Regulations

What is a Fuel Surcharge In The Trucking Industry?

The trucking industry keeps the world moving, delivering everything from groceries to construction materials. But there’s one essential (and expensive) resource that trucking relies heavily on: fuel.

Diesel powers the trucks that connect businesses and consumers, but fuel prices are anything but predictable. A sudden spike at the pump can disrupt budgets and eat into your profits, creating serious challenges for carriers and owner-operators.

That’s where fuel surcharges come in. A fuel surcharge offers a system that shares the burden of fluctuating fuel costs. Basically, instead of fuel increases cutting into your profits, a fuel surcharge protects your business when fuel costs rise.

Understanding how these surcharges work is essential for staying profitable and fair, whether you’re a shipper, a carrier, or an independent trucker. We’ll cover everything you need to know in the guide below.

What is a Fuel Surcharge?

A fuel surcharge in the trucking industry is an extra fee added to freight bills that helps carriers offset the fluctuating costs of diesel fuel.

Adding a fuel surcharge became common practice as fuel prices had big ups and downs, making it difficult for trucking companies to maintain stable operating costs. As a result, fuel surcharges became widely adopted, allowing carriers to adjust their rates based on fuel price changes, which often change weekly.

While there’s no standard formula for calculating fuel surcharges, each carrier typically uses their own method to help them manage the impact of volatile fuel expenses.

The Purpose of a Fuel Surcharge

A fuel surcharge helps trucking companies and owner-operators handle the unpredictable changes in diesel fuel prices. It protects carriers from losing money when fuel costs rise, making their operating costs more stable.

This extra fee ensures carriers can keep its business running smoothly without being forced to absorb sudden fuel price spikes. At the same time, it creates a fair system for both carriers and clients by keeping freight pricing transparent and tied to real fuel costs.

Fuel surcharges don’t cover all fuel expenses, but they make the increases more manageable.

How Does the Fuel Surcharge Work?

Freight bills include fuel surcharges to help trucking companies handle changing fuel prices.

Carriers and shippers often agree on surcharge terms in their contracts, using a baseline diesel price. This is typically based on weekly reports from the US Energy Information Administration (EIA).

Surcharge rates go up or down depending on how fuel prices change. For contract freight, these fees are consistent and agreed upon in advance. In spot freight markets, surcharges are adjusted more flexibly to match the current fuel costs.

With a system like this, you maintain fair pricing for both parties while helping carriers manage fuel expenses without constant renegotiation.

How Does Fuel Surcharge Work for Owner-Operators?

As an owner-operator, dealing with fluctuating fuel prices can be a real pain in managing your business operating costs.

Fuel surcharges help owner-operators manage this by compensating for the extra cost of diesel. So, when fuel prices fluctuate, the fuel surcharge ensures the price hike won’t eat into your profits.

These surcharges are typically based on a per-mile rate that adjusts as fuel prices go up or down. While fuel surcharges can sometimes provide extra earnings, they depend heavily on fuel efficiency and proper calculation.

To keep it fair, owner-operators should include clear fuel surcharge terms in their contracts and base calculations on reliable data, like the EIA’s fuel price reports.

Calculating Fuel Surcharge Fees

We calculate fuel surcharges using key variables to fairly offset fuel price fluctuations. Here’s how they work:

The base price of fuel: The base price of fuel is a predetermined “baseline” cost used as a reference. This is an agreed-upon threshold, which is based on national averages like the US Department of Energy’s weekly diesel price reports. If the current price rises above this baseline, it triggers a surcharge.

The truck’s fuel economy: Miles per gallon (MPG) determines how much fuel a truck consumes. A loaded semi-truck averages about 6 MPG, so better fuel efficiency lowers the per-mile cost of fuel. This efficiency directly impacts the surcharge rate.
The fuel price change: Fuel surcharges account for the difference between the base price and the current fuel cost. Regular updates from indexes like the DOE ensure accurate tracking.

How is a Fuel Surcharge Calculated?

While the exact calculation method can change for each carrier, here’s how it’s typically done.

Per Mile Surcharge

Subtract the base fuel price from the current fuel price to find the price difference. Divide this difference by the truck’s MPG to get the cost per mile.

Multiply the cost per mile by the total miles traveled to determine the surcharge amount.

Percentage of Load Price

Some carriers use a percentage surcharge based on the load’s price. The rate increases as fuel prices rise above the base price, using a predefined table.

For example, a surcharge might start at 10.25% and rise to 10.5% as fuel costs increase.

Example of Calculating Fuel Surcharge

Here’s an example of calculating a fuel surcharge. Say the base fuel price is $3.50 per gallon, the current fuel price is $4.00 per gallon, and the truck gets 6 MPG.

First, find the price difference: $4.00 – $3.50 = $0.50.

Next, divide by the truck’s MPG: $0.50 ÷ 6 = $0.083 per mile.

If the trip covers 1,000 miles, the surcharge is $0.083 × 1,000 = $83.

Now, if the truck’s MPG drops to 5, the per-mile cost increases to $0.10, making the surcharge $100 for the same trip.

Small changes in fuel price or MPG can significantly affect these costs, so accurate calculations are essential.

National Average for Fuel Surcharge

The national average for fuel surcharge is generally determined using the US Energy Information Administration’s (EIA) weekly updates on diesel fuel prices.

Truckers and businesses use this average as a benchmark to set fair and transparent fuel surcharge rates.

This data keeps surcharges accurate, reflecting real market conditions for fair and transparent fuel surcharge calculations.

Where to Find a Current Fuel Surcharge Table

To find a current fuel surcharge table, start with the EIA’s fuel price reports, which provide up-to-date national and regional diesel price averages. There’s also data on alternative fuels on the US Department of Energy’s website.

Many trucking resources, like software tools for truck drivers, offer tools and calculators for tracking and calculating surcharges. Fuel monitoring apps also simplify tracking fuel prices and surcharge adjustments, making it easier for truckers and businesses to stay informed.

