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The Plight of the New Entrant

mcsap2Every entity or person who has a dream of being in heaven as they drive an eighteen wheel truck across the country with a trailer full of commodities must first pass through a little hell. The life of a “New Entrant” begins simply with a desire to work for yourself instead of somebody else but like everything else in life the learning process can be a hard road to travel.

So you wake up one morning and decide that what you need is your own operating authority. You diligently fill out your MCS-150 (DOT Number application) and OP-1 (Motor Carrier Authority). You push the enter key filled with excitement at the prospect of your new adventure and before your back can hit the chair your phone rings. The journey begins.

Before I outline the process I would like to take a moment and explain my position. I spent many years in the compliance sector of the transportation industry. The true nature of this part of the industry is that they are “Third Party Administrators” or “Outside Service Providers”. They are NOT affiliated with the Federal Motor Carrier Safety Administration or the Department of Transportation. Although I believe that there are many companies out there that provide much needed, honest, and competitive services. There are those that portray themselves as something other than their true nature. Some of these companies have brought “buyer beware” to a whole new level. Remember that you are speaking to salespeople that are making a living from selling a product. The purpose of this is not to bash any company in particular but to make the “New Entrant” aware of some of the pitfalls that may keep his or her dream from becoming a reality.

The first thing you must realize is that the FMCSA or the DOT does not call you. They have a hard enough time keeping up with 350 new DOT numbers and 150 Motor Carrier numbers that are issued every workday. They don’t have the time nor the inclination to give you a call in order to explain things to you.

The most important advice I can give you is make sure you know who you are taking to. A mumbled greeting with a company name that has an authoritative title is a huge red flag. Make sure they speak slowly and clearly in order to allow you the time to figure out exactly who they are and what they do. Don’t be afraid to ask questions!! Don’t let yourself be rushed.

The following is the systematic structure and explanation of the items you will need in order to get your authority.

1. BOC-3: This is a “Blanket of Coverage”. A motor carrier must have a legal address in each state in which they travel. The companies that file it must be registered with the FMCSA. Ask that question!! Those that aren’t are just adding their cost of making a phone call to a company that does. A list of all the companies that hold authority from FMCSA to file BOC-3’s is available at www.FMCSA.gov.dot. A BOC-3 is a one-time filing and is not a renewable permit!!

2. Insurance Filing: This item, more than any other, keeps authorities from being granted. Any company that is applying for their authority must post their insurance with FMCSA. It’s called a federal filing and many insurance company agents will sell you insurance but the issuing company does not do the federal filing leaving you with an insurance policy that is useless. There are also those who will sell B or C rated insurance that, while filed with the FMCSA, will not be acceptable to any reputable broker. Again, you will have a useless insurance policy. While the New Entrant is going to pay a little more for insurance because of the risk factor in insuring a new company, make sure that the insurance you purchase fits all your needs. Sometimes the cheapest quotes are just that.

These two items are the only two things you need in order to get your authority granted. Don’t get told you need any of the following items prior to running. Your authority is useless if all your money is spent on things you don’t need if your authority is not granted. The following items are important for your compliance but don’t be spending money on things you don’t need… YET.

3. U.C.R. (Unified Carrier Registration): I could spend a lot of time explaining this but the bottom line is it is a tax that was born out of the International Registration Plan (I.R.P.). States that use to receive money from the “single state registration” lost the revenue with the I.R.P., this solved the problem. This is an annual tax/registration and can be purchased directly from the government at www.ucr.in.gov at the cost of $79.00.

4. I.F.T.A. (International Fuel Tax Agreement): Each state wants their share of the fuel tax. It can be a tedious job trying to figure it out but if you run a constant route it will be close to the same every quarter. Remember: If you are under 26,000 GVWR you do not have to file I.F.T.A. You get your I.F.T.A. stickers from your state department of revenue.

5. State Permits: There are four states that require permitting in order to travel through them. They are: New York (HUT permit), Kentucky (KYU permit), New Mexico and Oregon. All can be done on line through the issuing state and the permits are mostly free (You pay the taxing for using the roads quarterly). Oregon requires a surety bond to be posted. You may also get “trip permits” for those states if you only pass through them occasionally.

6. Consortium/Drug and Alcohol Testing: This is the most prolific of all the phone calls. Even after a few months companies will still be calling. The bottom line on Regulation 382 of the FMCSR’s is if you are a single driver owner/operator you can’t run down to the nearest clinic once a year and get a drug/alcohol test and be compliant with the regulations. There are many companies that offer this service. It can get quit complicated if done incorrectly and is probably a safe bet to let someone handle this aspect of your business for you. The big question is who!! Some easy rules to apply…ask questions and go with the company that best suits your needs. I could spend hours giving advice on this but will leave it up to your better judgment. It should boil down to how well they handle your account throughout the year. You can always cancel services and find a new consortium. Just make sure that there isn’t a lapse between the coverage. The pre-employment drug test is the only item needed prior to your running. Some companies include this test in their pricing, some don’t. Choose wisely.

7. Driver Qualification Files (DQF’s): Yes…you need these set up in order to pass your safety audit. They DO NOT contain personal background checks. The only check is of previous employment (if you drove a truck for them). They are simple and the forms can be found at www.fmcsa.dot.gov. Regulation 391 of the FMCSR’s also states that you have 30 days from the time you start running to have these files in order.

There are plenty of other services that companies will be glad to manage for you such as log book auditing and safety audit consulting. Some are, in my opinion, more of a sales “scare tactic” than an actual service.

I hope you have found this to be useful in your new endeavor. As with any new company the odds of being successful are not stacked in your favor. These opinions are derived from many years of experience and factual knowledge in the industry. I’m sure there are those who will disagree with some of my points. I hope that the information will give a clearer picture of what is, and more importantly, what isn’t, needed with the first few steps into the transportation industry. I wish you all great success.