All posts by Angela Filyaw

How to Correctly Complete the OP-1 Form for Operating Authority

Often when applying for operating authority, a person spends more than the $300.00 applying for operating authority. Although the FMCSA provides instructions for this form, this FAQs page is a better understanding of How toComplete the OP-1. Read below for hints and tips for specific questions during the application process.

Legal Name:
• If you’re a sole proprietor, YOUR name goes here. The company name you want to use will go in the DBA field. Ex: Legal Name: John Smith, DBA Name: ABC Company
• If you’re a corporation or LLC, etc., you want to have already completed the paperwork with your base state’s Secretary of State. Once that is done, you can put the name from your Articles in the Legal Name field. In the DBA field, you would put the name you chose on the Articles for your DBA name.

Phone Number:
If you don’t want to be bombarded with 3rd party companies calling and trying to sell you services you can do yourself, put in your area code followed by 000-0000.

Address:
Complete the address field and make sure it does NOT duplicate in the Address Line 2. If so, it will duplicate on the FMCSA Motor Carrier Profile and you’ll have to complete a Form 5889 to remove the duplicate address.

Types of Operating Authority:
Motor Carrier of Property: Only select this one type. Do NOT select yes to IEP, Household Goods, Broker, or Freight Forwarder.
Motor Carrier of Passengers: Only select this type of authority. Do NOT select yes to IEP, Household Goods, Broker, of Freight Forwarder.

NOTE: Everytime you select YES to a type of operating authority, you are adding $300.00 to your payment.

Completing the OP-1 Form for operating authority does not seem complicated until you’re at the end of the questions and your bill is $1200.00 and you only need to spend $300.00! Use these hints to spend only the necessary amount of money. The government does NOT refund for application errors.

Certificate of Authority

You applied for operating authority only to find out that isn’t the only step. You then hired a Process Agent to file your BOC-3 and contacted your insurance agent to file the correct filings with the FMCSA. Are you ready to see your business collide with the pavement?

Not so fast!

There is one more step. You must have a Certificate of Authority in hand prior to crossing state lines. The certificate means your operating authority has been granted. The FMCSA usually mails your FREE certificate of authority out within 3-4 days. If 10 or more days have passed since your operating authority has been granted and you still have not received the certificate, contact the FMCSA at 1.800.832.5660 and request it.

Certificate of Authority is oftenreferred to as a quick permit. They are one and the same. You will receive many phone calls and solicitation emails from 3rd party companies trying to sell you a certificate of authority. Remember, the FMCSA sends this out for FREE. If you are someone that wants to begin operations immediately, you do NOT need to hire a 3rd party company to receive your certificate of authority. You can go to www.iccasap.com and download it immediately for $17.50! This is one of many websites 3rd party companies use, and they pay $17.50 then overcharge the hell out of YOU for YOUR certificate.

Save yourself the hassle and unnecessary costs associated with the Certificate of Authority (Quick Permit). Either wait out the FMCSA or order it yourself.

Hope this helps save your money, so you can put it where it’s needed!

Types of Operating Authority

The type(s) of Operating Authority requested will impact the type and level of insurance that is required by FMCSA. Therefore, carefully select only the type(s) of Operating Authority relevant to the business and read the instructions before filing. FMCSA does not refund application fees. Descriptions of the different types of interstate Operating Authority for which carriers would file the OP-1 form are as follows:
Motor Carrier of Property (except Household Goods)
An authorized for-hire Motor Carrier that transports regulated commodities (except household goods) for the public in exchange for payment. Motor Carriers of Property (except Household Goods) must file proof of public liability (bodily injury and property damage — BI & PD) with FMCSA to obtain interstate Operating Authority. Cargo insurance is not required.

Motor Common Carrier: Provide for-hire truck transportation to the public.
Motor Contract Carrier: Provide for-hire truck transportation to specific, individual shippers based on contracts.

Motor Carrier of Household Goods (Moving Companies ONLY)
An authorized for-hire Motor Carrier that transports only household goods for the public in exchange for payment. Household goods are personal items that will be used in a home. They include items shipped from a factory or store, if purchased with the intent to use in a home and transported at the request of the householder who pays for the transportation charges. Motor Carriers of Household Goods must file proof of both public liability (BI & PD) and cargo insurance with FMCSA to obtain interstate Operating Authority.

