How Much Does it Cost to Start a Trucking Company?
Starting a trucking company can be an exciting and potentially profitable venture, but it also comes with significant costs. In this blog, we'll break down the expenses involved in starting a trucking company and give you a rough estimate of how much you can expect to spend.
One of the most significant expenses for a trucking company is the cost of equipment. Depending on the type of trucking company you're starting, you'll need to purchase or lease trucks and trailers. A new truck can cost anywhere from $80,000 to $150,000, while a new trailer can cost between $30,000 and $80,000. If you're just starting out, you may want to consider leasing your equipment to save on upfront costs.
Another significant expense for a trucking company is insurance. As a trucking company, you'll need to have liability insurance, cargo insurance, and physical damage insurance. The cost of insurance will depend on several factors, including the type of cargo you'll be hauling, the number of trucks you have, and your driving record. On average, insurance can cost anywhere from $8,000 to $12,000 per truck per year.
Factoring is a process where a company sells its accounts receivable to a third-party company in exchange for cash. Trucking companies often use factoring to improve their cash flow. Factoring companies charge a fee for their services, usually between 1% and 5% of the invoice amount. The cost of factoring will depend on the amount of money you need to factor and the specific terms of the factoring agreement.
Telematics is a technology that allows you to track your trucks in real-time. This technology can help you improve your fleet's efficiency, reduce fuel costs, and improve safety. The cost of telematics will depend on the specific system you choose and the number of trucks you have. On average, you can expect to pay between $15 and $30 per truck per month for telematics.
If you're starting a new trucking company, you'll need to obtain a new authority from the Federal Motor Carrier Safety Administration (FMCSA). The cost of a new authority can vary depending on several factors, including the type of authority you're applying for and the state you're based in. On average, you can expect to pay between $300 and $1,000 for a new authority.
Cost of New Authority
In addition to the cost of obtaining a new authority, there are other expenses you'll need to consider. For example, you'll need to register your trucking company with the state, which can cost between $50 and $500. You'll also need to obtain a USDOT number, which is free, but you'll need to pay an annual fee of $300 to keep it active.
Starting a trucking company can be a lucrative venture, but it also comes with significant costs. The cost of equipment, insurance, factoring, and telematics can add up quickly, so it's essential to have a solid business plan and budget in place before you get started. By carefully planning and budgeting for these expenses, you can increase your chances of success and build a profitable trucking company.