What are the Costs of Starting a Trucking Business

Lisa Hultz

Lisa Hultz

Lisa is the President of Sales & Marketing for Mazon Associates, one of the oldest factoring companies in Dallas, Texas.

The trucking industry pays well and with the current driver shortage, the industry is surely looking for new entrants to fill the shortage. The demand for freight is on the rise too, causing even more demand for trucking services. You need to look at some of the expenses of starting a trucking business.

Startup costs range from $6000 to $15,000. This cost doesn’t include any of the equipment, and that’s why most people consider trucking to be an expensive business to start. In retrospect, it requires low initial investment when compared to other businesses.

Freight Factoring

Once your trucking business is up and running you can use trucking and freight factoring to help with operating costs. There are factoring companies that specialize in trucking and understand the struggle of cash flow and hence, offer small business financing opportunities.

USDOT Number

Any business that operates commercial vehicles for hauling cargo or transporting passengers must be registered with the FMSCA. This is vital for businesses involved in interstate commerce. You need to get an MC/USDOT number that can cost around $300 for the filing fee.

State Registration

In order to get started, you’d need to get your business registered with your local county and state. Depending on your corporate structure, you’ll register your business as a corporation, LLC or sole proprietor using a DBA. The associated legal fees, registration and license fees can run up to $1,000 or more. However, the cost can vary from state to state, so make sure you research this and find out the cost in your area.

Unified Carrier Registration (UCR)

All the businesses that deal in interstate or international commerce via truck or bus are governed by the Unified Carrier Registration (UCR). Each business has to pay a fee to their respective state. Several states don’t participate, so you must pay the fee to a neighboring state if your state doesn’t participate. The fee depends on the number of qualifying commercial motor vehicles (CMVs) in the business’s fleet. For instance, the UCR fee in Texas is for up to two vehicles is $62, which then increases to $185 for three to five vehicles.

Truck Insurance

The average semi-truck insurance costs for owner operators that lease on to a motor carrier ranges from $3,000 to $5,000 a year. Owner operators can expect to pay between $9,000 and $12,000 per truck per year. This amount varies based on the model, condition and year of your truck. The type of coverage also plays an important role in determining the total cost of insurance of a vehicle.

CDL License and Endorsements

You’re required to have a Commercial Driver’s License to drive commercial motor vehicles (CMV) such as tractor trailers, semi-trucks, dump trucks, and passenger buses. CDL’s are available in 3 different classes, determined by the vehicle’s gross vehicle weight rating (GVWR) and other special requirements.

Class A

GVWR more than 26,000 pounds with towed vehicle heavier than 10,000 pounds

Class B

GVWR more than 26,000 pounds with towed vehicle less than 10,000 pounds

Class C

Vehicle designed to transport 16 or more passengers or transport hazardous materials (HazMat)

If you are aiming to operate hazardous cargoes or any other specialized vehicles, you will need to have proper endorsements added to your CDL. These endorsements will allow you to haul the respective cargo without getting into any unnecessary trouble.

A few examples of CDL license endorsements you might want to invest in are;

  • H — HAZMAT
  • T — Tank for liquid cargo
  • P — Passenger transport vehicle operator

CDL license costs aren’t expensive, but CDL training can cost between $3,000 and $7,000 depending on they type of CDL and which endorsements you need.

Truck Cost

The cost of vehicles can vary significantly, depending on the types and model of the truck you buy. New trucks can cost anywhere from $80,000 to $150,000 or more. If you wish to keep your investment to the minimum, going for used vehicles is a great option. However, you need to make sure that the truck is in good, reliable condition. Opting for poor used vehicles might lower your initial cost, but then it can increase your maintenance costs in the long run.

Trucking and Freight Factoring

Once your business is up and running, factoring companies can help you smoothly operate your business with upfront cash advances and collections for all your freight bills. It’s important to note here that invoice factoring isn’t a loan. This small business financing solution entails selling your freight bills at a discount and getting paid upfront without waiting to collect from your brokers and shipping customers.

How Freight Bill Factoring Helps Truckers

This is the best way to get some fast cash in hand so you can take care of your trucking expenses. Once your cash flow improves, invoice factoring assists in keeping your loyal customers without having to compromise on your business operations. Even if you have been disappointed by other financial sources, this is one door that’s always open for small businesses in need. And since it requires no collateral, invoice factoring is the ultimate tool to help you keep your business running smoothly.

Mazon Associates, Inc. has been providing factoring services for more than 40 years. We’ve helped thousands of clients grow their businesses and achieve their financial goals. We consistently provide a first-class experience in accounts receivable financing. You can depend on Mazon for your cash flow needs.

Call us today at (972) 554-6967!

Mazon Associates Factoring

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