Fuel Surcharge Laws and Regulations

Fuel surcharge regulations vary by region and country, but they generally focus on transparency and fairness in pricing.

In many areas, laws require that fuel surcharges are clearly outlined in contracts and adjusted based on verifiable data, such as national fuel price indexes. Some regions may have specific rules about how and when these surcharges can be applied.

It’s important for businesses and truckers to understand and comply with these laws to avoid legal issues and maintain fair pricing for both parties. Staying informed about local regulations helps prevent disputes and keeps the trust in business relationships.

Common Challenges and Pitfalls

While applying a fuel surcharge is important, getting it right can be tricky. Here are three common challenges truckers face when doing this.

Volatility in Fuel Prices

Problem: Sudden spikes or drops in fuel prices can disrupt budgeting and make it hard to predict costs. This is especially challenging for smaller carriers and owner-operators.
Solution: Use reliable tools to track fluctuations. Regularly review and adjust your surcharge agreements to keep them aligned with current market conditions.

Negotiation Disputes

Problem: Disagreements can arise between shippers and carriers over the baseline fuel price or the formula used for calculating surcharges. This can delay payments or strain business relationships.

Solution: Clearly define baseline prices, your fuel surcharge methodologies, and adjustment triggers in your contracts. Referencing standard industry practices helps prevent disputes and ensures consistency.

Owner-Operator Margins

Problem: Owner-operators may not always receive their fair share of the surcharge, reducing their ability to cover rising fuel costs. This can hurt their profitability.

Solution: Advocate for transparency in contracts to ensure surcharges are passed down appropriately. Track fuel expenses rigorously and use tools to verify calculations and fairness in payments.

Final Thoughts

Fuel surcharges are essential for managing the ups and downs of diesel prices in the trucking industry. By understanding how they work, you can protect your business from unexpected costs while still offering fair pricing to your customers.

Whether you’re a carrier, shipper, or owner-operator, staying informed about surcharges and fuel price trends is key to staying competitive.

Are you investing in a new commercial vehicle? Then get in touch with us at Mission Financial Services. We offer flexible, accessible financing for all, making it easy to purchase your dream semi-truck and become an owner-operator or expand your fleet.

How To Get Your MC Authority

If you’re an owner-operator, you’ll know that having all the right licenses and documents is essential for smooth business operations. If you run an interstate trucking business, you’ll need to add MC authority to your list of documentation.

This is an important legal requirement, and it can help make your life a lot easier when operating interstate.

While almost all interstate carriers need MC authority, it’s essential to understand the different types of authority that exist and how to apply for the correct one. We cover everything you need to know about this in the guide below.

What is MC Authority?

MC Authority, or Motor Carrier Authority, is a crucial component for companies operating within the transportation industry, specifically those involved in interstate commerce.

It is a legal authorization granted by the Federal Motor Carrier Safety Administration (FMCSA), a division of the U.S. Department of Transportation (DOT), that permits businesses to transport goods or passengers across state lines for compensation.

This authorization is mandatory for any for-hire carrier engaging in interstate commerce, meaning that if a company wants to transport goods or passengers from one state to another, it must obtain an MC number.

Getting an MC authority involves registering with the FMCSA and meeting specific requirements, including having the right insurance coverage.

Once approved, you get a unique MC number, which your company uses to operate legally in interstate commerce.

As a trucking business, it’s easy to fall under the category that requires MC authority. If you ever cross state lines on delivery routes, then applying for MC authority is important.

Types of Authority

Motor carrier authority falls under three main categories. Here’s a breakdown of each type:

Motor Carrier of Property (Except household goods): This authority lets companies transport general freight, like raw materials or finished products, but not household items. If you haul anything other than household goods for hire, you need this.

Motor Carrier of Household Goods: This is for moving companies that transport household items like furniture or personal belongings across state lines. If you’re in the moving business, this is the authority you need.

Specialized MC Authorities: These are for companies that transport specific goods that need special handling, like hazardous materials, passengers, or animals. For example, a company hauling chemicals needs HazMat authority, and a bus service needs Passenger Carrier authority.

Having the right authority is essential to operate legally, avoid penalties, and ensure your business runs smoothly.

Who Needs MC Trucking Authority (And Who is Exempt)

Quite simply, you need MC trucking authority if you transport goods or passengers for hire across state lines or within a state as part of interstate commerce.

If you’re a for-hire carrier moving freight like machinery, electronics, or other commercial goods, you need this authority.

However, some carriers are exempt. If you only haul exempt commodities like unprocessed agricultural products, and certain food items, or are strictly an intrastate carrier (operating only within one state), you might not need MC authority.

Private carriers hauling their own goods or nonprofit organizations transporting people might also be exempt.

If you operate a trucking business, then you need to make sure you have the right type of MC authority to operate legally. If you’re unsure, it’s best to check the specific regulations for your type of cargo and operations.

Steps for Getting MC Authority

Getting MC authority is a relatively straightforward process no matter what state you’re based in.

Step 1: Create a Business Entity

You’ll need to establish your business as a legal entity, such as an LLC or a corporation,to get granted MC authority.

A formal business structure is required to obtain your MC authority and ensure you comply with state and federal regulations.

Consult with a legal or business advisor to help you choose the right business structure for your trucking business.

Step 2: Apply for Your USDOT and MC Number

Once your business entity is set up, you can apply for a USDOT number through the FMCSA. This is the number used to track your company’s safety record and compliance with regulations.

Along with the USDOT number, you’ll need to apply for your MC number. Both numbers are critical for legally operating your trucking business.

Step 3: File BOC-3 Paperwork with a Legal Process Agent

After securing your USDOT and MC numbers, you’ll need to file a BOC-3 form. This form designates a legal process agent in each state where you operate.

The agent is responsible for receiving legal documents on your behalf, such as court notices or legal summons. Having a legal process agent is mandatory for all motor carriers and ensures that you’re properly represented in legal matters.

