crisis. Even in an era of rising fuel costs, the trucking industry holds an immediate, viable option for the entrepreneurial-minded individual. The opportunity to start your own trucking company has never been timelier than it is right now, as the gap between the supply and demand of drivers is at an all time high. Our country is literally hundreds of thousands of drivers short right now as increasing numbers of veteran career drivers are approaching retirement while there is conspicuous lack of new drivers ready to replace them.

The industry is desperate to not only hold onto the drivers it has, but also to foster an environment which attracts new blood into the industry. The sector is endeavoring to recruit that part of the labor force that has been adverse to the traditional over-the-road trucking dynamic- the driver being on the road for days, or even weeks at a time without seeing home or family. This factor has led many truck brokers and shipping agents to create what is referred to as “comfort zones”, where routes are designed to get the driver back home sometime during the week. Other drivers are being enticed to stay on by being assigned to regional runs and dedicated routes that provide more predictable schedules.

Some trucking websites are even courting husband-and-wife teams, which is a new industry trend. The team approach makes trips away from home more bearable by keeping a couple together, but also has the benefit of reducing the stress of all the work on just the one driver.

So, what does all this information mean for you? If you are a person interested in starting your own business, iIt means the time is right! So, what do you do next? If you are an experienced truck driver and you possess some business skills, than you may want to consider opening up you own trucking firm. If you are not an experienced driver, then you may want to establish a time-table, entering the industry know, learn the industry for a requisite period of time, and then consider the business ownership option. You have a little time, you know. This opportunity is not going to go away, its only going to get better as time goes on.

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Part 2. Starting Your Own Trucking Business

If you are interested in owning your own trucking business, then the time is now to jump in with both feet. If you have been in the industry for awhile as a driver, then you already know how the industry works. That said, it is surely a quantum leap from being a driver to being company owner, but at least you know the basics. The next step is to educate yourself about the requirements necessary to be a trucking company owner. Remember that most new businesses fail for two reasons:
1) Lack of capital to sustain the company during the initial period of growth
2) Lack of knowledge.

Let’s address both reasons, as we look at some ideas to consider when putting together your trucking company business plan.

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Legal Research, Licensing Requirements

Learn about the International Fuel Tax Agreement (IFTA) licensing, state requirements like company and vehicle registration, and all other requisite state and local permitting. Federal rules require that every interstate authorized “for-hire” carrier operating under their own authority have a current BOC-3 form on file with the office of motor carrier safety. New business owners also need to learn about fuel tax payments, and other mandated reports. There is a wealth of this information for free or for little cost at your library, your local bookstore, and especially, on the internet.

Financing and Financial Planning

The amount of financing you need to start up a trucking concern depends upon how big your start-up fleet will be. Obviously, the more vehicles you have, the more capital expenditure, the more insurance, the more repair, the more maintenance, fuel costs, etc. As a rule of thumb, an individual needs to invest somewhere between $20/50,000.00 to start up even a small trucking business. If you are going to borrow the money from a financial institution, or perhaps seek partners or investors, it is critical that you create a solid business plan which delineates your strategy for start-up, and growth. You may need to consult with both a financial professional, and a business plan specialist for these issues. You also may want to go online, where there are very affordable business plan templates that are specifically geared to the trucking industry.

Labor

Unlike the first two items above, this issue can be dealt with in more than one fashion. One quick solution is to contract with independent drivers who own their own trucks, and who could work with you on a contract basis. There are various methods of compensation, including mileage or percentage of gross sales. Secondly, you can work with payroll drivers hired by you. Or, you can work with a combination of both models. If you are an experienced truck driver, this is the part of the business that you should know best of all.

Truck Insurance

Similar to the financing issue discussed above, the amount of required insurance your new trucking business will require depends on the size and makeup of your fleet. Your insurance company can create a policy for truck owners or fleet owners designed to meet your company’s needs. Your agent can look at the type of vehicles you plan to use, and the application of those vehicles. For example, will your business operate locally, within your state (intrastate), or will your firm operate in many states (interstate) or even nationwide? Your agent will also look at the type of trucks you will operate. Is your fleet to be made up of traditional semi-trailer trucks, or will you use refrigerated trucks, flat bed trucks, or maybe car haulers? Or does your business plan to use smaller trucks, like tow trucks, delivery vans or dump trucks? As you can see, finding insurance requires expertise, so find a knowledgeable insurance professional to help you get started. Click here for a Free Truck Insurance Quote

Business Development

While this section is the key to your success, it may also emerge as your biggest challenge. When going after business, you need to develop a competitive strategy, and a professional approach. As yourself- why would a client choose your new company over more experienced outfits? As a new company, you may lack time in the market, but between you and your driver fleet, you may not lack experience. Also, the fact that you are a local company may help you win local contracts. Identify your strengths and play to them. Then incorporate those strengths into your brochures, and any other form of advertisement that you use. Between local phone books and the internet, there is no shortage of advertising platforms.

Obtaining an Operating Authority

One of the benefits that technology has brought to the trucking industry has been the creation of more streamlined methods of new company registration. Registration is needed to be granted an Operating Authority, and is accomplished through the Unified Carrier Registration Agreement. The government requires the registration of all motor carriers that operate for-hire within a single state, which is referred to as intrastate, and also carriers that operate in two or more states, which is called interstate. Furthermore, trucking firms are also required to register this information with the states that they intend to operate within. More information can be found at the Unified Carrier Registration Center website.

Summary

The trucking business will seemingly prosper in perpetuity - the demand is never-ending and new trucks and drivers are needed every day. If you choose this path, you will most likely have a strong chance of success. But, like any other business, there will be challenges. Don’t forget that education, experience, necessary capital, and some sage advice all need to be part of your plan for success.

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