Overview of the process in getting your own operating authority
By Linda Yates, The Expediters Consultant
Now more than ever current and potential professional drivers are considering getting their own motor carrier authority rather than working for a carrier or leasing to a carrier as an independent contractor or owner operator. Why is there such a heightened focus on getting motor carrier authority? Everyone is scrambling to find the best way to increase their profit margin. As an expediter would it be beneficial to get your own operating authority? In certain situations it could
be beneficial but in many cases it could be burdensome and financially devastating.
Before you can decide if getting your own authority would help you achieve your goals you must learn about the costs and procedures involved with maintaining motor carrier authority and then use your business plan to make a comparative analysis. If you plan to specialize in expedited trucking it is also critical to learn as much as you can about the expedited freight segment.
The are many rules
and regulations regarding motor carrier authority both on the Federal and State levels and if you are considering going that route you will want to learn all the intricate details but for now to put it simply, entities that engage in the transportation of persons or property for compensation must register and obtain permission from the federal and/or state governing agencies. Motor carrier authority enables the registrant to basically sell its freight transportation services to shippers. The
motor carrier utilizes its fleet of company drivers or leased operators to transport the freight or if the motor carrier also has obtained a certificate for Broker Authority it can even broker loads to other motor carriers for providing the actual transportation of the shippers’ freight.
When you are employed by a carrier or leased to a carrier you are operating under their authority certificate and your compensation for hauling freight is a percentage of the overall charge to the
shipper (even if you are paid by the mile that amount is essentially a percentage of the overall revenue). The carrier is in control of negotiating freight rates with shippers and brokers and the carrier is also in control of selecting the type of freight to be hauled as well as selecting the shippers to do business with. At some point, whether it be before you start your career in trucking or after experiencing the ups and downs of the business, you will no doubt wonder if you could earn
more by getting your own authority so that you can deal directly with shippers and brokers.
It seems like a no-brainer that if you where to deal directly with the shipper rather than through a middleman (the carrier) you would profit the percentage normally retained by the carrier. Say your percentage is 65% of the shipper charge and the carrier keeps 35%, you may think or may even be advised by others that if you operate under your own authority the 35% would be profit in your
pocket. Regardless of the type of trucking you are involved with the reality is only a portion of the carrier’s percentage could potentially be profit because of the expenses you would incur in having your own authority. Your greatest risk in taking a chance on running under your own authority is that if you cannot secure enough customers to generate a substantial amount of load volume then even though you get to keep 100% of the charge to the shipper you could end up with 0% profitability.
Let’s take a look at some of the details regarding getting your own authority. There are several types of operating authority certificates relating to freight transportation based on the activities you will be conducting (property motor carrier-private, property motor carrier-for-hire, passenger motor carrier, freight forwarded authority and broker authority. If you engage in several types of activities then you would need a separate certificate for each activity. The filing fee for
each type of authority is currently $300. For this article we are going to concentrate on the For-Hire Motor Carrier Authority, which applies to an entity paid to provide truck transportation of cargo belonging to others.
As a For-Hire motor carrier operating a vehicle over 10,000 lbs in multiple states, referred to as “interstate”, you must first register with the Federal Motor Carrier Safety Administration (FMCSA) by filing a form MCS-150 to obtain a USDOT number. At this time
there is no charge for a USDOT number. Your next step is to file an OP-1 form with FMCSA for your interstate motor carrier authority certificate. Many people who operate cargo vans believe since a USDOT number is not required for vehicles under 10,001 lbs, that they do not need to file for a motor carrier authority certificate. However if you transport cargo belonging to others across a state line in a "for hire" capacity then according to FMCSA you are required to register for a
Motor Carrier Authority certificate. This has been an ongoing controversial issue because there is contradictory language within the rules and regulations but to date representatives from the FMCSA still affirm that if your vehicle is not over 10,000 lbs., you do not need a USDOT number but you will need a Motor Carrier Authority number.
All motor carrier applicants must designate a process agent in each state where operations are to be conducted and must file a list of each agent’s
name and address with FMCSA on a BOC-3 form (a process agent is a representative upon whom court papers may be served in any proceeding brought against a motor carrier). Process agents charge a nominal fee for their service. For a flat fee there are many firms that will arrange your process agents in any or all the states needed and will file your BOC-3 form.
You must also have specific insurance documents on file with FMCSA before you can be issued your authority certificate. FMCSA
requires minimum amounts of insurance based on the GVWR of your vehicle(s) and the type of freight you haul. For vehicles with a Gross Vehicle Weight Rating (GVWR) of less than 10,001 pounds: $300,000 for general commodities (non-hazardous) and $5 Million for any quantity of Class A or B explosives, for any quantity of Poison Gas (Poison A) or highway route controlled quantity of radioactive materials. For Vehicles with a GVWR of 10,001 pounds or more: $750,000 for General Commodities, $1
Million for hazardous except class A & B explosives and $5 Million for Class A & B explosives, Hazardous materials transported in specified capacities in tanks or hoppers and/or any quantity of hazardous materials as specified in 49 CFR 173.403 of the Federal Motor Carrier Regulations. Property carrying common motor carriers must also maintain minimum levels of cargo insurance: $5,000 for loss of or damage to property carried on any one motor vehicle and $10,000 for loss of or damage
to property occurring at any one time and place. The appropriate forms must be filed by your insurance company within 90 days after FMCSA notifies you that a notice of your application has been published in the Office of Motor Carriers register. Insurance rates vary based on your individual history and risk. A motor carrier authority application is non-refundable so it's a good idea to make sure you
can afford the price of liability and cargo insurance before you submit your authority application.
After authority is granted, all regulated motor carriers must register their authority and insurance with the states in which they will conduct operations. This is done through the UCR (Unified Carrier Registration), which became effective in September of 2007 replacing the old SSR system. The fees range from $39 to as much as $37,000 depending on the number of leased or owned vehicles
you have. Keep in mind once you have your Federal motor carrier authority you may also need an Intrastate Authority Certificate for certain states. Any regulated freight that is transported within state lines (picks up and delivers without crossing state lines) is considered “intrastate” transport and is controlled on the state level. Authority to conduct this type of operation is known as Intrastate Authority and is issued by the state(s) where these operations take place. Because these
authorities are issued by each state individually, the costs and requirements vary.
FMCSA provides instructions and filing forms for motor carrier authority on its website at www.fmcsa.dot.gov. If you would like to find out how to get a USDOT number at no cost or about other motor carrier authority resources you can also contact my office at 877-878-4437. # | 