While it’s a legal requirement, it will also make your life running an interstate trucking business easier if any issues arise.

Step 4: File Your Unified Carrier Registration (UCR) Permit

The Unified Carrier Registration (UCR) system is a federal requirement for any carriers operating across state lines.

After you’ve filed your BOC-3, you’ll need to register under the UCR system. You need this registration to prove that you’re compliant with state regulations and that you’ve paid the required fees for operating in multiple states.

Failure to register can result in penalties and fines, so it’s important to complete this step as soon as you can.

Step 5: Pay the Heavy Vehicle Use Tax (HVUT)

If your vehicle has a gross weight of 55,000 pounds or more, you’re required to pay the Heavy Vehicle Use Tax (HVUT) to the IRS. This annual tax helps fund highway maintenance and construction.

Paying the HVUT is a legal obligation, and failure to do so can result in significant fines. File your payment on time each year to avoid penalties and to keep your operations running smoothly.

Step 6: Register for the International Registration Plan (IRP)

The International Registration Plan (IRP) allows you to register your vehicle for operation in multiple states and Canadian provinces with a single registration.

This plan is essential for interstate travel, as it ensures your vehicle is legally registered in all the regions where you plan to operate.

The IRP also helps distribute registration fees based on the distance traveled in each jurisdiction, simplifying the process for carriers operating across borders.

Step 7: Set Up an International Fuel Tax Agreement (IFTA) Account

To streamline fuel tax reporting, set up an account under the International Fuel Tax Agreement (IFTA). This agreement simplifies how you report and pay fuel taxes for vehicles operating in multiple states.

With an IFTA account, you’ll file a single quarterly tax report instead of dealing with multiple fuel tax forms. This saves you plenty of time and helps ensure you remain compliant with fuel tax regulations across all the different jurisdictions you operate.

Step 8: Enroll in a Drug and Alcohol Testing Program

If you have drivers operating under your authority, it’s mandatory to enroll in a DOT-compliant drug and alcohol testing program.

This program ensures that all drivers are regularly tested, helping to maintain safety on the road.

The DOT requires pre-employment, random, post-accident, and return-to-duty testing for all drivers. Enrolling in a reputable program is important to staying compliant with federal regulations and promoting a safe driving environment.

Benefits Of Having Trucking Authority

Having your own trucking authority offers some clear benefits, giving you full control over your business operations.

With trucking authority, you can choose your own loads, set your own rates, and negotiate directly with shippers. All of this can lead to higher profits.

You’re not dependent on a third party to find work for you, which means more flexibility and independence in how you run your business.

Holding your own authority can also open doors to more opportunities for growth, allowing you to expand your fleet, take on larger contracts, and establish long-term relationships with clients. This is important for a more stable and prosperous business in the long run.

Conclusion

When operating a trucking business across state lines, there are several essential considerations to keep in mind. One of the most critical is obtaining MC authority, as operating without it could lead to serious consequences.

If you’re busy planning your trucking business, then the right documentation may be essential, but the first and most important step is acquiring the right vehicle. Get in touch with us at Mission Financial Services to discover the easiest way to access commercial truck funding.

Dashcam Privacy Concerns For Semi Truck Drivers

Dashcam privacy concerns for semi truck drivers is a hotly debated topic in the trucking industry. Most fleet managers support dash cams because of their benefits, such as enhancing driver safety and providing insurance advantages.

However, many semi-truck drivers oppose driver-facing cameras, primarily because of privacy concerns. This guide delves into the legal aspects of this debate.

In this article we discuss the legislation regarding dash cameras in semi-trucks, address drivers’ privacy concerns, and examine the pros and cons of using these cameras. We also provide tips for fleet managers on how to address these concerns and comply with relevant laws when implementing driver-facing cameras in their fleet operations.

Are There Laws Against The Use Of Dash Cameras In Trucks?

Installing dash cams in semi-trucks is legal in nearly all states, as there are no specific laws prohibiting the practice. However, individuals have a right to privacy, and there are laws protecting against privacy invasion.

Most regulations regarding driver-facing dash cameras in the transportation industry aim to uphold drivers’ privacy rights and ensure safety. These regulations focus on how the cameras are installed and used.

Dash Cam Laws

Federal laws, like the Electronic Communications Privacy Act, prohibit using dashcams as tools for electronic surveillance and intercepting communications without consent. This means that trucking companies cannot install driver-facing dash cameras without getting a nod from their truck drivers.

Different jurisdictions have varying regulations regarding dashcams, particularly for audio recording. States with all-party consent laws are stricter than those with one-party consent laws.

For instance, in Delaware, everyone in the commercial vehicle, including customers, must consent to audio recording, which may limit driver-facing dash cameras to video only.

Another critical legal factor is the installation of dash cams, which must comply with Federal Motor Carrier Safety Administration (FMCSA) regulations. These regulations state that devices mounted on the windshield must not obstruct the driver’s view. The FMCSA specifies how and where to install these devices, but implementation varies by state.

Some states, like Washington, Nebraska, Montana, New Hampshire, and South Dakota, prohibit mounting dash cams on the windshield, offering alternative locations like the dashboard. Other states have specific size requirements for driver-facing cameras.

Trucking companies should review local laws before installing dash cams to ensure compliance and avoid legal issues.

Driver Privacy Concerns

Several truck drivers are against introducing dash cameras in semi-trucks for three main reasons:

1. Perceived Invasion Of Privacy

Over-the-road (OTR) commercial truck drivers spend more than half the year on the road. To them, their truck isn’t just a vehicle but a second home, and having driver-facing dash cameras constantly monitoring every move they make feels like an intrusion of their personal space.

2. Data Security And Misuse

Another privacy concern for most drivers is data security and misuse. As technology advances, the prevalence of cyber-attacks and data breaches continues to increase. Truckers worry that cyber criminals might access and misuse the volumes of data dash cameras collect, leading to privacy violations.

