What is the cost to start a trucking company? Once you have made the decision to launch a trucking firm, one of the first things you will likely do is give some thought to this matter. What’s the cost? There are a lot of different things that will go into determining how much it will cost you to get started. The following are some of the most significant costs to start a trucking company, and you need to be aware of them. They will vary from state to state and your own individual circumstances.
Do you intend to drive the truck yourself, or do you intend to hire a driver?
Do you have a truck or any equipment already?
Which state do you live in?
Are you starting your own authority or will you be leasing on to a carrier?
How old are you exactly?
So what are the prices?
The following is a pretty comprehensive list of things you will spend money on, including a summary description of each item, that you will require to get your trucking company up and running so that you may begin operations.
It all starts with the truck
As you may have guessed, the costs to start a trucking company is mostly based on the truck itself. Trucks are the essential component of every transportation business. What we are including in the setup charges is the initial payment, and or course, the actual dollar amount of this payment will vary. To buy a quality used semi truck, the typical down payment ranges from 10 to 20 percent of the total price. So, if you are looking at a truck retailing for $75,000 you can expect to put down $15,000 or so (20%) if you don’t have a CDL. If you are an investor, its most likely you do not have a CDL. CDL holders can usually get away with putting down 10% or less, if their credit is decent (690+).
There are a lot of people who get their start in the trucking industry by becoming owner operators. This means that when they establish their own trucking firm and then lease onto a carrier for services (dispatch, accounting, etc). In the short run you save upfront money on certain things like cargo liability insurance and sometimes the apportioned tags. If you are an investor, meaning you are not driving the truck, then my advice is to lease onto an existing carrier for your first 1-3 trucks. It can be very challenging to operate your authority based on only one truck. Why? Because if your truck ever breaks down and is in the shop for more than a week, you cannot pause your cargo liability insurance and other truck authority costs (but if you lease onto a Carrier, you will be able to)
The Trailer, to buy or lease
Similar to the semi truck, the down payment on the trailer might range anywhere from 10 to 20 percent of its retail. Most people would look into a good quality used trailer to start. That’s another $10-80K for a trailer depending on the type you get and the condition. Another option is to do drop and hook only (no trailer) or rent a trailer …$1000-$1500 for the month along with a refundable deposit.
Fuel
Before you can actually run, you will need diesel fuel for your truck. You have to figure your truck will drive upwards of 3,000 or more miles per week, assuming you are doing OTR. Many people don’t factor fuel in their equation when looking at the costs to start a trucking company. I suggest you budget $1500 per week to start. If you are running the hills and mountains in this country with some heavy loads (40,000 pounds), you will spend more, perhaps closer to $1800 a week or more on fuel. If you have your own truck authority, you may not be able to get fuel cards until you have logged a certain number of miles first. If you are leased onto a carrier, they will have fuel cards and the weekly cost of your fuel will be deducted from your weekly settlement. In other words, you wont have to come out of pocket up front for fuel.
Needed filings and Services
Some of these costs are your filing fees on the set up side, for instance like your LLC or INC. Other costs are larger reoccurring annual costs like your apportioned tags which will run you $1200-2000 a year depending on the state you get your tags from. expenditures are comprised of some of the legal and regulatory costs that you will be responsible for paying to get started. The following are some of the most typical.
Setup for an LLC or an Inc. $100-$300
Registration Fees varies
Numbers for the MC and DOT $300
Unified Carrier Registration (UCR) $600
Compliance with drug and alcohol regulations
Special permits $300-$800
IRP Fees (Plates for Your Truck) $1200-$2000
UCR costs will vary based on your base state and the size of your fleet. This one differs quite a bit from one state to the next. You will be required to acquire commercial truck or apportioned tags and register your vehicles too (just like a car). And naturally this varies from state to state. Make sure you apply for heavy duty truck tax exemption status to save some money there. As you may have guessed, the costs associated with registering a commercial truck are significantly higher than those associated with registering a personal vehicle.
Down Payment for Insurance
This is yet another big cost. I suggest to budget at least $3,500 for this. This should cover your deposit and first month payment. You will need bobtail or physical asset insurance to cover your semi truck and you will need cargo liability to cover the cargo when hauling. As I stated earlier in this article, if you own the truck authority, you have the bigger insurance costs.
