Everyone has to get somewhere. The world doesn't get things done by staying put, and that's exactly why we rely on the transportation industry. The U.S. logistics and transportation industry topped $1.4 trillion in 2016. We see this reliance every day when we hail a ride from our cellphones, receive a package in the mail from Amazon or catch the bus home from school.
Starting a transportation company can be lucrative, but it can also be difficult. There are so many different rules, regulations, permits and licenses – especially if you're traveling by air or dealing with hazardous chemicals. It may seem overwhelming at first, but it doesn't have to be. It all comes down to your business model.
Are You Going By Land, Air Or Sea?
In the modern world, we've got a whole lot of ways to transport stuff: there are airplanes, boats and cars. We've even got pedicabs and bikes. Before you launch your business, you're going to want to decide if you're transporting by air, land or sea (hint: a ground transport business is a lot easier to get off the ground than an air transport business).
- Air Transportation
Air transportation is one of the most difficult businesses to start because there are so many rules and regulations. Those who jump into this field might be hobbyists – licensed pilots who want to charter their own flights. You can either transport people or goods, but you're going to have to get a hefty amount of licensing and startup costs can be astronomical. Planes and helicopters aren't cheap.
- Boat Transportation
Boating is actually a pretty lucrative, seasonal transport business. People who go into this field can charter off their yachts for vacation getaways, take tourists on speedboat tours of scenic areas or even carry goods from state to state or country to country. It all depends: yachts are a totally different beast than sailboats or speedboats. Maritime shipping can rake in millions year round, but importing and exporting foreign goods has a lot of regulations and a lot of startup costs. It also requires a great deal of knowledge about customs.
If you're looking at the logistics of the business, speedboat transportation probably has the smallest startup costs of the bunch and the fewest regulations, but it won't be worth it if you're not operating in a maritime area.
- Ground Transportation
Starting a transportation company doesn't have to have cost millions. Sometimes, all you need is a single vehicle to launch your truck-for-hire business. For this reason, diving into the world of ground transportation is often the easiest, simplest place to start. For the purposes of this article, we're going to assume you're jumping into ground transportation, but the advice can also be applied to air and sea transport. You'll just have different licensing, insurance and equipment requirements.
Decide What You're Transporting
Starting a transport business could basically mean anything_._ There are so many kinds of companies that cart off food, people and even livestock to different locations across the globe. Each type of business has a different set of requirements, whether that’s specific insurance coverages or even going back to school and getting your commercial drivers license (CDL). Once you decide how you're going to transport things, you need to decide what you're going to transport. Consider the following:
- Taxi or Limousine Service
The goal of a taxi or limousine service is to get people from point A to point B. Starting your own taxi business can be as easy as signing up for Uber or Lyft (remember, these drivers are independent contractors meaning they work when and where they want). Uber drivers can make around $11 per hour in most of the country, but the earnings can be even larger in metro areas like New York City.
Limousines, on the other hand, are more of a specialty service. Cars are expected to be absolutely luxurious (as people generally use limos for very special occasions). You can hire a fleet of limo drivers or buy your own limousine and operate independently. This type of service is totally scalable. Start with yourself and add cars and employees as you grow.
Trucking is an absolutely massive industry, with revenue topping $700 billion. If you want to launch a trucking business, you'll likely be choosing from one or two options: Sub-contract driving or privately owned driving.
In the former, your drivers are independent contractors who maintain their vehicles on their own. They are in charge of their own insurance, but command higher prices.
With the latter, you own all the trucks and are responsible for the maintenance and insurance. Your truckers are employees, and though the startup costs are higher, you stand to make more in the long run.
- Moving Van Business
A moving van business has minimal startup costs. You won't need a commercial driver's license, you pretty much just need a moving van and some insurance. Of course, competition in this field is high as you'll be competing with hobbyist van owners looking to grab a quick buck with some extra work.
- Livestock transportation
Livestock transportation is actually one of the easier transport businesses to get into because you don't need a special license to drive as long as your vehicle isn't commercial sized. Of course, you'll need to gain experience in actually safely transporting animals and you'll need to familiarize yourself with immunizations and transporting livestock across state lines. Each state has different rules, and you'll probably have to take a health exam.
- Specialty Transportation
Someone has to transport the things most of us can't transport – whether that's frozen goods, absurdly large cargo loads or even live, refrigerated organs. The requirements of this vary state-to-state. You don't want to take chances with someone's second liver!
- Senior Transportation
When senior citizens get rid of their driver's licenses, they need someone to drive them around. Not only does this type of business do a great, necessary service, but you can also get started with the help of grant funds, corporate sponsors and government subsidies.
