6 Important Things To Keep In Mind as New Trucking/Logistics Business Owner
Haven’t you dreamed about running a trucking company in the USA one day?
We all know how crucial trucking is in the USA It’s basically a driving force of the States that is responsible for transporting 70% of all goods across the country. Without the trucking industry, US factories will have to shut down their operations as well as retail stores will have to close doors. It would severely affect even the most important facilities like hospitals, power plants, military establishments, and many others. It’s also true that with each year trucking becomes increasingly more attractive for those who are eager to set up their own company as this industry is indeed profitable and very promising, as it is an essential service required by all americans.
Yet it’s not that easy to become a trucking business owner as this environment is one of the most competitive in the USA and it takes time, dedication, and patience to get used to its permanent ups and downs.
But consider yourself lucky, as TruckStaff Solutions is here to put you at ease and help you every step of the way to your dream of owning a trucking company. We will discuss some of the key points that you will need to understand prior to investing your time and hard-earned money into this lucrative yet volatile industry:
- Knowledge/understanding of compliance
As with any other industry, trucking has its own rules and regulations.
To make commercial transportation safer, the FMCSA (Federal Motor Carrier Safety Administration)has laid down several pre-defined standards that a trucker must meet. Becoming adept with these guidelines and familiarizing yourself with the internal, external, primary, secondary, and even tertiary aspects of trucking allows a trucker to be able to avoid monetary liability and most importantly avoid ruining their business/carrier reputation. For a trucking business, a clean safety history can be considered the most defining factor that provides a strong foundation for sustained business growth.
- Understanding the relationship between safety history and filings on insurance premiums and hauling rates
We bet you already know about one of the most money-consuming expenses in trucking – insurance. Indeed, insurance rates assume a major portion of the recurring operational expenses for any trucking business. High violations lead to higher insurance rates and eat away at profits. It also dictates a carrier’s rank on the Internal Carrier Ranking Systems that brokerages use to offer loads. Additionally, a clean safety record also impacts a business’s ability in bagging corporate contracts/loads. For instance, a safety score of B+ (96%) is required to secure loads from Amazon Relay. Although Amazon uses its own safety scoring system it is broadly based on the CRS that we highlighted earlier. Safety, therefore, is imperative in lowering operational costs and increasing earning potential, and being on top of it can reap significant dividends that compound over the lifetime of a trucking business.
Towards the organizational end, the FMCSA requires documentation filings for trucking businesses, failing to do so can result in the revocation of the MC-DOT authority. For instance, one of the most common reasons that MC authorities get revoked is owners not updating the MCS-150 Form, a biennial update required by the FMCSA. Again, a revocation can impair a carrier’s ability to operate temporarily which incurs a loss through opportunity cost. Also, a revocation can impact insurance rates – insurance companies look for continuous activity on MC authorities and a temporary suspension can pull your rates back to the pre-revocation stage and it can take a while to earn the same rates and saving back thereby pulling the business backward instead of thrusting it forward.
- Keeping on top of insurance updates with FMCSA to avoid revocation
Based on several testimonials and experiences shared by business owners on trucking-related forums, one prevalent reason MC authorities get revoked is when insurance companies incorrectly update the FMCSA about insurance details, such as erroneously updating your insurance status as canceled with FMCSA. Best leave any updates of this kind to your insurance broker, but do follow up, as sometimes brokers or insurance companies may miss filing deadlines due to internal operational bottlenecks. Such errors can result in revocation and subsequent loss of income. It might be in the best interest of the business owner to verify insurance updates with the FMCSA personally through their online FMCSA portal to ensure the status has been accurately updated. It can be rather cumbersome to get insurance companies to legally compensate for their errors. Proactively monitoring insurance updates with FMCSA pertaining to your authority may save your business significant money, time, and stressful remediation.
To summarize, a revoked authority can incur a significant loss of opportunity and higher operational costs for a business. Avoid it to the best of your ability.
- Think like an entrepreneur
Starting a logistics business is an ambitious, bold, and exciting decision. However, it lacks the comfort of the usual 9-5 drill, particularly at inception. Whether you start as an owner-operator, a brokerage, a shipper, or a trucking company. Work doesn’t often end with the clock. And one is required to wear multiple hats, stay in the present, learn from the past, and constantly envision the future of the business all while adapting to the day-to-day reality of operations. To become adept with basic accounting, setting up reminders and timelines for filings, signing up for fuel savings programs, and regular vehicle maintenance routines are a few simple things that can be incorporated as the “things to do” on a regular basis to improve the longevity of a trucking business and keep it in good health.
- Root expectations in reality
Any search engine, online forum, or social media page about trucking will allow an aspiring trucker to be able to make a judgment call about the trucking industry – it is hard. You’ll have enough information to gauge that it’s a physically and mentally demanding job that requires many efforts. Yet, we find many new entrants getting overwhelmed by the workload, especially during the initial stages, resulting in many trucking businesses failing within the first year or so. The hours are long, and one needs to assume many different roles in order to navigate through the ever-changing and often complex nature of the industry to sustain and succeed.
While there’s tremendous earning potential, the trucking landscape is not particularly linear, and aspiring truckers should make themselves aware of the many directions they can take to develop a career in the industry and grow with time.
Remember that any business is about and for people. If not for people, then it’s all in vain.
That’s why a good network is what you’ll definitely need. Given the ongoing rapid rise of smaller inexperienced trucking companies/owner-operators, corporate mergers, unethical brokerages, and poor hauling rates, a good network can come to the rescue when the traditional channels fail to deliver.
Tap on the technology, and use online forums, social media pages, and in-person events to build a network. It’s a slow process, however, probably the most rewarding and important in securing an edge over other businesses and having less reliance on crowded feeding sources of income. Plus, the opportunities for growth that a network can present can be life-changing. It’s worth being mindful of it and seeking opportunities actively to connect with people and build relationships.
Instead of a conclusion:
Before setting up your own trucking or logistics business, you are to be well-prepared by knowing all about the FMSCA regulations, licenses, and permits you need to obtain, how this business looks like from the inside and what departments you should organize for achieving success. Trucking is hard, but believe us, the perks you can get are worth it.
Leverage our trucking industry experience since with TruckStaff Solutions you’re partnering with a reliable industry expert that will guide you through all the entry barriers and help you launch a successful and sustainable business.