Compensation for Workers or Occupational Accident Insurance
Because it is less expensive, occupational accident insurance is typically purchased by sole proprietors and small businesses rather than workers’ compensation insurance. If you want to proceed in that manner, you will most likely also be required to fill out a workers’ compensation insurance waiver. There are a few states that do not permit employers to get workers’ compensation insurance. In either case, to get started, you will often just be required to pay the fee for the first month.
Phone
I do recommend you getting a separate cellphone phone just for your trucking business if you can. Boost mobile has some good cellphone plans. It’s strictly optional of course, but allows you to write off the total cost as a business expense. Spend another $100 on a good bluetooth headset as well. Of course you know, hands free talking is the only way to go (and save yourself huge penalties and points on the CDL)
Tablet
As you may have guessed, cell phones and tablets are required for usage with the majority of Electronic Logging Device (ELD) systems utilized by smaller trucking companies. You’ll need to invest in a tablet computer which nowadays are inexpensive, less than $200 for a decent one.
ELD
Electronic Logging Device or ELD, is required for all trucks unless your truck engine was manufactured before 2000. This is supposed to ensure that truckers don’t driver more than the 10-11 hours a day as mandated by Congress and enforced by the FMCSA. There are several devices and companies to choose from such as KeepTruckin, Samsarah and others. Many ELD’s also keep an eye on your truck’s vital statistics, like oil pressure, speed, vehicle speed, etc. You can expect to pay $20-30 per month per truck depending on the vendor.
GPS
A good tablet or device GPS system (other than your cellphone) is a must have. I used Garmin without too many complaints. Why an external GPS device? Well, to keep your cellphone out of your reach and to have a specialized secondary device or software with global positioning system that is designed specifically for use in commercial trucks. They steer you away from restricted areas and are pre-programmed with all of the truck stops, parking spots, and other locations that are friendly to truckers. There are apps that can do that as well.
Tools and Equipment
The range here is very wide. You should have some basic tools like air gauge, a basic tool kit, emergency triangles (for breakdown) flash lights, a hammer (in case you gotta loosen up a stuck 5th wheel assembly lol). You will want to have extra gallon of heavy duty oil, gallon of heavy duty coolant is category has a wide variety of items, ranging from your tire gauge to your broom. Whether you are an investor outfitting the truck for your driver, or you are driving yourself, you will still need these things. This is by no means an exhaustive list. Inexpensive items like a fluorescent vest, and cold weather clothing should be purchased as well. Then you have optional things like a refrigerator, microwave, inverter and APU (auxiliary power unit) which will save you a lot on fuel costs in the long run. An APU is used to power components like, heater, A.C., television and other electrical equipment, without having to idle your truck. This saves you fuel costs as well as wear and tear on your truck engine.
Stickers and Graphics
All trucks o n the road are required by FMCSA to have prominently displayed identification tags which show DOT, MC and company name. This has to be on both sides of your vehicle (driver and passenger sides). You can spend extra money on get a full graphics or wrap if you like, but this certainly is optional and depends on your budget. Basic stickers will cost you anywhere from $100 -$300. One thing to note, the better, cleaner and more professional your truck looks, the less likely you are to get pulled over for an inspection by DOT enforcement. Put in your budget a bi-weekly external cleaning for your truck as well, which averages about $40-60 per wash.
Pre-pass
This is an inexpensive, optional but much needed service that, in my opinion, more than pays for itself in terms of time and money saved. You can expect to pay abut $20 a month per truck, which is a bargain. It saves you (or your driver) time waiting in line at weigh stations, and minimizes the “risk” of ancillary inspections.
So there you have it, the basic costs for you to consider when thinking about setting up and running your own truck company. Lets review the largest basic start up costs:
Truck $15,000
Trailer 5,000
Insurance 3,500
Filing/permits 1,500
Apportioned Tags 1,500
Fuel 1,800
Phone/Devices 400
Tools/misc. 500
Total $29,200
This is a basic number to give you an idea of a minimum starting budget, and does not include 2 weeks of driver pay, smaller miscellaneous items or an emergency escrow account for break downs and scheduled and/or preventative maintenance. This would bring your starting budget closer to $40,000 which is what we suggest our prospective active investors should have I the bank, before embarking on starting a truck company. Even if you have contract with my company to do the set up and management of your day-to-day operations, you never want to come in under budget. Remember, anything can happen in the trucking business that can zap your escrow account with an emergency bill, so you want to be prepared.