Why open a trucking company?
Opening a trucking company in Canada is the dream of every truck driver. Start as a truck driver, become an owner-operator and than start a trucking company. The trucking company income goes to someone else when you drive for a trucking company. So why not to take everything home, the driver salary, trucking company income, and full income of a load. Only trucking dispatch companies are getting popular these days. Because you do not need any equipment, drivers, owner-operators, and mechanics for starting a trucking dispatch company. You just need good links with the load brokers, an internet connection and a laptop.
Experience required to start a trucking company
No, you can make it possible starting a trucking company with no experience. This means you can make it true starting a trucking company with no driving experience. But it is better to drive for at least two years. After two years of driving experience, bring your own truck and work as an owner-operator. The truck driver and owner-operator experience will connect you with the shippers, mechanics, drivers, and owner-operators. These all are the pillars of a trucking company. Either you are starting a trucking brokerage company or a trucking company with all equipment and staff.
Types of corporations to open a trucking company
You need a corporation to become an owner-operator and can carry forward the same corporation for owing a trucking company. The different types of corporations are:
3. Limited Liability Corporation
4. Sole Proprietorship
Each type of corporation has pros and cons. What type of corporation would be your best partner from the owner-operator to a trucking company? Which corporation has minimum paperwork and maximum benefits? Ask your accountant for the best answers.
What is CVOR(Commercial Vehicle Operators Registration)?
Now you need to apply for a CVOR(Commercial Vehicle Operators Registration). You need a truck driver’s license to drive a truck, similarly, you need CVOR to operate a trucking company. Do not confuse this CVOR (Commercial Vehicle Operators Registration) with the CVOR(Commercial Vehicle Operators Record). The one ending with “Record” is the one which you get with the truck driving license.
You have to pass an exam to obtain a CVOR for a trucking company. Click here to find out more about getting a CVOR in Ontario.
Expenses of opening a trucking company
The biggest expense of starting a trucking company is purchasing trucks and trailers. The best is to get a pre-approval for a truck loan. Do not try to play out of the pocket, trucking income is not that stable.
The second option after financing is signing full-service lease agreements. Although you pay more in leasing but walk away the next day in case of loss.
Lease to purchase program.
Another option to arrange a tractor-trailer for fresh startups is a lease to purchase programs. Economically, the lease to purchase program is not good. But worth it if you have bad credit and not enough funds.
After the equipment expenses, you have to deal with staffing, staff, office, utilities are not easily affordable. Start your trucking company hassle-free company from the bunk.
You need at least 100K to start a local trucking company with 3 to 5 trucks.
Permits and authorities required for a trucking company in the US and Canada.
The next step is to get legal authorities (ie, get permits). You need the least authority to operate a trucking company within the province. So why not start as a local trucking company? because the local loads are rare to find.
You need big paperwork to operate a trucking company throughout the US and in Canada. But you will get more loads, better rates to and from the US.
Authorities and permits for a trucking company
You need the following permits and authorities to start a trucking company in the US and Canada. Please note these are the common requirements to set up a trucking company. There are some state-specific requirements also. For example, New York and Kentucky have different state-specific rules.
1. US DOT Number
The US Department of Transport assigns a unique number to your trucking company. The department keeps the record of your vehicle safety, accidents, inspections and related information under this number.
Here is the link to register for the US DOT number. The US DOT number.
2. MC Number
This is the Motor Carrier number for your operating authority. Click here to find out more about how to get the MC number.
3. Heavy Vehicle Use Tax:
This tax applies to trucks weighing more than 55,000 pounds. More information, the application process, and forms for the Heavy Vehicle Use Tax are available in the following link
The IRP plan is a US-based registration reciprocity agreement. This plan is between the US states, the District of Columbia and the provinces of Canada.
5. IFTA (International Fuel Tax Agreement):
This is an annual decal. This is a fuel reporting system. You have to report the fuel used by your trucks in the US States and in Canada. Visit IFTA website to find out more.
