Hot Shot Trucking Startup Guide

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What Is Hot Shot Trucking?

When shippers and brokers have relatively small loads that need to be delivered quickly, they call upon the services of hot shot truckers. These drivers and operators specialize in delivering time-sensitive, project-critical loads like agricultural equipment, construction equipment and materials, heavy machinery, and more. Hot shot drivers typically operate super-duty pickups with trailers rather than heavy-duty, Class 8 semis.

When done right, hot shot trucking can be a lucrative business. You can choose to become an owner-operator — meaning that you own and operate a hot shot business under your own MC number — or you can lease on with another company. In this guide, I will walk you through the pros and cons of the business, how to get started, and a few insider tips for how to get ahead.

The Pros and Cons of Hot Shot Trucking

Hot shot trucking is often the starting point for many drivers. As insurance requirements become more and more strict, the Federal Motor Carrier Safety Administration (FMCSA) is trying to steer new drivers away from earning their commercial driver’s license (CDL) and then immediately buying a semi truck — a career move that often leads to failure.

Instead, the more strategic move is to build up driving experience on a hot shot truck while your CDL matures, that way if you decide to make the jump to a semi, you’ll have a much easier time getting qualified for insurance. Plus, the regulations and requirements for operating a hot shot and semi business largely overlap, so cutting your teeth in the hot shot world is the perfect preparation for making the leap to transporting larger freight (if that’s the career path you’re interested in).

Another significant advantage of hot shot trucking is that there’s a lower barrier to entry and lower operational costs. Truck payments, for example, can reach as high as $2,500-3,000 a month on Class 8 semis, but are often closer to $1,000 a month for pickups. Plus, smaller vehicles generally offer better fuel economy. This typically allows hot shot truckers to make as much as — if not more than — Class 8 drivers. These cost savings are often passed onto customers, as well. Because payments are higher for heavy-duty trucks like semis, those drivers and carriers naturally have to charge more for less than truckload (LTL) and partial freight so that the loads are worth their while.

However, because hot shot trucking is much easier to get into, you’ll be up against some pretty fierce and consistent competition. That’s why it’s important for owner-operators to really focus on quality of service to prevent competitors from underbidding.

How Do You Start a Hot Shot Trucking Business?

There are two primary disqualifiers in the trucking business: health and insurance. So before even opening your own LLC, it’s important to make sure that you won’t be blindsided by unexpected sky-high premiums or setbacks.

Anyone who drives a commercial motor vehicle, including hotshot drivers, must receive their Department of Transportation (DOT) medical card, so your first step is to schedule a physical examination from a medical examiner on the FMCSA-approved national registry. These examinations will cover basic things like your medical history and vision, hearing, and urine tests, and typically cost around $120. If you’re healthy enough, you’ll get your DOT medical certificate, which lets you operate commercial vehicles for 24 months. After 24 months, you will need to undergo another physical exam to renew your certificate.

The second thing I recommend is to get a commercial insurance test quote from Progressive, which only requires your Vehicle Identification Number (VIN). High insurance premiums can quickly eat into your profit margins, so having a ballpark quote is a useful way of determining whether it makes more sense to open your own LLC (i.e.. become an owner operator) or to lease on with another company. Insurance quotes are based on your driving experience and history — so if you just received your CDL or have a bad driving record, it’s likely that your insurance premiums will be through the roof, which makes leasing on the most viable path forward. Leasing on is often a good choice for new drivers, as it can help you get your footing more cost-effectively. But if you have more experience and your insurance premiums look good, you may want to go ahead with starting your LLC.

The next step is to open a business through your state’s website. They’ll give you an Employer Identification Number (EIN), which allows you to open a business bank account and receive payments from customers. Then you apply with FMCSA for a motor carrier or MC number (operating authority). This lets you cross state lines, and designate legal BOC-3 agents, who represent you in states you operate.

However, one of the biggest requirements for activating your MC number is commercial insurance. Most brokers require $1 million liability and $100,000 cargo insurance policies, which — depending on your experience, your age, and state of residence — could cost between $1,000 and $2,500 a month.

The process will take weeks, so it’s critical that your applications are filled-out properly and free of errors the first time around. That’s where the experts at DAT Authority can help — they specialize in handling paperwork for authority, federal and state permits, and state DOT regulations for hot shot trucks.

All told, hot shot trucking start up costs can easily reach the $15,000-30,000 range, but this will vary based on personal circumstances. If you already own a truck, for example, then you just need a trailer and the various legal fees. However, if you don’t already have either a truck or trailer, you’re now responsible for a $5,000 down payment on your truck, $10,000-15,000 for a trailer, and $3,000 for insurance down payments, on top of the ballpark $1,000 needed for your LLC and the other fees listed above — all of which can quickly drive up your startup costs.

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