Taking the first steps to getting your own authority

 ( Photo: Truckstockimages.com )

(Photo: Truckstockimages.com)

If you have been a truck driver for years and decided now is the time to strike out on your own, congratulations. There are many resources available to help you, and a number of Facebook groups that have popped up to give drivers and owner-operators at all stages of their careers advice. The Rate Per Mile Masters group is one of the best, with its over 22,000 members always ready to offer advice where needed.

But, even with that level of advice available to you, getting started requires some initial research on your own. The Federal Motor Carrier Safety Administration outlines the steps you have to take to get your own operating authority, and what you have to do to keep it. Even the best advice can’t protect you if you’ve already committed a violation that leads to FMCSA fining or even shutting down your operation.

According to FMCSA, any new entrants need to start by filling out an MCS-150 “Combined Motor Carrier Identification Report.” The MCS-150 and the related OP-1 series forms, which provide authority status for property hauling, broker, freight forwarding, etc., are necessary forms to get started. However, OP-1 Series forms can only be used to apply for additional operating authorities. New registrants must use the Unified Registration System for initial authority.

You must apply for a MC number as well as a DOT number. When applying for MC number, it’s important to choose the correct operating authority, as application fees are not refundable.

Once the paperwork is submitted and approved, you are not done with FMCSA. The agency will monitor all new entrants for 18 months and conduct a safety audit or review within the first 12 months. During this review, the new operator must show they are operating safely, maintaining up-to-date records, conducting periodic inspections (including roadside inspections) and performing necessary maintenance on their vehicles, and pass the safety audit.

If FMCSA is then satisfied with the results, permanent authority will be granted.

During the safety audit, if any of these problems are found, it will result in an automatic failure:

Alcohol and Drug Violations

  • No alcohol and/or drug testing program.
  • No RANDOM alcohol and/or drug testing program.
  • Using a driver who refused a required alcohol or drug test.
  • Using a driver the company knows had a blood alcohol content of 0.04 or greater.
  • Using a driver who failed to complete required follow-up procedures after testing positive for drugs.

Driver Violations

  • Using a driver without a valid CDL.
  • Using a disqualified driver.
  • Using a driver with a revoked, suspended, or cancelled CDL.
  • Using a medically unqualified driver.

Operations Violations

  • Operating a motor vehicle without having in effect the required level of insurance.
  • Failing to require drivers to make hours-of-service records.

Repairs and Inspections Violations

  • Operating a vehicle declared Out-of-Service for safety deficiencies before repairs are made.
  • Not performing OOS repairs reported in driver-vehicle inspection reports (DVIRs).
  • Operating a CMV not periodically inspected.

Failure of the safety audit does not mean you are shut down, however. FMCSA will generally provide new entrants the opportunity to implement corrective action to fix their problems. Failure to fix the problems will result in revocation of U.S. DOT registration.

There are other steps involved - particularly if you are looking to haul hazardous goods – all of which are outlined on FMCSA’s website.

Once you have your operating authority, the next step is to find loads. Unless you have a customer already lined up, you will need loads. Load boards are a great place to start, DAT’s perhaps being among the most well-known, but there are plenty of others as well.

Companies such as Convoy, Uber Freight and BigRoad Freight also offer load matching services that make finding loads easier and more transparent, so you know what the rate will be before you haul the load.

Once you find the load, getting paid is the next step. If you are fortunate enough to have someone chasing down accounts for payment, you are lucky. Shippers are notorious for not paying in a timely manner, especially to small trucking companies and owner-operators who may not have the financial resources necessary to chase the debt. Chasing down these debts can be time-consuming and costly for a driver who is only making money when his wheels are turning.

To avoid this situation, many companies turn to factoring companies, which buy invoices from you for a discount fee. You may not get the full amount of the invoice – having to settle for 90-98% of the amount owed, depending on the factoring company and the terms – but you avoid spending time chasing accounts and can better manage cash flow to ensure you always have money on hand to pay bills and cover unexpected costs.

Managing a trucking operation is a full-time job, and it starts with a solid plan right from the start. Knowing the steps you need to take is only the first barrier that must be overcome, and certainly not the last.