Did you know that the trucking and haulage business is one of the promising business opportunities in Africa?
Growing import volumes are a key sign of Africa’s rapidly expanding consumption. Every day, huge volumes of food items, industrial raw materials, refined petroleum products, heavy and light equipment, vehicles and consumer goods (electronics, clothes, home décor etc) valued at billions of dollars arrive at African sea and air ports from the USA, Europe, South America and Asia (especially China).
These large chunks of imported goods need to be transported to several towns and cities until they reach the small retailers and final consumers. As a result, trucking has become a lucrative business and more smart entrepreneurs are getting in.
Let’s take a close look at this opportunity and how you can start a trucking business for yourself…
Why is the trucking and haulage business growing across Africa?
In spite of the recent global recession, African economies have shown sustainable growth (5 percent average) over the past decade. The forecasts remain very positive and trade between the continent and the rest of the world has doubled since 1999.
As Africa’s economy and population continue to explode and the size of the middle class increases, every other continent wants to sell goods to Africa.
In addition to imported goods at the ports, factories need to get their bulk products from the warehouses to wholesalers in distant cities and rural areas.
However, given our continent’s poor, and undeveloped, rail and inland waterway transport networks, almost all heavy goods are transported internally by road!
As a result, trucking and haulage have become big business in many parts of Africa.
Trucking may be a very costly, risky and inefficient option to transport heavy goods (given the bad state of many African roads), but it appears to be the only practical option at the moment (even though it puts more pressure on the already terrible roads!)
Combined with the rising production from our factories and farms, more than 100 billion (yes, billion!) tons of goods are transported across Africa every year. Trucking and haulage are the vital links that connect imported, manufactured, and cultivated goods to final consumers like us. Without these heavy-duty trucks and tankers, commerce may be totally impossible in Africa!
Market Opportunities for the trucking and haulage business in Africa
Forecasts reveal that the demand for trucking and haulage will double across Africa within the next 10 years. This will be a direct consequence of increased economic and commercial activities everywhere on the continent.
The opportunities in trucking and haulage are as huge as there are several opportunities in this market.
Manufacturers need to get raw materials to the factories and finished goods to the market; importers and exporters need to get their goods to the warehouses and ports respectively. (photo credit: miraimages.photoshelter.com)
Farmers need to move their crops, livestock, feed, fertilisers and equipment from the farm to market and vice versa.
Builders need to lift a lot of sand, stone, cement and other building materials to construction sites… Phew! Don’t we all need to move something?
There is a huge need to move heavy stuff from place to place and trucking remains the only viable way to get this done.
In the face of all these opportunities, expectedly, the trucking and haulage business has attracted a lot of participants. In Nigeria and South Africa alone, more than 7,000 businesses are registered as truckers and haulage service providers.
There are little or no barriers to start this business; Most people just buy (or lease) a good truck, hire a driver, fill up the tank with petrol/diesel and find a customer. That’s all! Whether they make a profit or not is a different matter!
Keep reading; we shall discuss the keys to success in this business in the sections below.
Although it’s an easy business to start if you have the start up capital, as many people who start this business every year, fail in their first year of operation.
This is mainly due to inadequate planning, insufficient capital, poor vehicle maintenance, dishonest and reckless drivers who sabotage the business, high fuel costs and bad management by the entrepreneur.
In spite of these high failure rates, there is a lot of potential in the trucking and haulage business for the diligent African entrepreneur.
Using the tips we have provided in the section below, additional knowledge and your experience in the field, it is very possible to consistently grow and remain successful in the long run.
Success tips for entrepreneurs in the trucking and haulage business…
Trucking is a capital intensive business and the startup costs can be very high. A durable truck in good condition is bound to cost you some good money (at least, US$ 25,000).
Entrepreneurs must ensure they do not put the new business under a lot of pressure through heavy debt.
Entrepreneurs can consider buying high-grade second hand trucks in good condition to reduce start up costs.
