So You Wanna Be a Trucker-Start Here.

Overview

The trucking industry in the United States is not just a significant sector of the economy; it’s the lifeblood that keeps it moving. Comprising primarily small operations, including many owner-operators and small fleet owners, the industry is characterized by its diversity and the vital role it plays in transporting goods across the nation.

Small trucking businesses, particularly those with a single tractor-trailer,  or a small fleet of box trucks, form the backbone of this industry. These small-scale operations offer flexibility and adaptability that large corporations can’t, meeting specific market needs and providing personalized services.

Smaller trucking companies, especially new ones, have historically made their bread and better within the spot (LTL) market, which is the sector of trucking that contains most of the freight that is not deemed for regular contracts. While this is the usual place to start, the ambition for every trucker should be to acquire regular freight through dedicated lanes/contracts. This will provide long term stability and predictable income.

1. Initial Steps

The first step in starting a trucking business is thorough research and planning. This involves understanding the market demand, identifying potential customers, and comprehending the competition. Creating a detailed business plan is crucial, outlining your target market, potential routes, services, and financial projections. This plan will serve as a roadmap for your business and is essential for securing funding or investors.

Deciding on a legal structure for your business (sole proprietorship, partnership, LLC, etc.) is vital. Each structure has different implications for liability and taxes. Additionally, choose a unique and memorable business name, ensuring it’s not already in use and registering it as required.

Setting up a dedicated business bank account is a must. This helps in keeping personal and business finances separate, simplifying accounting processes, and establishing a professional image with customers and vendors.

If you plan to drive the truck yourself, obtaining a Commercial Driver’s License (CDL) is mandatory. For those managing fleets, understanding the industry’s ins and outs, including safety regulations and efficient route planning, is essential.

Decide on the type of equipment needed based on the cargo you plan to transport. While a physical office may not be essential initially, having a designated workspace, even if it’s a home office, helps in organizing and managing the business effectively.

Building relationships with suppliers, clients, and other industry professionals is crucial. Attend industry events, join trucking associations, and connect with other business owners to build a network that can support and guide you as you start your journey in the trucking industry.

Since most new truckers don’t do any networking (especially once they start), putting this into practice early and often can give you a considerable advantage over the thousands of new truckers you are competing with. 

2. Detailed Cost Analysis

Starting a trucking business involves various expenses that can be broadly categorized into initial (one-time) and ongoing (recurring) costs. Below is a table summarizing these costs, followed by a detailed breakdown.

Expense Category	Estimated Cost Range
Vehicle Costs	$50,000 – $150,000 at start
Licensing and Permits	$3,000 – $8,000at start
Insurance	$9,000 – $12,000 annually
Fuel	$3,000 – $10,000 per month
Maintenance	$500 – $1,500 per month
Brand/Marketing	$1,000 – $10,000 initially
Additional Costs (legal, professional services, etc.)	$1,000-5,000 at start

1. Vehicle Purchase: The most significant expense. Prices vary based on whether the vehicle is new or used. New tractor-trailers can cost between $50,000 to $150,000, while used ones may offer a more budget-friendly option
2. Equipment and Technology: Including ELD devices, GPS systems, and other necessary technologies.
3. Initial Marketing and Branding: Costs for creating a website, branding your trucks, and initial advertising campaigns.

1. Fuel: One of the largest ongoing expenses, subject to market fluctuations.
2. Maintenance and Repairs: Regular servicing is crucial to avoid costly breakdowns.
3. Driver Costs: If contracting drivers, consider the rates you’ll offer, which can vary widely based on experience and the specific job.
4. Insurance: A significant annual cost, covering various aspects like liability, cargo, and physical damage.
5. Licenses and Permits: Including CDLs for drivers, motor carrier authority, and various state-specific permits.
6. Operational Expenses: Such as office supplies, utilities, and any rent or lease payments for office space.
7. Professional Services: Legal and accounting services to ensure compliance and manage finances.

3. Choosing the Right Vehicles

Regulatory changes in the trucking industry often aim to improve safety, efficiency, and environmental impact. However, for small trucking businesses, adapting to these changes can be a significant challenge, adding to the economic pressures they already face.