3. Performance Pressure And Job Loss Fear

Constant surveillance at work increases performance pressure and job loss fears among many drivers. They worry that the dash cameras subject them to nitpicking by fleet owners and other safety managers, and any mistakes the cameras capture might lead to disciplinary action or termination. Prolonged worry can cause stress and anxiety, decreasing truckers’ performance.

Also, some truck drivers interpret the installation of driver-facing cameras as mistrust from their trucking company. This demotivates them, leading to poor performance.

What Is The Purpose Of In-cabin Cameras?

In-cab cameras record the truck’s interior and driver’s actions. The information they offer is helpful for the following purposes:

Pros

Improving Driver Safety: Some dashcams provide a live feed of a trucker’s actions, allowing safety managers to offer immediate feedback and correct distracted driving and dangerous driving habits. Doing this helps prevent accidents and develops a safety culture within a trucking company.
Enhancing Driver Training: Driver-facing dash cams are reliable driver coaching aids. Fleet managers can review video footage of poor and safe driving habits to identify training gaps and create targeted training to improve drivers’ performance and safety records.
Speeding Up Claim Processing: Insurance companies favor fleets with driver-facing dash cams. They offer fast insurance claims processing because the cameras help build a poweful defense against fraudulent claims. Trucking companies using dash cams also qualify for reduced insurance rates because of decreased liability risks.
Settling Disputes: As video evidence, clear video footage from a dash camera is indispensable when settling disputes after road incidents. It can help establish the facts, leading to driver exoneration from wrongful blame. In doing so, trucking companies protect their reputation and avoid costly settlements.

Cons

Even though dash cameras have significant benefits in the trucking industry, they are not foolproof. A few major drawbacks of using these cameras include:

Technical issues: Dash cameras can fail to record because of technical glitches
Lack of context for certain behaviors: A driver-facing camera can capture a trucker’s behavior but fail to capture the external factors that led to the behavior.
Overreliance on technology: This can undermine the significance of driver intuition, which is essential for responding to changing road situations.

Addressing Driver Concerns

To install driver-facing dash cameras in commercial vehicles legally, fleet managers must address drivers’ concerns while complying with all privacy laws in their jurisdiction. Here are a few tips for alleviating the major truck driver concerns we discussed earlier:

Define your reasons for using dash cameras and ensure you communicate this clearly to your drivers. Is your goal safety improvements, leveraging insurance claims advantages, or aiding in accident investigations?
Inform your drivers about how the driver-facing camera in their truck will operate. Will it record only during specific events, like hard braking or lane departures, or continuously in real-time? Be transparent about the camera’s intended use. In nearly all states, it is a legal requirement for drivers to be informed about the cameras and to consent to their use before installation.
Establish clear guidelines on accessing dashcam footage, data handling, and storage. Who will gain access to the data? How long will the data be stored, and what process will you follow to delete footage once the storage period elapses? Robust data management policies will help alleviate drivers’ concerns about data security and misuse.
Assure drivers of their job security by clarifying that the driver-facing cameras aren’t for capturing their mistakes and penalizing them for every error so they don’t have to work under pressure. Or get stressed over their performance. It will help to create an understanding and compassionate work environment.

Final Thoughts

Most semi-truck drivers’ privacy concerns with dash cams focus on privacy and the safety of their data and jobs. As a fleet manager, you can leverage all the benefits of dash camera usage by respecting your drivers’ concerns, fostering open dialogue about the device’s use, and implementing strict policies to protect your driver’s data and privacy.

Remember to review and update your policies regularly to factor in any changes in state privacy laws so your policies remain effective. Also, ensure you seek your driver’s feedback on any changes and consider their input before making any updates. It helps promote transparency and build trust with drivers. Both are essential for integrating dash cameras into your fleet effectively.

For more practical insights on navigating the trucking industry, visit our blog. You can also reach out to us if you want to expand your fleet. We offer customized commercial vehicle loans for both new and used truck purchases

Start-Up Checklist For Owner Operators

If you’re looking at launching a career in trucking you may want a detailed startup checklist for truck owner-operators to help you start your trucking company on the right foot and set it up to succeed long-term.

Becoming an owner-operator can be overwhelming if you don’t have sound guidance. You must complete lots of paperwork and go through various tests to gather the required documents and meet the safety standards for owner-operator trucking businesses.

Without the required documentation, licenses, and proof of compliance with various federal and state regulations, you’ll sabotage your trucking business before it begins.

Owner-Operator Startup & Compliance Checklist

Here’s our step-by-step owner-operator startup checklist you can use as a roadmap to get your own trucking business up and running smoothly.

Determine your business type and create your business plan

To run a successful trucking business, determine your business type and create a business plan first. There are two types of owner-operator trucking businesses.

Leased Owner operator. A leased owner-operator operates their truck under the trucking authority of another company. If you choose this route, you won’t have to get some of the legal documents discussed below.
Owner-operator with own authority. Operating under your own authority means you’re a fully independent trucking business.

Ideally, your business plan should include your trucking business niche, target market, and overall business goals. You also want to evaluate your finances during this step to ensure you have enough budget to begin and run your business well before the profit starts rolling in.

Obtain a Commercial Driver’s License (CDL)

You’ll need to get your commercial driver’s license (CDL) and relevant endorsements, depending on the type of trucking business you want to start.

There are three main classes of CDL licenses in the trucking industry:

Class A CDL. A class A commercial driver’s license is necessary to operate large commercial vehicles, including combination vehicles weighing 26,001 pounds or more. These are the most popular types of trucks used by trucking companies – from tractor-trailers and big rigs to 18-wheelers.

Class B CDL. With a Class B CDL, you can only operate single vehicles weighing 26,001 and above. Or, combination vehicles weighing less than 26,001 pounds, such as delivery trucks, dump trucks, and buses.

Class C CDL. A Class C CDL allows you to operate hazmat vehicles and vehicles designed to carry sixteen or more passengers (the driver included).