Broker of Property (except Household Goods)
An individual, partnership, or corporation that receives payment for arranging the transportation of property (excluding household goods) belonging to others by using an authorized Motor Carrier. A Broker does not assume responsibility for the property and never takes possession of it.

Broker of Household Goods
An individual, partnership, or corporation that receives payment for arranging the transportation of household goods belonging to others by using an authorized Motor Carrier. A Broker does not assume responsibility for the household goods and never takes possession of the goods. Household goods are personal items and property that will be used in a home. An individual, partnership or corporation requires registration as a household goods broker if the motor carrier providing transportation will also provide some or all the following additional services, binding and nonbinding estimates, inventorying, protective packing and unpacking of individual items at personal residences and loading and unloading at personal residences.

United States-based Enterprise Carrier of International Cargo (except Household Goods)
A company that transports international cargo (excluding household goods) and is headquartered in the United States but is owned or controlled (greater than 55%) by a Mexican citizen or resident alien. International cargo must originate in or be destined for a foreign country.

United States-based Enterprise Carrier of International Household Goods
A company that transports international household goods and is headquartered in the United States but is owned or controlled (greater than 55%) by a Mexican citizen or resident alien. Household goods are personal items that will be used in a home. They include items shipped from a factory or store, if purchased with the intent to use in a home and transported at the request of the householder who pays for the transportation charges. International household goods must originate in or be destined for a home in a foreign country.

Applicants for authority to operate as motor carriers of household goods or freight forwarders of household goods also must offer arbitration as a means of settling loss and damage disputes on collect-on-delivery shipments. (See 49 U.S.C. 14708.)

Freight Forwarder Authority
Freight forwarders arrange transportation of goods by FMCSA-licensed carriers. Freight forwarders issue bills of lading to shippers and are responsible for the loss of or damage to the goods.
Motor Passenger Carrier Authority
A for-hire passenger carrier is a person or company that provides transportation of passengers for compensation. … If you are operating a vehicle in interstate commerce as a for-hire motor carrier of passengers, you must obtain interstate operating authority unless you operate within a commercial zone.

Factoring

Factoring: Freight factoring is a financing tool that provides your company with immediate capital. Not a business loan, factoring involves selling your invoices at a discount. In turn, you get immediate cash, and the factoring company – not you – waits for payment.

REMEMBER, FACTORING COMPANIES COME AT A HIGHER PRICE THAN LOANS BECAUSE IT’S IMMEDIATE ACCESS TO CASH. Factoring companies will give you many reasons to use them but asking the below questions are in your best interest!

Questions you should ask any factoring company before signing up:
1. What are your terms?
a. Is there a contract? If yes, is there a price break or flexible rates since you are locked in with their company.
i. Does the contract automatically renew itself or is a signature required each year (option 2 is best).
ii. Is a notice needed if you don’t want to renew the contract at the renewal date? If a renewal is needed, how much of a notice is required?
b. Will the rates be adjusted on my increased factoring volume or competitor rates?
c. Is there a sign on fee?
i. If there is a sign on fee, ask the company to waive it. I’m a firm believer you should not have to “sign up” with a company to use their services. You will be paying a percentage each time the service is used therefore the sign on fee is a rip-off. Companies that require a sign on fee normally state it’s to process the paperwork – again, ask to have the fee waived.

2. Do you offer recourse and non-recourse factoring?
a. STAYAWAY from any factoring company that requires recourse. The factoring company should offer FREE, UNLIMITED credit checks. If your company is making use of the credit checks and they are telling you that hauling for a specific company is safe, pay you upfront the invoice balance minus their percentage fee and then not get paid = that’s on them. NOT YOU.
b. Another word for recourse you will hear factoring companies use is reserve. If the company has a recourse program or a reserve program, find a new factoring company.

3. What is your fee structure?
a. Steer clear of any factoring company charging more than 3.99% per invoice. 3.99% on any invoice is high enough. Anything over 3.99% is taking advantage of your inexperience with factoring.
b. How much is the fee for money transfers?
i. Which is cheaper, direct deposit or EFT?
c. What is the cut off time for transferring money to your bank account?
d. Are there any other fees for services?

