Owner Operators - Owner Operator REXpert

I am a Licensed Insurance Agent and retired Interstate Commerce Commission (ICC) Investigator with more than 49 years in transportation. For the past 16 years I have been a transportation consultant assisting those who would like to get their own motor carrier or broker authority. Send me your questions and I will use my expertise and knowledge to answer them.

Q Where do I find the exempt commodities? And, if I am exempt, do I need to obtain an MC number or USDOT number?
A You can find the exempt commodities by typing "Administrative Ruling 119" in the Google search field. You may not need an MC number, but you will need a USDOT number if you are over 10,000 GVW and hauling only exempt commodities. Also, if you are hauling only within the state, you may need to apply for the intrastate authority.

Q If you are in a contract as a sub-hauler, and the company writes on each invoice how much the fuel surcharge is and per diem, does that company have to pass on the full amount of that money or can they take out their percentage of the fuel surcharge and per diem?
A You are only entitled to receive the amount of money that is in your lease agreement and nothing more. What does your contract say about "fuel surcharge" and "per diem"? If your lease agreement says you are to receive a percentage of the revenue, then you are certainly entitled to receive the full percentage of everything the carrier collects. You should take time to read your lease agreement and be ready to talk to your carrier about any possible changes.

Q Exactly what is a fuel surcharge and are truck drivers entitled to receive it?
A Actually, there is no regulation on fuel surcharge today. Fuel surcharge began about 25 years ago and it was only for common carriers. It was not designed for contract carriers or brokers. Common carrier had to ONLY charge the rates contained in their tariff. They could charge no more and they could charge no less. So, if the price of fuel increased, the common carrier needed to put a supplement in their tariff to offset the cost of the increase of fuel. This was then called a fuel surcharge. At the elimination of the Interstate Commerce Commission (ICC) January 1, 196l, tariffs were no longer required for common carriers. Today, the use of the fuel surcharge is used and misused to the discretion of everyone. The truck driver is ONLY entitled to what is contained in his/her lease agreement.

Q I have a broker's license and I now want to get my motor carrier's authority. Do I need to get my CDL first or buy my truck first?
A TIf you are going to drive the truck, then certainly you will need to get your CDL first. Many brokers today are obtaining motor carrier authority and do not intend to get their CDL nor do they intend to purchase a truck. Many insurance agents do not understand that you can be a motor carrier and not own any trucks. You are only going to get owner operators to lease to your motor carrier authority. Actually, when you try to obtain your insurance for your motor carrier company, you will need to insure something. My suggestion would be to insure your private vehicle and then when the first owner-operators lease to your authority, drop your private vehicle from the policy.

Q I am going to apply for my broker's license. I know I need a surety bond or trust fund in the amount of $10,000, but do I need contingency cargo insurance?
A As far as the regulations are concerned, there are no cargo insurance filings to be made to the FMCSA. However, some shippers and carriers require you to have the so called contingency car insurance. When you look at the loss and damage regulations, you will note that only common carriers are required to have cargo insurance. Contract carriers and brokers have been omitted from the loss and damage regulations as this was left for negotiation with shippers as to how much cargo insurance to have based upon the needs of the shippers. However, brokers never take possession of the freight and subsequently should never be held responsible for any loss and damage, but some shippers will not do business with the broker unless the broker has the amount of contingency cargo insurance that the shipper requires. Contact me personally for your insurance needs.

Q Where do I find a good broker school? And, do I need to go to a broker school?
A Never think about going to a broker school unless you know you can get a broker bond or trust fund in the amount of $10,000. If you find you cannot get the broker bond or trust fund, the most you can do is become an agent for a broker. Then you would be splitting any broker commission between you and the broker. Also remember that if in the future you decide to become a broker, all the clients you brought to the broker are the property of the broker. You would then have to start over with your own client base. To learn brokering, you might want to download my free transportation e-book. The e-book has most of the commonly asked questions plus so much more. To download the e-book go to www.evilsizor.info/get.htm. If you are in transportation today, you probably know more about brokering than you might give yourself credit for. My e-book should fill in any gaps that you might have. You might also consider my online course with the University of Arkansas. The information can be found at www.evilsizor.info.

Q What is the cost of getting my own authority if I do it myself? And what might be an advantage if I hired someone to get my authority for me.
A To get one (1) authority the filing fee is $300. So the filing fee for "contract" carrier is $300. If you wish to add "common" carrier to the same application, the filing will now be $600. Also, if you wish to add "broker" to the same application, the filing fee will now be $900. There is a separate filing fee for "each" authority you want to apply for. The advantage of hiring someone to get the authority for you is, they can take care of the Process Agents (BOC-3); and they can obtain a copy of your authority on the date it is granted, thereby saving you about one week's time that it takes the FMCSA to mail you a copy. Also, the right transportation consultant office can help you with any state permits you will need and help you find an insurance agent that can handle all your needs. Some insurance agents only handle the liability insurance and you have to look elsewhere for your cargo insurance. The right transportation consultant can get you up and running in 20 days.

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Ask Rex...

Rex Evilsizor & Associates specializes in filing motor carrier authorities (both freight and passenger) with the Federal Highway Administration. Rex is a retired ICC investigator (Special Agent) and Licensed Insurance Agent with more than 49 years of transportation experience.

Due to the amount of questions we receive, we are unable to answer all of them individually. We will answer as many as possible in this column.

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