Besides your commercial driver’s license, you might require special endorsement for specific types of equipment and cargo.

We recommend getting a Class A CDL because it allows you to operate all types of commercial trucks. Check out our quick guide on obtaining your CDL to learn how to get your commercial driver’s license.

Register Your Business

With your business plan and CDL ready, it’s time to register the venture officially with the state, the Internal Revenue Service (IRS), and the Department of Transportation (DOT). Doing this allows you to get the official business info you require for obtaining licenses and other crucial documents before you begin your operations.

Your location and the business structure you select will determine the process you’ll follow to register your trucking company. There are four types of business structures you can work with in the trucking industry: sole proprietorship, partnership, corporation, and limited liability company (LLC).

Each business structure is regulated differently. There are tax obligations and various liabilities you’ll be responsible for. So, be keen to choose a structure that will work best for you.

Buy or Lease Your Equipment

To get the best trucking equipment, first, decide whether you want to buy or lease your truck. Purchasing your equipment might seem expensive when starting, but it’s the best option if you plan to commit to your business long-term. Leasing is cheaper in the short term, but you’ll likely pay more in the long run.

If you decide to purchase your truck, you’ll have two options – to buy a new or used semi-truck.

Whichever option you choose, partner with an established truck financing institution to ease the financial burden of purchasing your commercial truck.

Consider working with Mission Financial Services to get financial help tailored to your situation. We have suitable loans for first-time buyers of commercial vehicles and can customize our packages further, even if you have bad credit.

Get your MC Number and Trucking Authority

The Federal Motor Carrier Safety Administration (FMCSA) requires all truck companies involved in interstate commerce to have a Motor Carrier (MC) number. This step is crucial if you plan to operate independently under your own authority and haul freight across states.

You’ll also have to get insurance coverage as part of your operating authority application process.

If you plan to operate as a leased owner-operator, you can skip this step. You won’t need your own Motor Carrier number because you’ll be working under the MC number and trucking authority of the company you lease under.

Also, skip this step if you have no plans for operating commercial vehicles across state lines. Owner-operators operating within their state don’t require a Motor Carrier number.

File a BOC-3 Form with the FMCSA

Filing a BOC-3 Form is another mandatory Federal Motor Carrier Safety Administration requirement. It shows you have a designated process agent in the states you operate in. A process agent is an individual or business capable of receiving legal documents on your behalf if people file complaints against you.

The process agent stays on top of all legal communication, helping you avoid unnecessary fines. You can have one process agent representing you in all the regions you operate in to make your work easier.

Obtain Your USDOT Number, IFTA License & HVUT Certificate

Other essential licenses and certificates you require to conduct your operations include:

USDOT Number. Like the MC number, a USDOT number is specific for owner-operators planning to haul goods across state lines. The Department of Transportation will use this number to confirm your trucking business’s registration status, compliance reviews, safety records, ratings, and inspections. Visit FMCSA’s registration portal to get your USDOT and MC number.

International Fuel Tax Agreement (IFTA) License. An IFTA license is mandatory if you operate in multiple states and transport taxable fuel. It allows you to report and pay fuel taxes to one state, simplifying your business processes. To obtain this license, apply through your state’s Department of Revenue.

Heavy Highway Vehicle Use Tax (HVUT) Certificate. If your commercial vehicles weigh 55,000 pounds or more and operate on public highways, you must have an up-to-date HVUT certificate. It shows you pay the IRS’s annual tax for such commercial vehicles. Visit the IRS website to apply for this certificate.

Owner-Operator Compliance Checklist

To ensure owner-operators comply with all FMCSA regulations, the Department of Transportation conducts unannounced audits periodically. There are four primary types of DOT audits you should anticipate:

New entrant audits. DOT conducts new entrant safety audits to ensure you’re within the safety guidelines as you get your commercial trucking business operations off the ground. Expect these within a year after filing and getting your DOT number.

Security audits. These examine your company’s driver training and safety plan and your security measures.
Hazardous materials audits. When performing a hazardous materials audit, the DOT checks your hazardous material labeling, training, plus shipping documentation.
Compliance review. Commonly known as a targeted DOT audit, this review happens when there’s an indication of poor performance. An indicator could be anything from increased crash rates to citizen complaints. However, FMCSA can also perform random compliance reviews without any cause.

The best practice to ensure you pass all DOT audits and remain in business is to stay on top of your DOT compliance requirements. Some key areas you should focus on being on the safe side include:

Adherence to hours of service regulations
Vehicle maintenance and inspections
Driver qualification and licensing documentation
Hazardous materials compliance requirements
Participating in DOT’s drug and alcohol testing program

Final Thoughts

Running a profitable trucking company as an owner-operator can be rewarding. There’s no cap to how much you make as you enjoy autonomy over your trucking business operations. However, you must set it up correctly for this to be true.

Our owner-operator checklist above is well-organized to ensure your business gets off the ground fast. If you follow it keenly, you’ll legally operate your commercial trucking business in many states and avoid the hefty fines that result from non-compliance.

Remember, you can always reach out to us if you need help purchasing your truck to get started. We’ll work to ensure our flexible commercial loans fit your budget and business goals so you can start your truck company on stable grounds financially.

Understanding Apportioned License Plates

If you operate a commercial vehicle or power unit across state lines, apportioned license plates are part of the legal framework that allows you to do so.

They work alongside the International Registration Plan (IRP) and the International Fuel Tax Agreement (IFTA) to ensure states and provinces receive the registration fees and fuel taxes they are owed. IRP and IFTA are inter-jurisdictional agreements administered by states/provinces, enforced via state/provincial law and roadside enforcement.

Understanding how apportioned plates work helps prevent fines, audits, and interruptions to your operations.

What Are Apportioned License Plates?

Apportioned license plates are registration plates issued to commercial vehicles that operate in more than one jurisdiction. Apportioned just means divided or distributed, referring to how registration fees are allocated.

