operating authority

pendiehouse · Jul 28, 2004

A good friend of mine has been expediting for about 8 years as an independent, hauling for a couple companies. We were planning to go into business together and form our own expediting ocmpany. It was our assumption that we need authority and have been moving in that direction. Today, he said he talked to someone that said operating authority is not needed since he has a cargo van and a cube with a gvwr of 10k lbs. From what I was able to look up online, I know we would be exempt from the DOT safety regulations, but it looked like we would need authority. Can someone give me the straight stuff on this issue?

davekc · Jul 28, 2004

my understanding is that if you are hauling commercial freight for someone else, you need to obtain your authority. If it is your business and transporting your own stuff or working for a company transporting their own stuff you don't need it for a van.
Davekc

davekc · Jul 28, 2004

forgot to mention, there are some variables to this depending on what state you are in and whether you are doing interstate or intrastate freight

Glen Rice · Jul 29, 2004

Dave is correct, you do need your own authority. You will be giving your potential customers tariff rates and you will need to support your tarrifs with proof of insurance and operating authority. Better do a little more checking. Your overhead beffore you open the doors to transporting your first load may be more than you where anticipating. Do you have a business plan, to show a bank for small business loan. Just a thought...you know what they say, "if it where that easy, wouldn't everyone be doing it".

Lawrence · Jul 29, 2004

Pendiehouse,

This is a common question on our forum. You said you wanted it straight so here it is....

I have heard from dozens of people over the years who thought that they would launch their own expedite service....with a single cargo van and no customers.

They were doomed for failure almost from the minute they started.

Why?

For one thing we are talking about a single unit fleet that is a cargo van.

If you were a manufacturer of widgets - that had to be "expedited" to another location 300 miles away. Would you rather put it on with a carrier with 300 cargo vans or 1 or even 5?

If that production line goes down because the single unit fleet is broken down somewhere it can cost that manufacturer tens of thousands of dollars.

Honestly, who would you ship it with?

I can tell you from personal experience - most shippers are NOT motivated by price, but rather service. Service area and coverage. They don't want to worry about whether the load will be there or not.

Also, consider that you will have to be the sales person, accounts payable & receivable, safety & compliance director, collections, marketing & promotions and of course truck driver/owner operator.

Typically, you can expect to be paid 30, 60, 90 or 120 days from the load you haul. That is of course *IF* you get paid. It is not uncommon for small fleets to get stiffed.

Can you take that risk? Can you wait that long for your money?

I can safely say I have heard from thousands of drivers over the last 6 years. Thousands. I only know of 1 person who has been successful with a single unit cargo van fleet. Just One.

On the other hand I know of hundreds who tubed it quickly.

My suggestion is considering leasing it to a good, reputable National Carrier. One that fits your personality and goals.

This may have not been what you expected but you asked for it "straight".
Best wishes for success on whatever you decide.

Lawrence,
Expediters Online.com

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RichM · Jul 29, 2004

One other important item is that unless you have a contract with a shipper giving you a dedicated trip with specific times to pickup and deliver,one unit will not work. The shipper needs the freight to go NOW and if you can!t do it because you are 500 miles away,they will not call you again. The load boards you see are geared towards the tractor trailer operations and not vans or straight trucks.

pendiehouse · Jul 29, 2004

Thanks for the straight scoop. I appreciate the questions to think about and the advice. I'm really glad I found EO!

raceman · Aug 1, 2004

Folks have given you all the right advice. I have been looking at all kinds of options for my trucks and me personaly. I have looked at HotShot work for me to keep busy while my drivers keep my other trucks running. I have looked at my own authority so that I can run during slow times and I have got on all the load boards looking for freight. I have come to the conclusion that it is best to just let the company I lease to, keep me loaded. All in all after it is all said and done and I look back at what I am making with them, it is simply the best way to go. I truely wish the best no matter what you do. If you come up with something cool let us all know.

raceman

pendiehouse · Aug 2, 2004

Sure will, raceman, and thanks for the input.

ECPIRATE · Aug 6, 2004

Don't let these naysayers discourage you.
I started my own expediting company 7 years ago with no current customers with just a van and a worn out straight truck.I now do between $125k and $175k annually.
First of all **** you DO need your own authority AND you need to incorporate (for limited liability) ****.Incorporation costs about $500.00 to $ 600.00;getting your own authority about the same $$(most trade magazines have process preparers and insurance companies selling ads...their costs are fairly competitive).
Go to your nearest major airport and spread your name to the myriad of freight forwarders that are usually located there...they ALWAYS need hot-shotters.
Next,identify the manufacturers in your community that produce for the mid-production process...their product is used to produce someone elses product...very little end-users need expedites.(automotive industry uses a LOT of expediters).I have even followed a Panther II van to see where he went and then made contact with shipping manager.You can afford to charge less than the big boys because you have less costs and YOU keep the entire revenue.
You DO need to think about getting a straight truck...keep it under 26,000 GVW (less regulation).There are plenty of good used straight trucks out there for less than $20,000.
Print some business cards with a 24 hour phone number (cell # is best...you want your customer to be able to get you first call every time).
THEN WORK IT !!!!!!!
Good luck.

