Operating Authority now to establish while Lease2Carrier

Just refinanced my Lease Purchase truck to get out of a slow freight, poor planning carrier. In the Future, I want to book my own loads under my own MCA. For now, I want to lease truck & trailer onto an established Carrier and earn my 88%.

Been advised to Get MCA now and let it sit dormant while I lease onto Carrier. Why? To get Time on my MCA and protect my Carrier Name from others using it.

Really WHY?
I was told Brokers look at your MCA # and if it is too young they won't risk giving you their prized freight.

Is there a way to put MCA on hold so I don't have to go thru all the compliance stuff, or should I file for MCA?

For Name
I suppose I could file a DBA then Trademark name.
I have done FMCSA Name Search and seen some with 5-10 carriers with basically the same name. Is that good for brand recognition, or if one bad one ruins reputation, we're all screwed?

 

Who owns the truck? Who holds the title. No title, no MC number.

 

My bank has the title.
Thanks!

 

It is expensive to have new authority, especially if you are not using it. Granted, some brokers may not load you until your authority has been active for at least 6-12 months, but most will load you as long as your authority is active and insurance is current. Insurance is very expensive. My agent told me recently that he is seeing an average of about $16,000/yr for new authorities. That is a lot of money to just let your authority sit. If your authority is not active it won't do any good with brokers who want to see you active for a minimum amount of time. They will go by when you reactivate your authority. If you want to run under your own authority, the best thing to do is to just dive in and do it. Most carriers to whom you may lease to will not allow you to have your own authority while leased to them. If you have active authority you will need to be compliant. There are still filings you will need to do whether you have miles or not. For instance, you will need to file and pay your UCR each year. If you have an IFTA account, you will need to file quarterly returns whether you have miles or not. Personally, I see no advantage to getting your authority and not using it. The cost is just too high. It isn't the cost of authority, but the insurance. If I were you, I would wait until I was ready to become independent before filing for authority. To help you make up your mind, you might check around for insurance rates. Currently, the minimum required for authority is $750,000 liability. You will need a minimum of $1 million liability and $100,000 cargo for shippers or brokers to load you. That is the minimum. If you want to get your authority and just sit on it, you will need to maintain the minimum on liability. I don't know who you have been dealing with but few carriers pay 88% to owner operators.

 

Thanks! Very few carriers pay 80%+ of the load. I have found several in the <30 truck operation size that pay over 80%

 

Something else to consider is that the FMCSA will do there new entrant audit early in your first year. They want to see that some kind of activity is taking place.

 

truckinfast, G/MAN and derailed have it right, it is not worth the money to have active authority if you are not using it. Yes, you will have a hard time getting freight for the first few months while you prove you are reliable, but you should still do better than what you would get on percentage leased to a carrier. It will be hard work, a lot of cold calls and hearing no often but you will survive. Having authority on hold will not help aging the authority for brokers, if anything they will want to know why it was inactive, what went wrong. Heck, having an aged authority doesn't always help either, ours is 13 years old, but because I rarely ever use brokers since most of my work comes from direct customers I still get told no or have a difficult time getting broker work when I call.

As for skateboardman's question about the truck title, that has nothing to do with having motor carrier authority, you don't have to own or have a truck to have motor carrier authority, just have to have the minimum insurance in place and do all the office compliance stuff. You could have MC authority and never run your own truck but lease on owner operators just like a lot of the big boys do. We have MC authority in one name and all our equipment is owned by another business entity, never been an issue.

Good luck with whatever you decide to do.

 

Big Thanks! Often it is difficult to get good business advice. I got great advice here and at Rawze's site http://rawze.com/forums/showthread.php?tid=5963&pid=14143#pid14143

 

Would you mind sharing some of those company names?

 

Some of them have lousy planners that wont preplan you, making you deadhead too much. Some cant get you home. It really is a crapshoot picking from the small carriers. Never lease your truck from the same carrier that gives you freight.