Are There Shortcuts to Getting Active Operating Authority?
by Hannah Marcom | April 28, 2017
Many people who start out in the trucking industry have a dream of eventually starting their own trucking company.
Working for yourself is something a lot of people want to do but don’t know where to start and, trust us, there are a lot of steps when it comes to starting a trucking business.
Because there are so many steps, many people seek out shortcuts to try to save money and time to get on the road and start making money right away. One of these shortcuts some trucking industry professionals (even some of our factoring clients) have taken is finding an old MC Number for sale rather than starting from scratch. We aren’t trying to tell you what you should and shouldn’t do when starting your own trucking company, but we do have some useful tips to consider from our Account Executive team and General Counsel to help you figure out if purchasing another company’s trucking authority for sale or starting with a new one is right for you.
Getting Active Operating Authority
Active trucking authority is a requirement of the FMCSA for most carriers who transport passengers or freight. The majority of carriers who haul in interstate commerce will need to get authority to operate, however there are exceptions that can be found on the FMCSA website.
The FMCSA charges a $300 filing fee when applying for new operating authority whereas the fee for re-instating a previously active MC Number is $80 plus $14 to change the name. The price difference between $300 and $94 might make it seem like purchasing an established MC Number is cheaper, but it’s unfortunately not that simple. There are a lot of other costs, whether it’s more money or your time, to take into consideration.
Why Would You Want to Purchase Inactive Authority?
The perception of using an already established MC Number is that it will allow you to get more and better business with brokers and shippers because they see the older MC digits sequence and are more willing to work with seasoned trucking companies than those who have just started. Our clients have also told us that it can be easier on the road and they feel like they get pulled over less for DOT inspections.
What to Watch Out For When Evaluating an Authority for Sale
- Do Your Research!
One of the challenges with finding a carrier MC Number for sale is that it demands a lot of research. Transferring authority can be complicated. There can be many reasons that a trucking company can be placed out of service. If you are looking to bypass the growing pains of starting a new trucking company by buying an older MC Number that has bad safety scores or anything negative associated with it, that will come with its own set of red flags for brokers and shippers.
Check out the FMCSA website SAFER, it provides public information to help check safety scores, crash information, and other general company information.
Researching the company and asking the seller lots of questions is the most important step!
- Know the Cost
Because there is no standard for paying for an established MC Number, the price ranges offered could be more expensive than the $300 it costs to get new authority in the end.
- Ask Good Questions
Make sure to ask the seller of the MC if there are any circumstances surrounding the sale you need to be aware of. For instance, if the seller has entered into any contract with another company that would be transferred in the sale, like a factoring agreement. Sometimes the terms of a contract hold the MC owner to that contract rather than the owner of the previous company.
- MC Numbers Aren’t Here to Stay
Another thing to think about before getting too far into finding trucking authority for sale is that the Unified Registration System (URS) is already in effect for new carriers and the removal of MC Numbers will take place sometime in the future, according to the FMCSA. Going through all the research and hassle of finding a quality MC Number for sale could be more work than its worth if it the switch with the URS takes place in the near future.
Still confused about how to get your own authority? Let us help! At Apex, we have a Startup team dedicated to helping simplify the process for people who want to start their own trucking company by helping take you through some of the biggest and most important steps and are here with you every step of the way. Call us at 844-827-4524 or get started here.