Applying For Trucking Authority ICC MC / USDOT Motor Carrier: Pitfalls you will run into.

what's up drivers Bobby C here with DIY trucker and this video is for those of you who are contemplating getting their own ICC authority or d-o-t number as they call it now and I'm going to give you the biggest causes for failure - those who run under their own authority and under their own name well you think you want to get your own ICC Authority or do T number well I'm going to give you five of the biggest causes for failures and five areas that is the hardest to compete with these mega carriers and competition is the main reason for failure it's very difficult to compete with these carriers that can do things a lot cheaper per truck than you can as a small company I'm going to go into those areas and before I get into these areas I'm going to give you guys some statistics and I'm going to cite an article that's about two years old that I read in transport topics it goes through the number of failures as far as those that have gotten their own ICC Authority or DoD numbers are calling it now out of every thousand applicants that are granted Authority 725 of those will have failed in the first 12 months that leaves 275 and out of those another hundred will fail in the next six months or the first 18 months that leaves a hundred and seventy-five and out of those only 84 less than one percent of those that are granted Authority actually make it to 24 months now you can interpret these numbers any way you want to but there's no getting around that this is a tough business and it's got a very high failure rate now I want to give you some background I had my own authority I had a fleet of trucks and some of these areas that I'm going to go into with you is what caused me to become a fleet owner and a sales agent for Landstar now I'm no longer a fleet owner or an agent when Landstar I'm down to one truck and I'm doing very well at another company and that's a video for another day the number one reason for failure or the cause of failure to small companies starting out with their own Authority is insurance insurance for a new company that doesn't have a liability insurance track record is going to be super high you're looking at minimum thousand to fifteen hundred dollars a month depending on your driving record per unit and that is a big hill to climb when you're competing with these big carriers that are self-insured that are doing things a lot cheaper their insurance cost is is a whole lot less than yours and I'm going to make another video explaining the different types of insurance the per unit insurance the gross receivables insurance and the self-insured insurance and how that works and how it plays into being able to compete amongst other carriers especially larger carriers and the number two reason is the cost of fuel it's harder to compete with these big guys when they're paying twenty to thirty cents less per gallon and I really didn't think there was that much markup but I'm actually leased to a company now that allows me to buy my fuel at their cost and I'm going to show you an image here of mossy Point Mississippi here in the first week of March of 2018 and you can see the price there is 231 seven now in full disclosure that is pre-tax I do not have to pay fuel tax where I'm at the company that I'm with takes care of the fuel tax so you add in the fuel tax you still have a significant twenty twenty-five cent a gallon savings I'm going to show you the image of the live at the pump right now in mossy Point Mississippi of the pilot as you can see when you add back in the fuel tanks it's a big savings so it just makes it even harder to compete with these guys that have lower cost than you do and the third area that causes failure is establishing freight lanes and establishing direct customers a lot of people think well I can just run the dot board or go broker to broker to broker on all my loads and I suggest that you have at least fifty percent of all your Freight and revenue generated by direct billing where you're billing a customer directly if you can't get to that fifty percent mark you're losing a lot of money now granted even the big companies use brokers so you're never going to be able to totally do away with getting broker Freight but you need to establish a good core of your business as direct bill and I'm going to make a video about that about how to approach these companies and establish sales sheets and rate sheets and and the best way to to establish freight lanes and how to analyze those things so be looking for that video coming down the pike pretty soon and the fourth area that causes failure is compliance not keeping up with compliance having a big if de bill I see so many of these carriers that that don't think about their fuel tax and they're getting an if to bill and they don't pay it and then they're if it gets cancelled and or they're not keeping track of their logs and keeping records and files there's a lot of compliance for these governmental agencies and record-keeping that's required and there are companies out there that you can hire as a small company that can do these things for you but then again that's just adding more cost that these big carriers don't have they're able to spread out their cost over a lot of trucks and they're paying a whole lot less per unit per month on their compliance than you are as a small carrier and the fifth thing is financials the financing the money most people that get into this business and get their own authority do not have enough money up front to cashflow their business until they can start generating some cash flow from the customers invoices and I always suggest that you have at least 60 days worth of operating cost in the bank so it's gonna take a big bankroll before you even get started and what's gonna happen is if you don't have that much money you're gonna be forced into what's called factoring or accounts receivables financing and I'm going to make a video about the details of what that really is and how to navigate those things and and to understand what factoring is but you have to realize that these factoring companies are going to get three to five percent depending on the credit rating of the customer per invoice and most of these customers will pay in 30 days so if you factor in 3% on a 30 day invoice as a interest fee that works out to about a 36 percent interest rate it gets better to use a credit card than to get into factoring and I'm going to go over some of those things because you've seen the ads no chargebacks we buy your invoices that that's partially true I'm going to give you some quick information on what that really means most factoring companies only give you anywhere from 70 to 80 percent of the invoice amount up front immediately in what they call an advance and they hold the remainder of that to win the customer pays and then when the customer pays they deduct their fees and give you the rest so if a customer doesn't pay and most contracts now I understand that there's different contracts out there if a customer doesn't pay you don't have to pay that advance back but you're not going to get the to that invoice is not a true purchase and they word it carefully make it sound like it's a purchase of the invoice but they actually say no chargebacks meaning you don't pay the advance back and I'm going to interview in an upcoming video a major factoring company and I'm going to ask the questions that you should ask when you're calling a factoring company because some of you guys may have to do it but if you do do it you need to make it short term and have a good financial plan together for your accounts receivables financing if you don't have the bankroll upfront to fund your operating cost until you get revenue coming in I hope that this helps you and gives you a good idea of what to expect and the things and the areas that cause failure so I applaud anybody that wants to have an entrepreneurial spirit and go out there and get their own authority and and do things and make themselves better even though it's something that I would advise against I still want to give those and are going to do it anyway all the information that they they need to make an educated decision so thanks for tuning in guys good running with you and Bobbie C checking out

Channel: DIY Trucker

Views: 26,958

Keywords: ICC authority, DOT number, USDOT number, insurance, fuel, compliance, logs, sales, rates, factoring, fuel taxes, ifta, elogs, e logs, safety, account receivable financing, motor carrier

Id: Gn6X_A73bAI

Length: 10min 8sec (608 seconds)

Published: Sat Mar 10 2018