The transportation and warehouse industry market size in the USA alone amounts to $1.3 trillion. The transportation industry is the backbone of society as it facilitates getting people and things from one place to another in safe and quick ways.
However, the transportation industry is one of the most highly regulated industries. There are a plethora of rules and regulations that you and your associates must follow to stay on the right side of the law at all times.
Let’s take a look at some of the most important legal aspects of running a transportation service that will help you ensure compliance at every step.
Transportation is a ubiquitous business in nature and involves a myriad of sub-industries. This makes it an industry that requires a large amount of manpower to operate, allowing many entrepreneurs and workers to make a fortune in it.
If you wish to venture into transportation as a business, it’s extremely important to be well-versed in the rules, regulations, and compliance requirements of not just the industry, but your specific business in your specific region.
You can always get legal help to get to know the rules and regulations better, but you still need to have at least a basic understanding of the legal aspects of transportation service to be able to thrive in your business.
Here are the most prominent aspects of running a transportation business that every entrepreneur must know about.
The importance of insurance in any business is well recognized. It helps you cover monetary losses in case you suffer setbacks while operating your business. It becomes even more important in a tightly regulated and high-risk business such as transportation.
No matter which field you choose for your business, you need to have every aspect of it insured right from the beginning. Ensure your vehicles, crew, products, and goods that you ship under your authority.
The goal should be to insure every aspect of your business from your infrastructure to your operations to ensure there are no loopholes. Insurance will protect you from legal fines, customer claims, and compliance mishaps.
Get legal advice to help you choose the best plan for your business based on its scope and nature. Insurance for box truck will help secure your vehicles, the backbone of your business. Insure your cargo to comprehensively protect your business.
Once you pick the right policy for you, make sure to understand its details before you commit to it. You don’t want to get the help of a legal advisor every time you interact with your insurance provider. Learning the basics of the policy and understanding its stipulation will help. You negotiate better.
Niching Your Business
Transportation is a vivid industry where you can choose from a variety of businesses to start your journey. The logistics/trucking sector has emerged as the most preferred one. The most common ones are:
- Car rentals
- Bike rentals
- Cargo shipments
- Limousine rentals
- Taxi service
- Senior transportation
- Moving company
- Medical transcription
- Towing service
- Bus transport
- Shipping service
All these businesses come with a different set of rules and regulations that you need to comply with. You may begin with one or multiple of these businesses. But you also need to make sure to understand the compliance regulations that come with them.
For example, if you choose medical transportation, you will need to collaborate with medical establishments in your region. On the other hand, shipping services will need you to spread your reach all over the country. Both businesses have distinctly different legal requirements.
This is why it’s important to choose your fields wisely. Choose a field that you are better acquainted with and build your business from there by venturing into other fields of choice. This also applies to the type of business model you choose.
You could be a sole proprietorship, limited liability partnership, or limited liability company, depending on which model suits the nature and scope of your business better. This is what you will be legally registered as and all the compliance regulations will be based on it.
Perhaps the biggest, most important legal aspect of a transport business is licensing. You need a multitude of licenses to be able to operate a transportation business of any kind. The first of which is a commercial driver’s license for every driver that is associated with you.
Every state has different rules and licensing procedures that come with different classes. The more technical or higher the class you want, the more time-consuming the licensing process will be. You will have to choose the class you want wisely.
The most suitable way to go about this is to acquire a basic commercial driving license and then add endorsements to it. The endorsements are for specific types of transport or the level of difficulty you can maneuver with transport, such as 18-wheeler, passenger, etc.
The federal licensing rules are quite standard for all kinds of driving, not just the transportation industry. Transportation activities that cross state lines are subject to federal as well as state laws as it falls into interstate transportation.
You need to learn about the transportation laws in your local region, and state, as well as the federal ones that apply countrywide. Even if your transportation activities do not involve crossing state borders, you should have a basic idea about those legalities for when the scope of your business increases.
Running a successful transportation business, especially if it involves chemical transport, requires meticulous attention to detail and a strong focus on compliance. Failing to meet the regulatory standards can result in heavy fines, negative publicity, and damage to reputation.
You will need to acquire permits with a city ordinance to operate in an area. They can be about the time periods you’re allowed to operate in, or controlling the environmental damage you might cause, governed by related authorities.
Every region has a different set of rules and permits depending on its geographical situation. Check with your municipality to know about the stipulations that apply to your specific business. You can check their website to gain more information on the same.
Permits allow you to conduct business in a region while staying under the guidelines. So, for example, by acquiring a permit to conduct taxi services in the city limits of an area, you can legally take passengers from one place to another for a fee during a particular time without breaking any compliance rules.
Should any authorities come up to you and check why you’re using a taxi in an area, you can show them the permit that allows you to do so. This helps you avoid legal trouble and conduct business with ease.
Permits help city municipalities control activities in their area. They limit the number of vehicles in the area to ensure there is no overcrowding or property damage. So, if you want a permit from a city ordinance, you need to make sure you contact them in time and with complete documents.
We talked about zoning when we discussed licensing and crossing interstate borders for business reasons. Zoning refers to the physical areas you cover when conducting a business and its legal limitations of it.
Zoning is a legal aspect of any business. However, with transportation businesses, it can become a little complicated given the nature, and scope of your business and if you cross interstate borders or not.
The place of importance in this is your office i.e., from where you operate your business. This is where your vehicles are parked and administrative activities take place. It can be your home as well but it should be the place from where you conduct your business.
Check the zone in which your office falls and the related regulations with it. You must adhere to the compliance regulations of your zone. Only then should you look at the regulations that come with crossing borders, as mentioned in permits and licensing.
You need to maintain a certain standard of safety for your vehicles to stay under the guidelines. Every type of vehicle has a different set of safety standards that allows it to get on the road. If your business fails to follow it, it breaches the law.
Perhaps the easiest way to ensure that you follow the safety protocols with your vehicles is to ensure their timely maintenance. When you’re maintaining your vehicles regularly, you can easily identify safety problems and fix them then and there to ensure compliance with ease.
To stay ahead of your maintenance schedules and make sure you are keeping up at all times, it’s best to develop a fleet preventive maintenance program. Not only does it reduce asset downtime, it improves the lifespan of your equipment too.
Legal hassles don’t just dampen your reputation but also hinder your day-to-day operations, especially with on-the-go businesses such as transportation.
The most efficient way to avoid them and stay compliant with rules that apply to you is to be informed about the legal aspects of running a transportation business.
Learn about the zone your office falls in and the licences and permits you require to begin. Insure your business against missteps and keep up to date with safety regulations to keep your vehicles in top shape.
Let us know in the comments what you think are the most important legal aspects of running a transportation business.