• New Trucks: Offer the latest technology and fuel efficiency but come with a higher price tag, typically ranging from $50,000 to $150,000.

• Used Trucks: More budget-friendly, costing anywhere from $15,000 to $100,000, but may require more maintenance and have higher fuel consumption.

• Leasing can be a viable option, especially for those starting out or expanding their fleet. Lease payments typically range between $1,600 to $2,500 per vehicle per month. However, be aware of lease terms and potential penalties for breaking the lease early.

• For certain types of cargo or delivery services, smaller box trucks or specialized vehicles might be more appropriate. These often have different cost structures and operational efficiencies. These trucks are fuel efficient enough for both long haul, short haul, and final mile.

• Cargo Type and Volume: The nature and volume of cargo you plan to transport will significantly influence the type of vehicle needed.

• Routes and Distance: Long-haul operations might require different vehicles compared to local distribution services.

• Fuel Efficiency and Maintenance: Fuel costs and maintenance requirements should be factored into the decision-making process.

• Resale Value and Longevity: Consider the potential resale value and how long you plan to use the vehicle. You should also factor in how much “skin” you are prepared to put in the game. If you are simply looking to ‘test out’ or see if you will really enjoy being a trucker, you might not want to take on the huge expense and commitment of a tractor trailer.

4. Licenses and Permits

Operating a trucking business requires adhering to various regulatory standards and obtaining specific licenses and permits. These are crucial for legal operation and compliance with federal and state laws.

• Commercial Driver’s License (CDL): Mandatory for anyone operating a commercial vehicle. Costs vary by state but typically range from $200 to $500.

• Motor Carrier Authority (MC Number): Required for interstate operations, involves a registration fee.

• USDOT Number: Needed for tracking and safety regulation purposes.

• International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA): For vehicles traveling in multiple states or jurisdictions.

• Heavy Vehicle Use Tax: Filed using IRS Form 2290.

• Unified Carrier Registration (UCR): Applies to operators of commercial vehicles engaged in interstate travel.

• State-Specific Permits: Depending on the states you operate in, additional permits like weight permits or hazardous material permits may be required.

• BOC-3 Filing: Designates a process agent in each state where you operate.

• Safety Regulations and Compliance: Adherence to safety standards set by the Federal Motor Carrier Safety Administration (FMCSA) and other relevant agencies.

The costs associated with licenses and permits can range from $3,000 to $8,000, depending on the scope of your operations and the states you operate in.

5. Insurance Considerations

• Liability Insurance: Covers damages to third parties caused by your truck. This is the most significant insurance expense.

• Physical Damage Insurance: Protects your own vehicles from damage due to accidents, theft, or natural disasters.

• Cargo Insurance: Essential for covering the goods being transported.

• Workers’ Compensation: Required if employing staff, covering injuries or illnesses that occur on the job.

• Vehicle Type and Value: Heavier and more expensive trucks typically incur higher insurance costs.

• Operating Radius: Long-haul operations might face higher premiums than local deliveries.

• Driver Records: The experience and safety records of drivers can significantly impact insurance rates.

• Cargo Type: High-value or hazardous materials will increase insurance costs.

Annual insurance expenses for a single truck can range from $9,000 to $12,000, varying based on the factors above.

6. Fuel Costs and Efficiency

• Variables: Fuel costs vary depending on market prices, the efficiency of your vehicles, and the nature of your routes.

• Budgeting: Anticipate and budget for fluctuating fuel prices. Include a buffer in your financial planning for unexpected spikes in fuel costs.

• Recovery Patterns and Industry Resilience: Historically, periods of instability in the trucking industry have been followed by recovery. The question now is whether the small trucking companies, bearing the brunt of current challenges, can withstand this period of hardship. The resilience of the industry is being tested in unprecedented ways.

• Vehicle Maintenance: Regular maintenance ensures optimal fuel efficiency. This includes engine tune-ups, tire rotations, and oil changes.

• Driver Training: Educate drivers on fuel-efficient driving practices like gradual acceleration and maintaining steady speeds.

• Route Optimization: Use GPS and route planning tools to find the most efficient routes, reducing unnecessary mileage and fuel consumption.

• Fuel Cards and Discounts: Leverage fuel cards that offer discounts and enable better tracking of fuel expenses.