Instead of registering the same vehicle separately in every state it travels through, the carrier registers once in a base jurisdiction. That jurisdiction then distributes registration fees to other states and provinces based on the miles the vehicle travels in each one.

When you see a commercial truck using apportioned plates, it means the vehicle is legally registered for multi-jurisdiction operation under the International Registration Plan (IRP). This allows the truck to cross state and, in some cases, international borders without carrying multiple registrations.

How the International Registration Plan (IRP) Governs Apportioned Registration

Apportioned registration exists because of the International Registration Plan (IRP).

The IRP is a reciprocity agreement among the 48 contiguous states + DC + 10 Canadian provinces (Alaska and Hawaii are not IRP members). It is authorized under state motor vehicle laws and administered by each jurisdiction’s motor carrier services division.

Under the IRP, a carrier designates a base jurisdiction, usually the state where the business is registered, and operational records are kept. That jurisdiction issues apportioned plates and collects registration fees. Fees are then distributed to other jurisdictions based on reported mileage.

This system replaces the need for multiple state registrations and creates a uniform process for interstate commercial vehicles.

What Is the International Fuel Tax Agreement (IFTA)?

The International Fuel Tax Agreement (IFTA) is a multi-jurisdiction agreement among the lower 48 contiguous U.S. states and 10 Canadian provinces.

It simplifies fuel tax compliance for interstate motor carriers. Instead of filing fuel tax returns in every jurisdiction traveled, carriers file one quarterly fuel tax report with their base jurisdiction.

That report details:

Total miles traveled
Miles traveled in each jurisdiction
Fuel purchased in each jurisdiction

Tax authorities then calculate the amount of fuel tax owed to each state or province. Failure to file IFTA reports or pay fuel taxes can result in penalties, interest, suspension of credentials, and enforcement actions during roadside inspections.

What Is the Difference Between IFTA and IRP?

The IRP and IFTA serve different legal purposes, even though carriers often comply with both. The IRP governs vehicle registration and registration fees, while the IFTA governs fuel tax reporting and payment.

In simple terms:

IRP determines where and how registration fees are paid.
IFTA determines where fuel taxes are owed based on miles driven and fuel consumed.

Most interstate carriers subject to IRP registration are also subject to IFTA reporting, but qualification is determined separately under each program.

Who Must Register for Apportioned Plates, IRP, and IFTA?

Not every vehicle that crosses state lines qualifies for apportioned registration. Requirements are based on vehicle specifications and interstate operation, not business size.

Under IRP rules, a vehicle generally must register if it has a gross vehicle weight rating (GVWR) over 26,000 pounds, or has three or more axles, regardless of weight, and operates in more than one jurisdiction.

The IFTA applies to motor carriers operating qualifying vehicles in more than one jurisdiction, typically using the same weight and axle thresholds.

Vehicles operating strictly intrastate or below these thresholds may not require IRP or IFTA credentials.

Apportioned Plates vs. Commercial Plates

The difference between apportioned plates and standard commercial plates lies in where and how a vehicle is legally allowed to operate.

Commercial plates are state-issued registrations that permit a vehicle to operate for business purposes within a single state.

On their own, they do not authorize interstate operation for vehicles that meet the definition of an apportionable (qualified) vehicle.

Apportioned plates, issued under the IRP, are required when an apportionable vehicle operates across state or provincial lines. These plates allow interstate and interprovincial travel, with registration fees distributed among jurisdictions based on reported mileage.

All apportioned plates are commercial plates, but not all commercial plates are apportioned. Operating a qualifying vehicle interstate without apportioned registration or a valid trip permit can result in citations, fines, and out-of-service orders.

How to Get Apportioned License Plates For Commercial Vehicles

Getting apportioned license plates is a structured regulatory registration process governed by the IRP and administered by each state’s motor carrier authority.

The goal is to ensure that interstate commercial vehicles are properly registered and that registration fees are fairly distributed among the jurisdictions in which they operate.

Confirm Your Eligibility

Eligibility for apportioned plates is based on commercial truck specifications and interstate use, not business size or how often you cross state lines.

As mentioned, a vehicle generally qualifies for apportioned registration under IRP rules if it operates in two or more jurisdictions and has a GVWR over 26,000 pounds, or if it has three or more axles.

If a vehicle meets these criteria, it requires an apportioned registration for legal interstate operation.

Your state’s motor carrier services office or Department of Motor Vehicles can confirm eligibility. However, responsibility ultimately rests with the carrier, not the state.

Register Under IRP

If your vehicle qualifies, you must register it under IRP through your base jurisdiction. This is the state where:

Your business is legally established
You maintain your business’s operational records
You control or dispatch the vehicle

This requirement exists so that one jurisdiction can administer registration, collect fees, conduct audits, and coordinate with other states under IRP rules.

Registering in the wrong base jurisdiction is a common compliance error and can result in your applications being denied or future penalties.

Submit Required Documentation

IRP registration requires documentation that proves ownership, insurance coverage, and operational intent. Most jurisdictions require the following:

Proof of vehicle ownership or lease, such as a title or lease agreement
Proof of insurance meeting state and federal minimums for commercial vehicles
Business registration documents, including an employer identification number (EIN) or state filings
Estimated mileage by jurisdiction, often based on prior operations or reasonable projections

Mileage estimates matter because IRP registration fees are calculated based on how much each jurisdiction will be used. Underreporting mileage can trigger audits, back fees, and penalties if the actual distance traveled exceeds reported estimates.

States are authorized under IRP to audit carriers to verify mileage accuracy. Auditors increasingly rely on telematics data and electronic records to confirm where and how vehicles operate.

GPS-based tracking systems, electronic logging devices (ELDs), fuel card data, and dispatch records can all be used to validate reported mileage across jurisdictions.

Pay Registration Fees

Registration fees are calculated using:

Vehicle weight
Number of jurisdictions selected
Estimated mileage in each jurisdiction

Heavier vehicles and broader operating territories result in higher fees because they impose greater wear on infrastructure across more jurisdictions.