5. BOC -3:
An agent can file to Bearuo of Customs on behalf of you. More information on the BOC-3 filing is available on the FMCSA website.
The Safety and Compliance for a trucking company
There are several certifications of safety and compliance for the trucking companies.
This is the US Customs Trade Partnership Against Terrorism. It protects the trade industry from the terrorists and increases border security. You need C-TPAT approved seals for load security. Nobody should contaminate or load illegal materials in your tractor-trailers. If you want good loads for your company and stay longer in the business, you must comply with C-TPAT. Detailed information on C-TPAT is available on the link in the heading.
The Partners In Protection is the Canadian program between the private industry and the CVSA for a secure supply chain. More details, the application process, and further details are available in the above link.
This is a joint initiative of Canada Border Service and the US Customs. The FAST minimizes the border crossing time. This program is for drivers, every OTR driver can apply for a FAST card. Click on the above link for FAST card application, processing times, fees and further details.
This is a DOT and FMCSA initiative to improve motor vehicle safety, reduce collisions, injures and fatalities. The link in the heading is to apply, get trained and more details.
Furthermore, you need, border crossing stickers, transponders, approved seals, toll passes, EZ pass, the bridge passes to operate a trucking company in the US and Canada.
All shippers love shipping and receiving from certified companies. Grab one by one and stay on the top.
Opening a trucking company to run Canada only.
Another option is to open a trucking company to run in Canada only. You need the following permits to open a trucking company to run Canada only.
1. IRP and PRP plates (International Registration Plan and Prorate Plates). This is based on the distance you travel in the US and Canada. The PRP plates are for frequent travels between two or more jurisdictions between the US or Canada.
Find out more information on the IRP website.
2. CVOR is the same as your truck driver’s license. The CVOR is for a trucking company. There is a separate exam to obtain a CVOR.
The easiest in trucking is to start a local trucking company. You only need a CVOR to operate a trucking company within the province of Ontario.
So start as a local trucking company. Once you stand, expand your operations to all provinces of the US or Canada.
Buying insurance for operating a trucking company
The trucking company requires a substantial amount of fleet insurance coverage. The following are the insurances you need for a trucking company. All in one package are available.
Liability insurance: Depending on the size of your fleet, you have to buy about $1million of liability coverage. The trucking insurance company covers If your truck damages someone’s property.
Freight Insurance: This insurance is for the loads you pick and deliver. This is the coverage for stolen and damaged loads.
Tractor Trailer Insurance: This insurance is the coverage for your trucks and trailers. You can get good rates with extra deductibles.
Other insurance-related expenses
In addition, other insurances you may need are for the employes, WSIB, office equipment and related to the operations.
Nowadays, trucking companies are closing overnight due to skyrocket insurance expenses. So play wisely, trucking insurances are not easy to afford.
Finally, I want to describe things in steps to success.
The step by step information to open a trucking company is as follows.
- Grab a CDL or have a truck driver’s license.
- Drive as a company driver for at least two years.
- Buy your own truck and drive as an owner-operator for two years.
- Apply for CVOR(Commercial Vehicle Operators Registration)
- Grow your network with drivers, owner-operators, shippers, and mechanics.
- Find some local shippers, by a stand by truck, start as an on-call local delivery service.
- Expand your local trucking company to the province.
- Apply for nationwide authorities, and operate a nationwide trucking company.
- Hire some owner-operators, and focus on starting a trucking dispatch service also.
- Apply for trucking authorities for the US and Canada and start logistics service.
You can start a trucking company with no money following the steps above.
Do not worry, there are some companies to help you with the paperwork for trucking safety and compliance. Trucking safety and compliance will cost you around $1000. The trucking safety and compliance companies and websites help you in everything.
I hope you are all clear about opening a trucking company. All comments and feedback are welcome. Please share this article on social media and join our FB groups and pages.