Looking to start your own transportation company?
There are many things you need to know about what operating authorities you will need. It can be confusing trying to figure it all out. It becomes even more complex if you plan on operating out of your home province or state, even out of your own country. Here is a couple of common topics I discuss with new clients who want to start a new operating authority.
Are you incorporated yet or business structure why is it important?
One of the first things you have to consider is how your going to structure your new business. Legal and financial consideration must be taken into account before you go off and start applying for your brand new operating authorities. You should discuss your options with your accountant and or lawyer who are the best people to talk to about the pros and cons of each type of structure and your unique business venture. Most of our clients do opt for simple provincial/state incorporation or Canadian corporation as they are fairly easy to set up.
The reason this is the first item on your agenda is because once your start applying for authorities as one type of entity, you can not change you mind later on. Well ok you can but in most cases your paying the same fees over again because according to the government you’re a new legal entity.
Have you talked to your insurance broker and How long does it take to get an operating authority?
These two questions go hand in hand as one is depended on the other. In reality if you think about it, you can’t operate without insurance so having insurance ready to go makes the whole process much smoother.
The quick and dirty answer to how long to get an operating authority in Ontario (called a CVOR) and in the US (your DOT number and MC number) is 10 business days.
Talking to your insurance broker gives you a good idea about what to expect in regards to insurance costs down the road. For Ontario based carriers, for example, insurance tends to start rising as soon as you mention US exposure. Some new Ontario carriers might not want that added expense so they choose to wait before entering the US market. Knowing this before you spent money on obtaining your DOT number and MC operating authority is good.
So how does insurance directly relate to when you can obtain your operating authority? Let’s look at Ontario’s CVOR and the US DOT number.
Ontario’s CVOR application time frame is about 10 business days according the Ministry of Transportation. Ontario will not accept an application for a CVOR operating authority without proof of insurance. You must include your insurance company and policy number on the application or the Ministry of Transportation won’t even look at the application. If you failed to include your insurance because you didn’t have it yet, your application will be sent back to you to resubmit once you get the missing insurance information, this increases the wait time.
Another common insurance delay is for the United States:
The Motor Carrier Operating Authority (MC Number) issued by the United States has a base 10 day waiting period while it sits in a register. The 10 days allows for the public to comment on your potential operating authority. After the 10 days the FMCSA looks to see you have fulfilled your obligations. Do you have a BOC-3 on file? Do you have active insurance on file? ACTIVE insurance. What does this mean? It means insurance that is up and running. Not pending due to a future start date.
Here is an example:
You apply for your MC number on the 1st of the month. You have a 10 day waiting period which takes you to the 14th of the month (remember 10 business days). Your insurance company filed proof of insurance on the 1st of the month BUT it does not become active until the 27th. The FMSCA won’t activate your operating authority until after the 27th because that is when your insurance actually becomes valid. It is common for the FMCSA to take an additional day or two to release your new active operating authority.
So how long does it takes for an operating authority?
About 10 days. Some service providers will say “I can get you a DOT and MC number in less then 24 hours,” which is true but that is NOT your operating authority, it’s only the start of the process.
So figuring out how your going to structure your business and investing time into looking at and firming up insurance is two crucial steps in getting your new operation up and running as swiftly as possible. Without out a doubt, in my experience it’s always the insurance aspect that delays operating authorities most often. We will look at other aspects of obtaining Operating Authorities in future posts.
As always we welcome questions and comments regarding this or any other subject relating to trucking.