Fees are paid to the base jurisdiction, which then distributes funds to other states and provinces under IRP guidelines.

Approval and Plate Issuance

Once your application is approved and fees are paid, the base jurisdiction issues:

Apportioned license plates
IRP cab cards, which list approved jurisdictions and weights

Cab cards must be carried in the vehicle at all times. Enforcement officers use them during roadside inspections to verify legal operation. Failure to produce valid credentials can result in citations or out-of-service orders.

Common Mistakes to Avoid with Apportioned Registration

Most apportioned registration violations don’t happen because of intentional noncompliance, but because of common misunderstandings about how IRP and IFTA work together and how those rules are enforced. Here are some common mistakes people make:

Assuming Occasional Interstate Travel Does Not Count

IRP requirements are based on qualification, not frequency. If you operate an apportionable vehicle interstate, you generally need IRP apportioned registration or a valid trip permit before operating.

Enforcement officers do not consider intent or frequency during inspections.

Registering in the Wrong Base Jurisdiction

Registering where the truck is parked or purchased, instead of where the business is based and records are kept, violates IRP base jurisdiction rules and can invalidate registration.

Underreporting Mileage

IRP and IFTA both rely on accurate mileage reporting. States are authorized to audit carriers, and discrepancies can lead to back fees, interest, and penalties across multiple jurisdictions.

Confusing IRP Registration with IFTA Fuel Reporting

IRP covers registration fees. IFTA covers fuel taxes. Registering for one does not satisfy the requirements of the other.

Many compliance failures occur when carriers assume IRP registration automatically covers fuel tax obligations. These errors can result in fines, credential suspension, audits, and disruptions to operations.

Frequently Asked Questions

Do I Need Apportioned Plates If I Only Cross State Lines Occasionally?

Yes, if your vehicle meets IRP qualification thresholds. The International Registration Plan does not base registration requirements on how often you cross state lines. It bases them on vehicle characteristics and interstate operation.

Do I Need IFTA If I Have Apportioned Plates?

Not automatically. IRP and IFTA are separate programs with different purposes and qualification rules.

IRP governs vehicle registration and registration fees. IFTA governs fuel tax reporting. A vehicle can require IRP registration without meeting IFTA requirements, although many interstate vehicles qualify for both.

Can I Get Apportioned Plates Without IRP?

No. Apportioned plates are issued only through IRP registration. There is no separate apportioned plate program outside of IRP. If a vehicle requires apportioned registration, the carrier must apply through their base jurisdiction under IRP rules.

What Happens If I Operate Without Apportioned Plates?

Operating a qualifying vehicle without apportioned plates is a registration violation. Consequences vary by jurisdiction but often include roadside citations, fines, and out-of-service orders.

Can I Register for IRP and IFTA at the Same Time?

Yes. Many states allow carriers to apply for IRP registration and IFTA credentials during the same onboarding process. Registering for both at the same time helps streamline compliance and reduces the risk of missing required credentials before operating interstate.

Conclusion

Apportioned license plates exist to make interstate trucking possible under a single, structured registration system. When used correctly, they simplify compliance, ensure fair fee distribution, and allow commercial vehicles to operate legally across jurisdictions.

For carriers planning to purchase a commercial vehicle for interstate use, understanding IRP and IFTA requirements early helps avoid delays and compliance issues.

Mission Financial Services focuses exclusively on commercial truck financing. If you are planning to purchase a vehicle that will operate interstate, start your credit application early to avoid financing delays once registration requirements begin.

Safety Tips For Commercial Truck Drivers

There’s a lot that could go wrong on the road as a commercial truck driver. So being properly prepared, and understanding all potential safety concerns, is so important.

Taking the right approach to truck driving safety will help you avoid accidents, and truck stop safety incidents, and keep your truck working properly. In this guide, we’ll break down all the different safety elements you need to be aware of as a truck driver.

Driving Safety Tips

It’s essential that truck drivers are always doing what they can to stay safe on the roads. As a truck driver, here are some of the most important truck driving safety tips to keep in mind.

Defensive Driving

Understanding defensive driving is essential for truck driver safety. This is when you maintain a proactive mindset by anticipating hazards and prioritizing safety on the roads.

Regularly assess your surroundings and other vehicles, predict and prevent potential risks, and adapt to changing conditions. Keep a safety cushion, use communication tools, and stay calm under pressure.

Maintain Proper Following Distance

Keep a safe following distance to allow for enough reaction time. Many truck drivers agree to maintain a minimum of one truck length for every 10 mph you’re traveling.

Use Mirrors Effectively

It’s essential for truck and bus drivers to check their mirrors regularly and to be aware of their surroundings. Adjust them properly before starting your journey and consistently monitor blind spots.

Anticipate Potential Hazards

Stay alert and anticipate potential hazards on the road. Look ahead for brake lights, traffic signs, and changes in traffic flow to respond proactively to any challenges. Of course, always wear your seat belt.

Practice Speed Management

Always stick to speed limits and adjust your speed based on road and weather. Avoid aggressive driving and maintain a speed that allows for safe stopping distances.

Avoid Distractions

Eliminate distractions inside the cab, such as mobile phones, and focus on the road. Distracted driving significantly increases the risk of accidents in the trucking industry.

Be Mindful of Blind Spots

Truck drivers deal with larger blind spots than smaller vehicles. Be aware of these blind spots and make necessary adjustments, such as signaling well in advance before changing lanes.

Participate in Ongoing Training

Stay up to date with industry best practices and regulations through continuous training. Ongoing education can enhance your defensive driving techniques and keep you informed about the latest safety technologies and truck driving tips.

Safety At Truck Stops

Truck drivers also need to stay safe when their commercial motor vehicles are parked at truck stops. Here are a few essential tips to keep in mind about this.

Choose Well-Lit Areas

Park in well-lit sections of the truck stop to enhance visibility and deter potential security threats.