• Invest in Fuel-Efficient Vehicles: Consider vehicles with better fuel economy, especially for long-haul trips.

For a single truck, monthly fuel costs can range from $3,000 to $10,000, depending on operational factors such as distance covered and vehicle efficiency.

7. Maintenance and Repairs

• Preventive Maintenance: Regular check-ups can prevent major breakdowns and costly repairs. This includes routine oil changes, tire inspections, brake checks, and engine servicing.

• Compliance: Keeping vehicles in top condition is also a regulatory requirement, ensuring they meet safety standards.

• Budgeting for Repairs: Set aside a portion of your budget for unexpected repairs.

• Service Contracts: Consider service contracts with repair shops or dealerships for regular maintenance and emergency repairs.

• Monthly maintenance and repair costs can range from $500 to $1,500 per truck, varying based on vehicle condition and usage.

7. Driver Contracting and Costs

• Contracting Drivers: Provides flexibility and can be cost-effective. You pay drivers per job or on a contract basis rather than a fixed salary..

• Payroll: Involves regular salaries, benefits, and additional employer responsibilities. While not common for small fleets, it’s an option if consistent staffing is needed.

• Rates: Contracted driver rates vary widely. They can be structured per mile, per hour, or per job. Rates depend on factors like route difficulty, type of cargo, and driver experience.

• Insurance Implications: Ensure contracted drivers are adequately insured, either through their own policies or your company’s coverage.

• Budgeting for driver costs is crucial. For contracted drivers, this includes their fees and any additional expenses like per diems for long hauls. It’s also very important to have cash reserves to pay your drivers while you wait for your freight invoices to be paid. Keep your drivers happy at all costs.

8. Marketing and Branding

Effective marketing and branding are essential for any business.  This is an often overlooked aspect of running a small trucking company.  Branding and marketing dhjkdhjkdhjkdestablishing your trucking business in a competitive market.

• Logo and Design: Develop a memorable logo and consistent design scheme for your trucks, website, and marketing materials.

• Truck Branding: Develop a comprehensive budget that includes all operational costs, and regularly review and adjust it as needed.

• Digital Presence: Create a professional website and maintain an active presence on relevant social media platforms.

• Local Advertising: Consider local advertising in trade magazines, local newspapers, or billboards.

• Networking: Attend industry events and join trucking associations to build relationships and gain referrals.

• Initial marketing and branding efforts can cost between $1,000 to $10,000, depending on the scale and channels used.

• Set a monthly budget for ongoing marketing activities, typically ranging from $200 to $500.

8. Financial Management and Funding Options

Sound and disciplined financial management is crucial for the sustainability and growth of your trucking business.  It’s important to always know where every dollar is coming from and where every dollar is going.  

• Bookkeeping and Accounting: Maintain accurate records of all income and expenses. Consider using accounting software or hiring a professional. BLF provides excellent bookkeeping services for small trucking companies. For more info check out our Bookkeeping Services page.

• Budgeting: Develop a comprehensive budget that includes all operational costs, and regularly review and adjust it as needed. Do this BEFORE things go wrong because sooner or later things go wrong.

• Business Loans: Explore loans specifically designed for small businesses or the trucking industry. For more information on the different types of loans see this page.

• Leasing: Consider leasing equipment as a way to reduce upfront costs

• Grants and Incentives: Research any available grants, especially those aimed at small businesses or transportation.

• Cash Flow Management: Monitor cash flow closely to ensure you can cover expenses and invest in growth opportunities.

• Emergency Fund: Establish a reserve fund for unexpected expenses or downturns in business.

Read more: So You Wanna Be a Trucker-Start Here.

Conclusion

Starting a trucking business in the United States is both a challenging and rewarding endeavor. It requires a significant investment in terms of time, capital, and effort. By understanding the various costs associated with starting and running a trucking company, from vehicle purchases and maintenance to insurance and driver costs, entrepreneurs can better prepare for the financial aspects of the business.

Additionally, being mindful of the industry’s challenges, such as driver shortages and regulatory compliance, and adopting effective strategies to address them, is crucial for success. With careful planning, diligent management, and a focus on efficiency and quality service, aspiring trucking business owners can establish a profitable and sustainable operation in this vital sector of the economy.