4. How long have you been in business?
a. Be careful working with a new factoring company. They may not have the overhead to pay you in a timely manner. It’s important funding is always available when you need to turn in invoices.

5. What else can you do for me?
a. Fuel card?
b. FedEx program?
c. Cash Advance? If yes, make sure you ask what the prime rate is for this advance plus the %. Ex: Company charges a prime rate + 2%. Anything over 2%, stay away from.
d. Back office support?

6. Do you specialize in the Transportation Industry? It is imperative to factor with a factoring company that understands the Transportation Industry.

7. Is a mobile app available for faster funding?

Hopefully you are now more knowledgeable in choosing a factoring company for your company’s needs.

Common Mistakes when applying for Operating Authority

Hopefully you’re reading this article BEFORE applying for Operating Authority. Everyday I speak with customers who have applied for the wrong type of operating authority OR too many types of operating authority. Each type of operating authority costs $300.00. The FMCSA makes it very clear at the very end of the application that THERE ARE NO REFUNDS. In my fifteen years of working in the Transportation Industry, I have never witnessed a refund be given. It’s very important you know what you’re applying for beforehand and why.

Common mistakes I see daily are listed below in hopes you don’t make these same mistakes!

1. You apply for operating authority using an incorrect legal name and/or doing business as name. What do I mean?
a. If you’re a sole proprietor, your legal name goes in the legal name field and then your DBA will be what you want your company name to be.
b. You apply as a Corporation or LLC when you have not yet become a Corporation or LLC. The issue here is the name you’re choosing may already belong to someone else. If that’s the case, you will be required to choose a name that is available with your State and then you’ll need to request a name change with the FMCSA by completing the request online (using your DOT PIN number or via fax/email/mail.

2. Many people believe when they apply for operating authority and pay the $300.00 fee, that’s it. For whatever reason they do not realize there many more steps to be completed. DO YOUR RESEARCH. Know as much as you can prior to completing the application so you know what to do next and why.

3. Company applies for operating authority and believes that as soon as the MC/MX number is issued, operations can commence. No. There is a 20-25 day hold after applying for operating authority. In the interim, you can run under your DOT number in your base state ONLY as long as the correct commercial insurance is in place while in your FMCSA waiting period.

4. Applying using your social security number. It’s not that this is a mistake; it’s just frowned upon. Identity theft is real. You will be dealing with many, many other companies working in the transportation industry so the smartest thing you can do for yourself is to apply for an employer identification number (EIN). This is a unique nine digit number assigned to your company issued by the IRS. This number is free so take advantage of it. Visit IRS.org and take your SSN off the radar.

5. Not having a process agent in place BEFORE applying. Anyone with operating authority is required to have a designation of process agents. The name of this is a BOC-3 filing. When applying for operating authority, the best thing you can do for yourself is leaving OUT your phone number. It DOES require a phone number to move to the next screen but you can use your area code and then all zeroes. (Ex.: 843-000-0000). The logic behind this is as soon as your information drops into the FMCSA database, it is immediately available to ALL third party companies in your industry. This means your phone is going to ring non-stop for at least two weeks. Let’s not even discuss the spam emails and letters you’ll receive via USPS.

6. Quote insurance prior to obtaining operating authority. I have seen many people spend $300.00 for operating authority just to find out the insurance premium is not in their budget. When this happens the person feels even worse because $300.00 has been spent that cannot be refunded. Make sure you can afford to have a few slow months in the beginning. Planning ahead should always be your #1 priority.

I hope by reading this article, you have a better understand of how many operating authorities you will be applying for and how. If you have any questions, feel free to reach out to Government Filings LLC for clarification.

For-Hire Carrier vs. Private Carrier

FMCSA Definition of For-Hire:
An authorized for-hire motor carrier transports passengers, regulated property or household goods owned by others for compensation. If you are a for-hire carrier, in addition to the USDOT number you will also need to obtain operating authority (MC number).

Simply said if a company is transporting passengers or hauling commodities for monetary gain, that company is considered “for-hire”. Any for-hire carrier MUST have operating authority, a DOT number, a BOC-3 filing and the required insurance filing(s) to operate legally.

A For-Hire carrier is a company that transports cargo or passengers for compensation. For-hire carriers must have a USDOT number as well as operating authority (MC number) to operate.