Lock Your Vehicle

Always lock your truck when leaving, even if it’s just for a quick break. This may sound simple, but it’s essential to deter theft and unauthorized access.

Be Mindful of Personal Belongings

Keep valuable items out of sight and secure personal belongings to avoid attracting unwanted attention.

Stay Vigilant During Rest Breaks

When resting, stay aware of your surroundings. Be cautious of unfamiliar individuals and report any suspicious activity to authorities.

Use Designated Parking Areas

Park in designated truck parking areas to ensure you have enough space and avoid obstructing traffic flow.

Follow Truck Stop Rules

Always stick to any posted rules and regulations at truck stops. This includes speed limits, no-smoking zones, and other safety guidelines.

Fuel Up Wisely

Choose well-lit and reputable fuel stations. Be cautious when using your credit card and monitor for any suspicious activity at the fuel pump.

Truck Safety Checks

Beyond safety tips for driving or road conditions, keeping your truck well-maintained is vital for your safety. As a truck driver, here are a few necessary truck safety checks to keep in mind.

Vehicle Maintenance

Prioritize regular, comprehensive maintenance checks for your truck. This includes inspecting your brakes, tires, shocks, fuel filter, lights, fluids, starter, and any other critical components.

A well-maintained vehicle is fundamental for safe and efficient transportation.

Brake System Inspection

Regularly check and test your truck’s brake system, including brake pads, drums, and air pressure. Properly functioning brakes are essential for effective stopping and overall road safety.

Tire Care and Inspection

Inspect your tires for proper inflation, tread depth, and signs of wear. Ensure that all tires, including the spare, meet safety standards. Well-maintained tires enhance traction and reduce the risk of blowouts.

Lighting and Visibility

Regularly inspect all lights, including headlights, taillights, brake lights, and turn signals. Proper lighting is crucial for visibility, especially during low-light conditions. This is a major factor in road safety.

Fluid Levels Check

Monitor and maintain proper levels of essential fluids such as oil, transmission fluid, coolant, and windshield washer fluid. Adequate fluid levels keep your truck running smoothly and prevent mechanical issues.

Steering System Inspection

Ensure your steering system is functioning correctly by checking for any unusual noises, fluid leaks, or difficulty in turning. A responsive steering system is crucial for maintaining control on the road.

Suspension System Check

Inspect your suspension system for signs of wear, including worn-out bushings or uneven tire wear. A well-maintained suspension system is necessary for a smoother ride and better handling.

Safety Tips for Weather

Preparing for the weather is a major part of truck driver safety. Here are a few tips to help you with this.

Monitor Weather Forecasts

Stay informed about upcoming weather conditions along your route. Regularly check weather forecasts for potential challenges and plan accordingly.

Adjust Driving Speed

Reduce speed during adverse weather, such as rain, snow, or fog. Slowing down allows for better control, and increased reaction time, and minimizes the risk of accidents.

Increase Following Distance

Extend your following distance in dangerous weather. Wet or icy roads require more time and space to stop safely.

Avoid Cruise Control

Disable cruise control in slippery conditions. Maintaining direct control over acceleration and deceleration is crucial for safe driving in tricky weather.

Brake with Caution

Apply brakes gently to avoid skidding on wet or icy surfaces. Practice controlled braking to maintain stability.

Stay Informed About Road Conditions

Check for real-time road condition updates, especially in winter. Be aware of closures, detours, or areas prone to ice patches.

Secure Cargo in Windy Conditions

In windy conditions, ensure that cargo is properly secured to prevent shifting, which can affect the stability of the truck.

It’s a good idea to stay in contact with your dispatcher or fellow drivers to share information about weather and road challenges. Collaboration enhances overall safety.

Safety Tips For Women Truckers

Female truck drivers often face many unique safety challenges while on the road. Here are some essential safety tips to keep in mind.

Choose Well-Lit Rest Areas

When stopping for breaks or rest, opt for well-lit, busy areas. This enhances visibility, which can help with security.

Maintain Regular Communication

Stay connected with family, friends, or fellow truckers. Regular check-ins can provide a sense of security and allow for swift responses in case of emergencies.

Secure Restroom and Shower Facilities

Utilize truck stops or rest areas with secure and well-maintained restroom and shower facilities. Be aware of your surroundings and report any concerns.

Know Your Route

Familiarize yourself with the route and plan your stops in advance. This minimizes uncertainty and allows you to make more informed decisions about where to rest or refuel.

Carry Personal Safety Devices

Keep personal safety devices, such as a whistle, pepper spray, or a personal alarm, easily accessible. These tools can provide an added layer of protection in emergencies.

Invest in Self-Defense Training

Consider enrolling in self-defense classes to build confidence and learn techniques that can help you in emergency scenarios.

Establish Boundaries

Clearly communicate and assert personal boundaries with colleagues, fellow truckers, or anyone encountered during the journey. Trust your instincts and prioritize your comfort and well-being.

Secure Cab Access

Ensure that your truck’s cab is properly secured when parked, especially during rest stops. Lock your doors and windows to prevent unauthorized access.

Network with Other Women Truckers

Connect with other women truckers through industry groups or forums. Sharing experiences and advice fosters a supportive community and provides valuable insights into navigating the profession.

Report Security Concerns Promptly

If you encounter any suspicious activity or feel uneasy about a situation, report it straight away to authorities or your company’s security team.

Trust Your Intuition

Always trust your instincts. If something feels off or uncomfortable, take action to prioritize your safety, whether that means changing your route or seeking assistance.

Final Thoughts

Truck drivers can face all kinds of dangers on the roads. However, by being properly prepared for them and proactively focusing on your safety, you should be able to avoid these issues.

Make sure you take care of your vehicle, follow the right driving safety precautions, and understand how to stay safe in your surroundings. This will make your life as a truck driver far easier and more enjoyable.

Looking to purchase a new semi-truck? Then get in touch with us at Mission Financial Services, where we make gaining truck financing easy for everyone.