Hot shot trucking has become a popular business model for independent truckers. It involves expedited freight deliveries, typically with smaller, more versatile trucks. While starting your own hot shot trucking business can be an exciting endeavor, it’s important to consider the financial aspects. This article will guide you through the various costs involved in establishing your hot shot trucking operation.
Essential elements of a hot shot trucking business
Hot shot trucking is distinct from traditional trucking in terms of the types of loads and distances covered. Typically, hot shot deliveries are time-sensitive, and the cargo is smaller. This business model requires a reliable truck, relevant equipment, and specific insurance coverage. You’ll also need licenses and permits to legally operate, and effective advertising to attract clients.
If you want to start a hot shot trucking business, here are our guide on how to start a hot shot trucking business that you can follow.
How much does it cost to start a hot shot trucking business?
The average cost of the first year to start a hot shot trucking business is $58,500. Most hot shot trucking business owners spend from $35,400 to $86,500 in the first year to get their business going. After the first year when you make big investments in your truck and trailer, the following years will have a much lower cost. Some estimate that from the 2nd year onwards, hot shot trucking business owners spend from $14,400 to $36,00 on their operations. Below is the summary of all costs for a hot shot trucking business:
|Cost Category||Estimated Cost|
|Truck||$20,000 – $50,000|
|Trailer||$5,000 – $15,000|
|Equipment (straps, chains, etc.)||$500 – $2,000|
|Insurance||$7,000 – $12,000 per year|
|Fuel||$1,000 – $2,500 per month|
|Maintenance & Repairs||$1,000 – $2,000 per year|
|Licensing, Permits & MC Authority||$500 – $1,000|
|LLC or Business Entity Set-Up||$100 – $800|
|Load Board Subscription||$300 – $1,200 per year|
|Total||$35,400 – $86,500 first year, +$14,400 – $36,000 each additional year|
We discuss the cost details for different items below:
Cost of purchasing or leasing a truck for your hot shot trucking business
The type and size of truck you need depend on the freight you’ll be carrying. Prices can range from $20,000 for a used light-duty truck to upwards of $50,000 for a new heavy-duty model. Leasing is another option, which reduces upfront costs but comes with monthly payments and possible restrictions.
Insurance is one of the key costs associated with running a hot shot trucking business, and it’s essential for protecting your investment and mitigating potential risks. Here are the types of hot shot trucking insurance you’ll need and their estimated costs:
|Type of Insurance||Estimated Annual Cost|
|Primary Liability Insurance||$5,000 – $7,000|
|Physical Damage Insurance||$1,000 – $3,000|
|Cargo Insurance||$400 – $1,200|
|Non-Trucking Liability/Bobtail Insurance||$200 – $500|
|Total||$6,600 – $11,700|
Please note that these costs are only estimates, and the actual costs can vary depending on multiple factors. Always consult with a professional insurance advisor for a more accurate quote tailored to your specific circumstances.
Below are further explanations of these coverage types and their estimated costs
Primary liability insurance:
Trucking primary liability insurance is the most basic form of commercial trucking insurance and it’s required by law for all motor carriers. It covers damages to other people’s property and bodily injury if you’re at fault in an accident. The FMCSA requires a minimum coverage limit of $750,000, but $1 million is often recommended. The estimated cost can range from $5,000 to $7,000 per year.
Physical damage insurance:
Trucking physical damage insurance covers damage to your own truck and trailer, regardless of fault. The cost will vary greatly depending on the value of your equipment, but it could range from $1,000 to $3,000 per year.
Truck cargo insurance covers the freight you’re hauling in case of damage or loss. The specific coverage amount you’ll need will depend on the value of the cargo you typically haul, but a common limit is $100,000. The cost of cargo insurance can range from $400 to $1,200 per year.
Non-trucking liability insurance:
Non-trucking liability insurance covers your truck when you’re not under dispatch or hauling cargo. It’s often required by motor carriers and can cost around $200 to $500 per year.
So, the total estimated insurance cost for a hot shot trucking business can range from roughly $6,600 to $11,700 per year. Note that these are rough estimates, and actual costs can vary based on factors like your driving record, location, the age and condition of your equipment, and the specifics of your operation. Always get quotes from multiple insurance companies to ensure you’re getting the best coverage at the best price.
These include fuel, maintenance, and repair costs, as well as tolls and permits. Fuel will likely be your largest operational expense, with costs dependent on fuel economy, the size of your truck, and distance traveled. Maintenance and repair costs can also add up, so it’s important to keep your vehicle in optimal condition.
