How much does it cost to start a trucking company?

by Liudmyla M. Consultant

How much does it cost to start a trucking company?

Running a trucking business is a profitable opportunity for everyone who’s not afraid of a bit of challenge. Starting a trucking company can be complicated, but with enough effort, you can succeed and become a successful carrier. To make your business more productive, you can consider ordering freight management and dispatch services from professionals like.

The first thing to consider at the start is the cost of owning a trucking company. In this article, we’ll review average spending in the trucking business.

What do you have to spend to start a trucking company?

So, what are the numbers? Let’s start with the initial costs that include business and vehicle registration. This will cost you around $10500 without the equipment. This includes registration plates (around $1500 for each truck depending on the state and truck type). Also, these $10500 include the heavy vehicle use tax and permit ‒ you need one per truck. Some states also have their own additional taxes for heavy vehicles ‒ this is why the initial cost can vary from $6000 to $15000 with an average of $10500.

If you plan to own a single truck for a while and work as an owner-operator, this sounds even more optimistic. On the other hand, if you plan to launch a large-scale trucking business, you’ll need more significant capital that will cover all the fixed and variable costs.

What are fixed and variable costs?

Separating fixed and variable costs for your trucking business is only logical ‒ for some things, you will only have to pay once while other costs can vary both in their size and the frequency of spending.

Let’s start with reviewing fixed costs and then move on to variable ones.

Required DOT documents

Every trucking business is required to obtain a US Department of Transportation number for your motor-powered vehicle. This is a standard procedure, and receiving this number will cost you $300.

Business registration

Registering your trucking business has to be done not only in US DOT but also in the tax office. The cost of business registration will be an average of $500, mostly depending on the state you’re registering your business in.

Getting a Unified Carrier Registration (UCR)

If you plan to own a single or two trucks, the UCR fee will cost you $69. However, if you plan to own more trucks for your trucking, you will also have to pay more. The UCR for three and up to five vehicles costs $206. You can find more specific information on the UCR website.

The cost of the truck

It’s obvious that your truck has to be in mint condition in order to be profitable. Trucks are something you shouldn’t save on.

You can purchase both new and second-hand trucks. Opt for the best technical condition, especially for second-hand vehicles ‒ the better shape they are in, the lower will be the cost of maintenance. Second-hand trucks have their benefits ‒ for example, you will have to pay less for the premium insurance.

If you choose to buy a second-hand truck, remember that it has to be five years old at maximum. This, and less than 600k miles on the engine will ensure you get something that will ride long enough until the first major repairs.

And again: don’t save on the truck, because this way you will only pay more for its maintenance. 

But what about numbers? Well, expect to spend from 15 to 175 thousand dollars on your first heavy vehicle. Everything depends on every truck individually.

Buying insurance

Getting insurance is a must. It’s probably the most important of annual fixed costs, and many things have to be considered before you buy one.

Insurers usually pay attention to the age of your vehicle, its condition, the most common freight type, and your usual routes. $10000 per truck is an average annual premium insurance cost for a single truck. This number can be higher depending on the vehicle model, driver’s experience, and a few other factors regarding your new trucking business.

Special CDL endorsements

If you plan to transport dangerous cargo or if you have a special type of heavy vehicle, you have to obtain one or a few CDL endorsements to do it legally. There are usually several types of these licenses:

1. H is for hazardous materials. This category includes gases, explosives, flammable, and combustible materials, and pretty much anything that can cause serious harm to the public in a case of an incident.
2. P is for passengers. If you plan to drive over sixteen passengers including the driver, you have to pay a fee of $14, pass a skill test, and take a theory test to prove you are a safe passenger vehicle driver.
3. X is for hazardous materials contained in a tanker. You need this CDL endorsement if you plan to transport waste or hazardous materials on a big scale ‒ this is mostly the case for carriers who work with power plants and energy corporations. to receive this endorsement, a driver has to pass a tanker knowledge and hazmat knowledge test and pay a $14 fee.

You can learn more about CDL endorsement classes and categories on your local transport authority's website.

Additional fixed costs

You also might want to invest in marketing and promotion. Your company will most definitely need a website, a promotion of this website, and relevant content to show up ranked higher in the search results.

Also, it won’t hurt to invest in business optimization services ‒ dispatching, and tax accounting. It’s a good investment that will return in good profits.

Variable costs

So, what can be included in variable costs? Think of anything you will need to run your business once in a while: fuel costs, gas taxes, other taxes, salaries for everyone who works with you, and new or additional equipment.

Variable costs are significantly smaller in comparison to fixed ones, but it doesn’t mean you can forget about them while planning a budget ‒ this mistake will cost you a lot of missing profits.

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Created on Feb 24th 2023 03:38. Viewed 99 times.

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