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The trucking industry is very broad and to succeed in it, you must select a niche. There are
different niches in haulage business and the niche you choose would determine the type of
vehicles you would need and your start-up costs.
For example, you can check out these business opportunities for truck owners and then take the
questionaire below:
Will you be engaged in transporting bulk goods or would you be leasing trucks to businesses in
the transport industry?
Will you outsource your truck to a trucking company or would you rather put your truck on a
hired purchase?
Are you going to haul short or long distance?
If you are to go into transportation; will you haul solid or liquid goods?
These are the questions you must answer before setting out to start your own trucking business. If
you choose petroleum products haulage for instance, what you would need is a petroleum tanker
and you would have to register with an oil company or work as a sub-contractor with an already
registered company but if you want to go into building materials haulage like carrying of sand,
cement and granite from quarries to construction sites, what you would need is a tipper or a lorry.
3. Start-up Capital
The next thing you will need to begin your journey in the trucking industry is capital and you are
going to need lots of it. Trucking is capital intensive and arguably the bloodiest part of starting a
trucking business. Your start-up capital will largely depend on the size of the fleet you are
intending to own. Therefore, you have to write a business plan and have a clear idea of how much
you would need to start the business and look into your savings to see if you can afford it.
Are you going to buy new trucks or used trucks? There are two ways with which you can get your
trucks; you can either purchase them outright or get them on lease. Another option is to look for
subcontractors. While the initial investment is quite huge, you can easily get it back if you make
the right management decisions.
If you do not have enough funds to start and would like to explore other financing options, you
should first consider your credit-worthiness and eligibility for borrowed funding and whether you
have collateral security for the funds you wish to borrow. You should also look into interest rates
on the loan and compare it with your projected earnings from the business to be sure that the
business would still be profitable even after paying such interests.
How to finance your haulage business
There are some financiers that are ready to finance this project if you can convince them. The
major financing option that is available is leasing. Generally, equipment leasing is regarded as a
usage agreement between an equipment owner the lessor and a user of the equipment the
lessee whereby the lessee remits to the lessor a periodic rental fee as compensation for the usage
of the equipment. How a lease is viewed and utilized varies considerably, although there are two
major forms:
Finance lease
Operating lease
Finance lease, which is the most common type of lease in Nigeria and the rest of the world
substantially, transfers all risks and benefits of ownership to the lessee while the lessor still retains
title to the equipment, which may eventually be transferred.
In Operating lease, a substantial part of the risks and rewards incident to ownership are not
transferred to the lessee. The term operating lease encompasses the short-term hire of equipment
such as Trailers, motorcars, barges or boats. Leasing provides the lessees the opportunity of
payment over a longer period than with most other forms of financing. This allows the lessee the
opportunity of reducing financial commitments particularly in times of stress.
4. Rules and regulations
Another important factor that has to be given serious consideration is the legal requirements
required for starting haulage business. You would be required to obtain various licenses and
permits and you would also be presented with a set of rules and regulations that must be adhered
to. You should do an extensive research on what these rules are and ensure that you comply with
them.
5. Insurance-: Haulage business is filled with lots of risks. You would be carrying expensive
merchandize which do not belong to you and would have to be conveyed to its destination safely.
Considering the fact that you would be traveling over long distances to deliver these goods; it is
impossible to predict the things that may or may not happen along the way.
Sometimes accidents may occur, cases of thefts may arise, dishonest drivers may even divert the
goods elsewhere and this would lead to a huge debt on the part of the haulage company. This is
why obtaining insurance for your haulage business is very important and you must consider the
costs of obtaining insurance policies, and the premiums you would be required to pay and
compare it with your projected earnings to determine viability of the business.
6. Your management strategy
The next important to look into when starting a trucking business is your management strategy to
handling payload and clients. A good management team is very essential to running a successful
trucking company. If you are inexperienced, you may need to employ a manager who is
experienced to oversee the day to day affairs of the business and run the business profitably.
Your management team must be experienced in the transport industry; especially with truck
management. Another important aspect of running a trucking business is your accounting process.
You can buy an accounting software your business to make things easier. As an alternative, you
could place your vehicles under fleet management companies who would manage the vehicles for
right maintenance services to put the vehicle back in order again. You would need a very good
mechanic to handle repairs of your vehicle.