davekc · Aug 6, 2004

I don't think the above are being naysayers, just realist. For every 100 folks who go down this path, 1 or 2 are successful at it. Competition is fierce at major airports and most of those trips pay very little. As you move into the manufacturing sector, many of these companies require you to be 90002 certified. That is not a cheap audit process. Also, depending on the state, insurance and taxes will be much higher. Longer trips become more difficult because you don't have the network in place to get return loads. You might find LTL backhauls ect, but they again pay next to nothing. Businesses will refrain from calling you with only a handful of trucks because you can't be reliable unless you have a dedicated account with a truck(s) assigned to it.
While you might have gotten a run from Panther, they would have to go back to them or a simular company.
You would not have the ability to have trucks their in a timely fashion. If you do, it would be expensive. You have no tracking ability, can't haul hazmat, limited on vehicle size, no air freight, very limited service ability ect.
The above gives you some idea as to why there are as many expediting companies out there as the are. If it was easy, everyone would be doing it.
You can make some money just running local stuff but it is not as lucrative as expediting.
While you may be successful at this, the deck is stacked against you. I certainly wouldn't advise a newcomer to venture down this path. As you read these posts you will find very few that have made a go of it. And many have tried!
Davekc

Playing the lottery doesn't mean you are a guaranteed winner

pendiehouse · Aug 10, 2004

I agree on the incorporation, we've already started the process of forming an LLC. The straight truck idea is like a cross in the face of a vampire. I've been driving a semi for 12 years, and the last thing I want is to have to worry about DOT inspections, weigh stations and the dreaded logbook. I want to operate as far under the radar as possible, if you know what I mean. Also, the upkeep for a straight truck is higher. I'm well aware of how much oil changes and tires and brakes cost for bigger trucks. But after all that, thanks for the encouraging words.

pendiehouse · Aug 16, 2004

We talked to someone that arranges for authority for drivers. She told us that since our trucks are not over 10k gvw, the only authority we need is MPSC authority. That's what we would get from the state of Michigan. That would allow us to go intra and interstate, without the need for Federal MC authority or single state registrations. This cleared things up a great deal for us.

Tom Robertson · Aug 17, 2004

You have been given some very good advice. I am one of the few who have tried and succeeded in staring my own expediting company. That having been said I will tell you that my business evolved from the Air Freight industry. All my business in the begining was moved by air. Then along the line we started getting shipments that were simply to large to fly out of Louifrom Rysville KY. I started renting from Ryder and others on occasion to fill these needs. Then when the revenue expended with them exceeded the costs of truck ownership I purchased my first expedited truck. That my friend was in 1987, before the laws requiring CDL's...before the nationally known carriers made "expediting" a seperate industry. We operated for many years without "return" trips, deadheading back to Louisville, but without national competition we were being paid air freight rates and could afford to do so. Then the competition moved in and our rates were excessive in comparison. Three years ago we were lucky enough to gian our first automotive contract with Chrysler, and began paticipating in their traffic through a 3PL (third party logistics) company known as NLM. NLM "broadcasts" all avialable loads to participating carriers (those with contacts) for DCX,GM FORD and others that allow companies like mine to "bid" on loads all over the US. It is an entirely different business and the cards are really stacked against you. You have neither the size or the 10 years + verfiable experience necessary to gain contracts with the big three. Without a sizeable 3PL, where do you expect to find your return loads? Believe me the competition will not allow your charges to raise to level of deadheading back to your home base, that is unless you enjoy working for nothing! Take the advice given by the others, and sign on with a national carrier. We do not use O/O's as we own our vehicles. BTW the information given to you that you do not need authority under 10K or 26K lbs is bogus. I fyou are stopped by the DOT, you will be fined for operating without authority and recieve a "cease and desist" order form the US Government. Failure to comply with this order.... I wouldn't want to take that chance. Good luck with your endeavor, and search out the "nationals"... they are always looking for O/O's.

pendiehouse · Aug 25, 2004

Well, there sure has been a lot of advice given in response to my question, but many of them don't answer the original question. I've done some research and have found out that the 10k gvwr trucks in question are not, by definition, commercial vehicles and are therefore exempt from all Federal regulations. According to the Michigan State Police Lt. Colonel in charge of one of the Michigan districts, a man in charge of the weigh stations, all we need is MPSC authority. When I looked at the Single State Registration area, it indicated that trucks exempt from Federal rules cannot apply for SSR. It doesn't make sense to me that we could transport interstate with only MPSC authority, but that's the only conclusion I can come to. My partner have begun the process to obtain that authority.