It’s a great time to get into the trucking business.
Of all the freight transported in America, 70% is transported by the trucking industry. Because the majority of freight in the United States is moved by trucking companies and truck drivers, it’s a great time to start your own trucking business.
One of the biggest questions we hear through our Apex Startup Program is “how much does it cost to start a trucking company?” To answer that, we’re breaking down the costs to help you be prepared and set your trucking company up for success.
How much does it cost to start a trucking company?
Not including equipment, initial costs to start your trucking company can vary significantly from $6,000-$15,000.
Factors such as the freight you haul, the equipment you purchase, the states you run in, and whether you own or lease your trucks will affect your startup costs.
Here’s a sample breakdown of the costs based on data from our Startup Program’s transportation specialists.
- $900-$1,500: Formation and Registration Documents (including DOT & MC numbers, BOC-3, UCR, etc.)
- $2,000-$4,800: Insurance Down Payment (per truck)
- $500-$3,000: IRP (apportioned plates per truck)
- $100-$550: Heavy Vehicle Use Tax and Other Permits
- $500: Additional State Specific or Other Permits
Getting Your Trucking Authority
If you plan to use a service to get your authority, like the Apex Startup Program, you can save time, stress, and confusion, while ensuring that your trucking business is set up properly. In general, the total cost of a program like this is around $1,000. Here’s a breakdown of the Apex Startup Program services and costs:
- Formation Documents with the Secretary of the State in Your Home State: Varies (every state’s fee is different)
- Form SS-4 with the Internal Revenue Service: Free
- Form MCSA-1 with the FMCSA (DOT & MC Numbers): $300
- Form BOC-3 (Designate a Process Agent): $150
- UCR Form with the Unified Carrier Registration System: Varies by Fleet Size
- Non-refundable Apex administrative fee: $435
The cost to get your operating authority is going to depend on what state you register your trucking company in. Rates vary from state to state. Additionally, some states may have additional registration requirements.
Fixed costs are trucking company expenses that will be consistent every month such as payroll, truck payments, and insurance, whether you’re hauling freight or not. Long haul drivers travel about 100,000 miles a year. According to ATRI’s 2016 Operational Costs of Trucking their average cost per mile is $1.593. So it costs approximately $160,000 a year to operate one commercial truck. Here are some examples of fixed costs you can expect.
- Semi-Truck Down Payments and Monthly Payments: Commercial truck prices depend on the truck’s make and model, its year, its mileage, features, and whether it’s new or used. New semi-trucks can start around $80,000 and go up to $150,000 or more depending on features. Agently used semi-truck with a low millage can cost around $30,000, a higher mileage semi-truck in good condition can cost around $10,000-$20,000, and a very high mileage semi-truck in need of some external repairs can cost $10,000-$15,000. To finance a truck, you’ll typically put 10-25% down, but this may vary depending on your credit score. The stronger your credit, the lower your down payment or monthly payments could be. To get more personalized information on financing costs, call a few commercial truck lenders and consider several quotes when selecting the best option for your trucking business.
- Commercial Truck Insurance Payments: Trucking insurance costs can also vary depending on factors such as your driver’s age and safety record, the make/model/year of your truck, the freight you’re hauling, and the states you run in. According to Commercial Truck Insurance HQ, a company that assists with trucking insurance, new trucking companies typically pay between $10,000 and $16,000 in liability insurance for their first year. Most of the time, you may pay 20-30% of your annual premium up front. After that, you might pay the remainder in 10 equal installments, depending on your policy. To get a better idea of insurance costs, try to find a few quotes from those specialized in the trucking industry.
- License and Permit Renewals: To ensure your company maintains required registrations and compliance, you’ll need to budget for renewal fees like UCR filings, BOC-3 filings, Fuel Tax Reporting (IFTA), Heavy Vehicle Use Taxes, and IRP plates. These filings need to be renewed at various times, so make sure you’re keeping detailed records to stay compliant. Programs like the Apex Startup Program offer renewal filing services to keep your company compliant by tracking and renewing your trucking company’s annual filings. Call 855-369-2739 to learn more.
Variable costs are what you spend operating your trucks. Expenses like fuel, truck maintenance and repairs, meals, and lodging can change in price and frequency from one month to the next. To get a good idea of how much you’re spending on variable expenses per month, try tracking these expenses in a spreadsheet.
- Fuel: Let’s assume a typical fuel tank on a Class 8 truck holds 120 gallons. Most trucks fill up about 11 times per month. That means this truck will use approximately 15,840 gallons of fuel annually costing around $38,000 (based on $2.40/gallon fuel prices). With fluctuating diesel prices, plan on fuel accounting for around 25-40% of your operating expenses.
- Maintenance/Repair Costs: According to ATRI’s 2016 Operational Costs of Trucking, the average cost per mile for repair and maintenance for a single-unit Class 8 truck is $0.156. If that truck travels 100,000 miles a year, annual repair and maintenance costs will be around $15,600. A good rule of thumb is to plan on spending 10% of your overall expenses on repairs and maintenance for your truck.
How can I set my trucking company up for success?
A good way to track the success of your trucking company is to find your operating ratio. Your operating ratio is your expenses divided by your revenue. An operating ratio of 100% means your trucking company broke even. If your operating ratio is under 100%, your trucking company is in good shape. If it’s over 100%, your trucking company didn’t make a profit that month.
Got sticker shock from all of these costs? Does it feel like you’re starting a trucking company with no money?
Your first step should be to make a plan. It can be tough when you’re first starting out to keep steady cash flow to maintain a positive operating ratio. Thankfully, Apex can help. Factoring your freight bills with Apex is a great way to ensure you keep your trucks on the road. As a new carrier, you might not be able to afford to wait 30, 60, or even 90 days to get paid. By purchasing your freight bills and sending you your money up front, Apex can help you to keep your trucks fueled, make insurance payments, pay drivers, and keep your truck(s) in good condition.
Plus, when you become an Apex client, you will get a fuel card with fuel discounts at the truck stops you visit most, free access to our load board, NextLOAD.com, the free Mobile Factoring™ app to help you manage your paperwork, and other additional discounts, to help make your dream of owning a trucking company a reality.
Additional Resources to Start Your Trucking Company
Now that you have an idea of the cost of starting a trucking company, read 7 Steps to Starting a Successful Trucking Company to make sure you’re staying on the right track. You can even get trucking company name ideas by reading, How to Name Your Trucking Company.