FMCSA Definition of Private Carrier:
A private motor carrier transports its own cargo, usually as a part of a business that produces, uses, sells and/or buys the cargo that is being hauled. A private motor carrier transports its own goods and is required to have a USDOT number but does not need operating authority (MC number).

Simply said if a company is transporting its own cargo (business or personal) in a not-for-hire operation, operating authority is not required. A DOT number will still be required.

The Importance of Vehicle Maintenance Files (VMF)

Anyone owning a vehicle should realize the importance of maintaining upkeep on it. It’s even more important when it’s your commercial vehicle as this is how you put food on the table for your families.

The FMCSA requires that any maintenance done to a commercial vehicle for use in a for hire or private fashion be maintained through record keeping at your place of business. There are specific documents required to be kept as well as maintenance to vehicles and the files retention period. These regulations apply to any owned or leased vehicles being operated for a minimum of (30) days that meets any of the following: Transporting (8) or more passengers including the driver, has a GVM or GCWR of more than 10,000 lbs. or carries hazardous materials. Each vehicle (including trailers) should have its own dedicated file for maintenance information. You want to clearly identify receipts of repair and regular maintenance and always, always document ANY roadside inspections. A good rule of thumb to use for vehicle maintenance is using a spreadsheet on the front. Write down any repairs and maintenance as they happen and place the documentation in the folder. On this spreadsheet, it’s also a good idea to notate the next annual inspection due. Retention periods for vehicle maintenance files is a minimum of (12) months UNLESS it contains annual DOT Inspection Reports. These reports must be retained for (14) months.Refer to FMCSA Regulation 396.3 for more information on vehicle maintenance.

See below for what should be in each vehicle maintenance file:

Each vehicle (including trailers) should be assigned a unit number (ex.: 001), include the year, make and model, VIN number, tire size, owner’s name (if not carrier), and the maintenance schedule.Always check with the FMCSA for updates to the VMF rules and regulations.

Recordkeeping and Retention Periods
Annual Vehicle Inspection Report (must be kept 14 months)
Pre-Trip Inspection
Inspection, Repair and Maintenance
Preventative Maintenance Report
Order to Move CMV
Truck Repair and Work Order
Trailer Repair and Work Order
Driver’s Time Record / Record of Duty Status (must be kept for 6 months from date)
Accident Register (must be kept for 3 years from date of accident)
Lease Agreement (if vehicle/trailer is leased)
Any Roadside Inspections (must be kept 12 months)
Driver Vehicle Inspection Report (must be kept 3 months)

Other files encouraged to keep are:
Inspector Certifications
Copies of any accessible documentation required in vehicles

FMCSA PIN Numbers – The Difference and The Importance

When applying for Operating Authority, motor carriers will receive two PIN numbers. Brokers and Freight Forwarders will receive one PIN number. Motor Carriers are issues two PIN numbers. They are the MC PIN number (also known as the Docket PIN number) and DOTPIN number.Brokers and Freight Forwarders will be issued MC PIN number only.

 

Each PIN number is unique and will be seven digits in length using a mixture of numbers and letters. The letter O versus the number 0 and the letter I versus a lower-case L can confuse many people. The sequence of PIN numbers is the same for both the MC # Pin number and the DOT Number Pin number. PIN number sequence is: number, letter, number, number, letter, letter, number, letter. This will help making heads and tails out of iffy numbers and letters.

 

The DOT Number PIN number is to update your DOT carrier information. The MC Number PIN number is for updating your motor carrier profile. DOT PIN numbers are obtained after completing the application for operating authority. It is emailed immediately. However, many people miss this email and still need their DOT PIN number. The MC PIN number is only sent via mail by the FMCSA. It can take 2-3 weeks for you to receive this PIN number if the FMCSA is running behind. Most people find they receive it around the (7) day mark though. If after (7) days you do not have your MC PIN number, it’s a good idea to order it.

 

PIN numbers are vital to update your company’s information. The FMCSA requires motor carrier profiles be updated annually while DOT requires your DOT company information be updated biennially. Upon completing the DOT update, an MCS-150 Report is generated. It’s important you print this out (and sign if necessary) for your company records.

 

If you cannot locate one your PIN numbers, give us a call and we can assist you at no charge!