Aside from the truck, you’ll need additional equipment like a dolly, straps, chains, tarps, and GPS. The cost of this equipment can add up to several thousand dollars.
Here is an estimated cost for the essential equipment required that we outline in a hot shot trucking starter kit:
|Trailer||$2,500 – $10,000|
|Dolly||$200 – $500|
|Chains and Binders||$200 – $500|
|Tarps||$100 – $200|
|Ratchet Straps||$50 – $200|
|Wide Load Signs||$20 – $50|
|Safety Cones||$20 – $50|
|CB Radio||$100 – $300|
|GPS Navigation||$100 – $300|
|Emergency Road Kit||$50 – $100|
|Total||$3,340 – $12,200|
This is just a general guide and the actual cost can vary. Certain types of equipment might not be necessary for all types of loads or trips. Always consult with someone who is already in the hot shot trucking industry for a more accurate estimate.
Licensing and certification costs
Obtaining the necessary licenses and certifications comes with costs. You’ll need to register with the FMCSA and obtain a USDOT number and MC number. These costs can vary but expect to budget around $300 to $400.
You may or may not need a CDL to start your hot shot trucking business. Learn more at our guide of non-CDL hot shot trucking requirements.
A hot shot trucking business may or may not subject to DOT regulations depending on the gross weight rating of the truck, the trailer, and cargo. Learn more at our guide of DOT regulations on hot shot trucking
Marketing and advertising costs
To attract clients, you’ll need to market your services. This could involve creating a website, online advertising, and listing your services on load boards. Costs can vary significantly depending on your approach.
Here is a summary of the top five load boards along with their unique offerings and subscription costs:
|Load Board||Best For||Subscription Cost|
|DAT Load Board||Extensive listings, ideal for new and experienced operators||$39.95 – $149.95 per month|
|Truckstop.com||Broad range of services beyond load board||$35 – $125 per month|
|Direct Freight||Driver availability feature, good for dispatch services||$35 per month|
|123Loadboard||Affordable with lots of features, good for smaller operators||$35 – $55 per month|
|Getloaded||Easy-to-use interface, good for beginners||$45 per month|
Note: The cost of subscription varies based on the services provided and can change over time. Always check the provider’s website for the most accurate and up-to-date pricing.
Other startup costs
These include any unexpected expenses that may arise. It’s advisable to have reserve funds for such situations. Additionally, costs like office space, dispatch software, and professional services (such as accounting) should be factored in.
Starting a hot shot trucking business requires a substantial financial investment. Initial costs can range from $60,000 to over $100,000 depending on various factors. However, with thorough planning, careful budgeting, and efficient operations, a hot shot trucking business can be a profitable venture.
Can I start a hot shot trucking business with a regular pickup truck?
Yes, you can start a hot shot trucking business with a regular pickup truck, provided it has the towing capacity for the loads you intend to haul. It’s also important to note that different types of cargo may require different types of trailers, so you’ll want to consider your target market and the kinds of loads you’ll be carrying.
How can I reduce insurance costs for my hot shot trucking business?
To reduce insurance costs, maintaining a clean driving record is crucial. Many insurance providers offer discounts for drivers with no accidents or violations. Additionally, you can opt for a higher deductible, but keep in mind this means you’ll pay more out of pocket if an accident occurs. Lastly, regular safety training and adhering to all safety regulations can also help reduce insurance premiums.
Is it better to lease or buy a truck when starting a hot shot trucking business?
The decision to lease or buy a truck depends on your financial situation and long-term business goals. Leasing can be a good option if you’re short on upfront cash, but in the long run, owning a truck can be more cost-effective. However, if you own the truck, you will be responsible for all maintenance and repair costs.
What types of cargo are typically transported in hot shot trucking?
Hot shot trucking typically involves carrying urgent, time-sensitive loads. This can include equipment for the oil and gas industry, construction materials, automotive parts, or any other type of cargo that needs to be delivered quickly.
How much can I expect to earn in my first year of hot shot trucking?
Earnings can vary widely in hot shot trucking based on factors such as the types of loads you carry, the distances you travel, and the rates you charge. On average, hot shot truckers can expect to earn somewhere between $50,000 to $100,000 in their first year, but this can vary significantly.
What are the common challenges in running a hot shot trucking business?
Common challenges include maintaining cash flow, especially in the early stages, finding consistent loads, managing operational costs like fuel and maintenance, and navigating regulatory requirements. It’s also important to maintain a balance between work and personal life, as the long hours on the road can be demanding.