This is especially important because the level of maintenance and quality of servicing your car
receives would go a long way to promote the life span of your vehicles. You should look around
you for competent automobile repair companies or technicians who can handle repairs of your
vehicles.
These must be people who would be willing and able to provide 24/7 services and who would be
willing to travel over long distances in case your vehicle breaks down on a trip. For people who
own fleet of vehicles, it is more economical and advisable to employ an in-house mechanic or
team of mechanics to handle maintenance and repairs of your vehicles.
Starting a Trucking Company (Haulage) Nigeria as a Case Study
Transport business in Nigeria is as old as the nation itself and there is no doubt that those in the
business have been known to have contributed in no small way to the economic development of
the country. Transport plays an important role in most business activities. Efficient transport is an
essential component in the production and distribution process commonly referred to as supply
chain logistics.
Nigeria has the largest road network in West Africa and the second largest south of the Sahara,
with roughly 108,000 km of surfaced roads. The present paralysis of the rail system in Nigeria has
made road transport the only effective means of conveying heavy goods from one point to another
within the country. The population is there and the environment is good. This explains why the
road haulage business is one of the most lucrative businesses to start in Nigeria today.
Haulage (or road haulage more specifically) involves the transportation of manufactured consumer
goods, raw materials, machinery, petroleum products, and natural resources from one point to
another using heavy duty vehicles such as trailers, tankers, tippers, and cranes.
3 Distinct Ways to Make Money in the Haulage Industry
Starting a haulage business is just like starting a wild fire. The returns are enormous, but it greatly
depends on what your truck will be doing. Haulage is a broad area and all spheres of haulage have
its specific intricacies, the good news is that it is not so difficult to learn.
a. Running the business an independent contractor
This involves starting your own haulage company, operating your truck, hiring your drivers, and
hunting for contracts from companies that may require your services. This is the most profitable
option, the most capital intensive, and the riskiest.
For example, if you have a fleet of, say 5 trucks to start with, each truck can fetch you N500,000
or more in profits per week, depending on the capacity of the truck, the number of trips covered
per week, and the distance travelled per trip.
For a 40ft truck traveling from Lagos to Onitsha, you will charge about N250,000. After deducting
the cost of fueling and other routine measures (which will be around N100,000) you will be left
with a whopping N150,000 profitand thats just for one trip. If the same truck does 3 to 4 trips
per week, thats a weekly profit of between N450,000 and N600,000. Now you can imagine how
much you would make monthly if you have 5 trucks of the same capacity.
You may decide to haul products for oil majors like Total, Oando, Conoil or Telecoms companies
like MTN, Airtel, Etisalat, Glo, etc. However, all these companies have stringent entry procedure
and requirements, so your option going in as an individual may mean merging with some other
persons in the business.
Although the idea of starting your own haulage company is very alluring due to the huge
profitability of that option, though there are certain risks involved, just as is the case with any
other profitable business. Here are some of the risks and downsides of haulage business:
b. Running the business as a contractor or subcontractor
In this model of haulage business, you will be serving only one client, usually a multinational or
big manufacturing company. The company will manage all your trucks as well as the process of
hiring and paying drivers. At the end of each month, the company will pay you an agreed amount
of money, which ranges between N350,000 and 650,000depending on the number of trucks you
have.
One interesting fact about this business is that if it is properly set up, all you need to do is sit back
and wait for your monthly earning which can be up to N800,000k (depending on the type, age and
tonnage of your truck).
My research took me to some firms and I discovered how some Nigerians have been consistently
collecting money from big haulage contracting companies, I saw a long list of signatures with a
corresponding amount. I also noted that even the Trucks in the Country now are not enough to
satisfy the need of this sector.
You will need to think twice before adopting this model because you will be subject to certain
terms and conditions stipulated by the company you register with (of course, you will be required
to register with the company).
c. Leasing your trucks to a haulage company
This model is similar to running the business as contractor or sub-contractor (as described above),
but the difference being that you will be sub-contracting with a haulage company. Here, you will
also enjoy the benefits that come with sub-contracting with a multinational or manufacturing
company.