 

 

The Importance of Driver Qualification Files

I cannot stress enough the importance of Driver Qualification Files. It doesn’t matter if you have a fleet of 500 vehicles or are an Owner Operator. Driver Qualification Files are required regardless.

Who must have Driver Qualification Files:
• An Owner Operator who employs him/herself as a driver.
• Anyone with operating authority.
• Commercial motor vehicles as specified in 49 CFR Part 391.

Driver Qualification Files includes:
• Recordkeeping and Retention Periods
• FMCSR Pocketbook Driver’s Receipt
• Employment Application and prior history (for driver)
• Medical Examiner’s Certificate
• CDL Self Certification
• Record of Road Test
• Road Test and Certificate
• Certification of Violations
• Notification of Traffic Violations
• Annual Review of Violations
• Motor Vehicle Record (Also known as MVR. Most states report driving records for the past three years, although some states may report five or more years of history. Most insurance companies consider the information in MVR reports, along with other factors, when determining insurance eligibility and insurance premiums. Each year you must keep a current copy of each driver’s MVR in the DQ file. This is an annual requirement.)
• Carrier Statement of On Duty Hours
• Refusal of Medical Treatment
• Driver’s Rights to Release of Driver Information
• Certificate of Compliance
• Fair Credit Reporting Act
• Driver Rebuttal Form
• Driver Data Sheet (prior log form for 7 days minimum)
• Entry level Driver Training Requirements
• Alcohol and Controlled Substance Test Information Release
• Alcohol and Drug Employee’s Certified Receipt
• Form I-9
• Copy of Driver’s driver license (front and back)
• Copy of Driver’s social security card
• PSP Report (Pre-Employment Screening Program. This is a program to help carriers make more informed hiring decisions by providing secure, electronic access to a commercial driver’s five-year crash and three-year inspection history from the FMCSA Motor Carrier Management Information System (MCMIS).)
• Authorization Release Form
• Hours of Service Rules

It’s also handy to have the Driver Qualification Checklist and File Setup page to make putting this file together and in order much easier.

It is the law that an employer keeps a driver’s Driver Qualification File for a duration of employment and (3) years thereafter.
As the owner of a company, do your due diligence when hiring drivers or you are setting yourself up for a potential financial disaster.

Call us today at 888.850.3837 (toll free) or 843.992.8869 (direct) for a Driver’s Qualification File at NO cost.

Ways a Freight Broker can Generate Leads

1. Start with who you know. Find out where your family and friends work. Eight out of ten companies require shipping. Finding out where your family and friends work can be a great source for leads. Find out who you can speak with inside the organization to assist with their shipping needs. Prospect other companies this way too. After building a relationship with the Shipping Manager, ask for references for companies he buys from and sells to so that you may expand your network even more.
2. Always have a pen and paper handy. As a freight broker, you can write down names of companies you see while driving. Use all your resources (including social media) to find a source inside the business to get you in the door.
3. Offer Incentives. If someone refers a company to you and that company books a load through your brokerage, give the referring company an incentive. They will definitely keep referring you if for nothing else, their “reward”.
4. Pass out business cards. Business cards are becoming obsolete, but they still work. A person may not remember your name, but a trigger word can remind him/her of meeting someone in this field. A business card is always a good source for others to go back to when they can’t remember anything else about you!
5. Be careful with Social Media. Social Media can make or break a company. It only takes one viral post for a company to land a target audience or scare them away. Stay away from politics and posting inappropriate memes and pictures.
6. Referrals. Most small businesses see more growth through referrals than any other source. Build your reputation on treating your customers with the utmost integrity and they will refer you. Once the referrals start going out, sales will come in.
7. Be persistent. Trying to figure out where Company A’s shipping from and to points are. Call and ask them and be persistent. Do not take a NO as never. It only means you need to call back at a later time and try again.
8. Leverage your Expertise. When you speak with a potential customer, explain what commodities you specialize in. Anytime you see a shipping label, read it. You will learn how this merchandise was shipped giving you more expertise to discuss with more potential customers.
9. Observe. Observe the brands around you. These companies are shipping this commodity to your area and other areas. Research and find a connection inside to get you in the door.
10. Use all the Search Engines you can. Search for company competitors. See who they use for shippers. Ask if you can be put on the list.