Purchase Your Vehicles And/Or Hire Staff
After you decide on your business model, it's time to purchase your vehicle or fleet of vehicles. Of course, if you're starting a transportation company, you may opt to hire independent contractors who already have their own vehicles. This saves you a lot of cash upfront and is common with many truck-for-hire businesses.
Learn The Zoning Laws
Zoning might be a permanent snag in starting a transportation company or truck-for-hire business. You might not be able to legally operate out of your home depending on what your needs are. For example: you can probably transport horses and operate a single pickup truck and trailer in a rural, residential area (say, Buffalo, New York) because agricultural businesses are typically allowed.
This might not be the case for a heavily populated area like Manhattan, where large vehicles would disrupt neighbors. You may legally need to rent a garage space, instead.
A lot of factors go into this, including vehicle weight (some roads just don't work with heavier vehicles) and disruption (no neighbor in a posh suburb is going to love a giant 15-wheeler permanently parked next to them). You'll have to check with your local zoning board.
Consider Your Commercial Driver's License
To start with Uber or Lyft, you'll only need a driver's license, but it only gets more complicated from there. Remember the great taxi medallion argument of New York City when Uber moved in? That stuff gets complicated. If you're driving a large vehicle, you'll probably need a commercial driver's license (CDL).
Commercial driver's licenses do vary. To get a basic CDL, you'll have to take a course that runs about 40 hours a week for seven weeks. Other classes of CDL likely require longer courses. For example, you'll need to pass a HAZMAT exam if you're planning on transporting dangerous materials like flammable or corrosive chemicals. A passenger CDL, like you'd get if you want to run bus tours, also requires different classes.
Comply With State And Federal Rules
This gets a little tricky if you're going to cross state lines because regulations and licensing varies from state to state. Interstate transportation is subject to both federal law and the laws of the origin state, the states you drive through and your final destination. The Department of Transportation (DOT) should be able to help you with specific requirements.
In most cases, you'll need proof of insurance and intrastate trip permits (these are called "bingo stamps" in the industry). In the event you're driving a tractor, you'll also probably need proof that you paid the Heavy Vehicle Use Tax (IRS Form 2290). Your drivers will also be subject to strict hourly rules. For example, truckers are usually allowed 14 consecutive hours of driving, but Uber drivers must have a six-hour break for every 12 hours of driving.
Since transportation laws vary so much state-to-state, you might want to consult with a mentor or talk to city and town officials who know their stuff.
Comply With City Ordinances
Regulations aren't just limited to state and federal licensing. Every city has its own ordinances, which can quickly put taxi services in trouble. Portland has 74 different regulations for vehicle-for-hire businesses which range from pedicab permits to horse-drawn carriages.
New York City also recently put a cap on the number of ride-hailing services allowed to operate at any given time. In 2018, they flat-out paused new vehicle licenses for 12 months, which anyone who lives in New York hopes will help cut down on the traffic these ride hail services caused.
Learn The Environmental Laws
Large vehicles emit more CO2 than your average tiny car. For this reason, the Environmental Protection Agency (EPA) has a lot of rules related to air quality, emissions and transport. For example, the EPA has long had an endeavor to reduce the amount of time truckers spend idling. They also have a clean diesel program that offers grants to projects that help reduce harmful emissions in diesel engines. You may be able to use this to get a rebate for replacing an older engine in one of your vehicles.
Get The Right Insurance
The insurance a transportation company carries depends on the business model. If you're operating a moving van, you'll want general liability and auto insurance. You'll probably also want equipment breakdown insurance and non-trucking liability insurance. In other cases, you might want inland marine insurance, broadened pollution coverage and more. It's best to consult with a professional insurance agent to make sure you're fully covered for whatever issues might come your way.
Launch A Maintenance Plan
Maintenance is the hallmark of starting a transportation company. You're only as good as your safety record, and if you're toting around passengers in vehicles that constantly break down or are prone to malfunctions and accidents, you're going to have a problem. Decide how you're going to maintain your fleet: will you hire a garage? Will you do it yourself? How often will you check each vehicle?
Remember: never skimp out on safety features. Don't miss changing tires to save a couple of bucks. Don't skip oil changes. Only work with certified mechanics.
Get Yourself Out There
Once you've got your vehicles in order, obtained all the proper permits and licenses and have a solid insurance plan, it's time to market yourself. Get a website, start advertising on Facebook, and try placing ads in local papers.
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- Entrepreneur: The Legal ABCs of Running a Transportation Service
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