So, you’re ready to dive into the trucking industry head-first as a business owner. Congratulations on making this important decision!
Hopefully, you’ve already gotten together a business plan, some start-up capital and registered your company. If not, no worries. We have lots of articles on all those topics on our blog and the Bobtail Help Desk on YouTube.
In this article, we’ll explain what it takes to get your USDOT number and activate an operating authority. But first, let’s talk about the sneaky difference between interstate and. intrastate commerce.
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Interstate Vs. Intrastate
It would seem simple enough: interstate is when a carrier crosses state lines and intrastate is when a carrier stays in their home state, right? Well, not exactly.
The difference between interstate and intrastate has more to do with the cargo than with the carrier. Delivering a load that has originated in one state and is destined for another is participating in interstate commerce, even if you as the carrier never crossed a state border.
For example, if you bring a load from Detroit, MI to Kalamazoo, MI and then another carrier takes it to Chicago, IL, you are participating in interstate commerce even though you didn’t cross state lines from Detroit to Kalamazoo.
This is why we recommend getting an operating authority even if you plan to run only intrastate routes. This will ensure that you can haul cargo that came from or is destined for another state without getting in trouble.
What is a USDOT Number?
A USDOT number is a carrier’s identifier for recording safety information, compliance reviews, investigations, and inspections by the US Department of Transportation (USDOT).
Nearly all carriers need a USDOT number. At the federal level, it’s only really required if you’re involved in interstate commerce. However, most states require a USDOT number even if you plan to run only within your home state.
To register for your USDOT number, you need to use the Unified Registration System. Getting a USDOT number is free but you can also apply for your operating authority (MC number) at the same time, which costs $300.
What is an Operating Authority (MC Number)?
Your operating authority determines the type of operation your company can run and the type of cargo you can haul.
You do not need an operating authority if you are a…
- Private carrier (hauling your own cargo)
- Carrier that operates exclusively within a federally designated “commercial sone” exempt from interstate authority (like the Washington DC metropolitan area).
If you’re still not sure whether or not you need an MC number, read more on the FMCSA’s website.
To apply for your operating authority, you’ll use the same process as the USDOT number on the FMCSA’s Unified Registration System. Processing costs a one-time nonrefundable fee of $300.
How to use the Unified Registration System
First, go to https://portal.fmcsa.dot.gov/UrsRegistrationWizard/.
Select “New Applicant” and then “Next”. Follow the prompts, which are pretty straightforward. Here’s the information you will need to provide:
- Contact information
- Business legal name
- DBA name, if applicable
- EIN (or SSN if you’re a sole proprietor)
- Type of property (or cargo) you will haul (Most carriers will transport “Other Non-Hazardous Freight”.)
- Interstate vs. intrastate commerce
- Operation classification (Typically, you’ll select “General Freight”, “Fresh Produce”, “Meat”, “Refrigerated Food”, and/or “Beverages”, though others may apply to you.)
- Number, weight, and ownership of vehicles
- Whether or not you’re operating in Canada or Mexico
The application will also prompt you to create an account on the FMCSA website. This will allow you to access additional registrations later on. You’ll then provide payment information, if applicable, and submit.
The USDOT number will be emitted immediately and the MC number will take a couple of days. There is then a 21-day protesting period as well as a 90-day period in which you need to complete a few more tasks to activate your authority.
What’s needed to activate your operating authority
Even after you pay the $300 fee and receive your USDOT and MC numbers, your operating authority is not yet active. If you do not activate your authority within 90 days, your application will be rescinded and you will need to start all over again. So, make sure you do it right the first time!
You need two things to activate your authority: insurance and a BOC-3 filing.
The federally-mandated minimum coverage is $750 thousand in liability insurance. However, brokers are very unlikely to work with you if you do not have at least $1M in liability insurance coverage and $150 thousand in cargo insurance. If you’re operating a reefer, you’ll also need to get reefer breakdown insurance. Find more on insurance in this article.
A BOC-3 filing designates a process agent in every state where you’re authorized to operate to accept legal documents on your behalf. To do your BOC-3 filing, go to the FMCSA’s list of process agents, select one, and contact them. We recommend including all states in your BOC-3 filing so you’re not limited to running in just one region.
The cost of your BOC-3 filing depends on your processing agent, usually between $100 and $300.
Additional Requirements Before Hitting The Road
Now you know what you need to activate your operating authority, but you’re not done! Both interstate and intrastate carriers are required to have additional licenses and permits, depending on their situation.
Once you’re ready to get on the road, Bobtail can help you get paid the same day you deliver a load. Sign up to learn more about our hassle-free factoring service here or call us at 410-204-2084.