It is very probable that business will start slow (for a couple of months) before it starts to pick up. If you have a lot of debt hanging over you, it is likely that you will start to cut corners and critical areas of the business may start to suffer (especially vehicle maintenance and repair).
As a result, it is best to set up this business with your own finances or capital raised from investors (friends, family etc.) who are ready to wait out the tough times until the business stabilizes, and will not put pressure on you early in the business.
Only borrow from the bank or other lenders if you have a supply contract in hand or you are VERY sure of customers who will hire your services. In addition, you have to be sure the business will make enough money to pay back (with interest) under the terms of the loan.
This can sometimes mean the difference between success and failure in this business.
On the other hand, you may consider a Hire-Purchase arrangement with someone who already has good trucks. These arrangements are much more flexible and help to avoid the huge initial capital.
You can also check out other options for funding this business in this article: 10 Guaranteed Ways To Raise Capital For Your New Business
(2) Running and sustaining the business
Anyone can start a trucking and haulage business; the difficult part is always how to keep it going. The trucking business requires a lot of detailed planning and close management. Business and financial skills are very important here.
You should be able to make very reasonable estimations about the profitability of jobs you are offered. It can make more sense sometimes to turn down certain jobs if they are not profitable. This will save you a lot of stress and financial loss.
Advertising your services in local newspapers and magazines may be a very good idea as long as it is cost-effective. Use your business name, logo and contact details on your trucks to create the vital awareness that will fetch more business.
Join a trucking or road transport association in your area to network with similar companies and business people. You never can tell who will win a major trucking contract and will need your services to support his or her fleet.
Security and tracking features on your vehicle can help to make running the business a whole lot easier. There are dozens of truck tracking and immobilizer services in several African countries. These tools can help you track your vehicle’s location, average speed, mileage, fuel use, routes taken and many more interesting features.
The information provided from these tools can help control driver recklessness and abusive use of your vehicle. You must ensure your drivers are licensed and well-trained to drive the particular vehicle. It is also advised to pay drivers on an incentive basis.
A typical example is: the more trips the driver makes, the more money they earn; with generous rewards for road safety (speed limits, no accidents or traffic violations), cleanliness of the vehicle, and keeping to recommended maintenance and service routines.
Properly implemented incentive-based pay schemes like this can significantly motivate drivers to make your business successful. Drivers are very vital to the survival and success of any transport business!
As long as the entrepreneur/business owner does not personally drive the vehicle, it is absolutely wise to ensure that your drivers see a very strong relationship between the success of your business and their selfish interests.
A diligent entrepreneur should also seek out cost-effective insurance cover to limit the risk of severe damage, loss or theft of the vehicle or transported goods. It’s very easy to overlook the benefits of insurance when business is doing well.
This is an unprofessional and ignorant way of running this sort of business. In many countries, insurance cover for vehicles is compulsory and backed by law. Make sure you know what your local law says about vehicle insurance!
Some things you should consider before you start a trucking and haulage business…
Before you lay down your hard capital to start this business, it is important that you seek out potential trucking jobs, contracts or customers. This will help you to estimate the likely income from the business.
This income must be able to cover the costs of your freighting business for you to turn a profit. The usual costs include garage parking fees, maintenance and repairs, insurance, toll fees, fuel, marketing, security features (tracking), driver’s salaries and so on.
You will also need a durable truck in good condition that will help to recover your initial investment and more. Some second-hand vehicles with a low mileage on them can be cost-effective and make a very good bargain.
However, timely service, repair and maintenance is likely to determine the eventual condition and useful life of the vehicle.
You and your driver(s) will play a huge role in this regard. You should not be carried away when the money starts coming in and forget to ‘regularly’ maintain and service your vehicles!
In line with our Smallstarter principles, we strongly advise that entrepreneurs start up with one vehicle and gradually expand the fleet in line with market demand and the success of the business. Starting off with many trucks can spell disaster for your business if your initial plan and forecast do not go well.
Vehicles must also be certified to be roadworthy and must have the all the necessary permits and licenses. Special permits may be required to transport flammable, toxic and dangerous materials. You must ensure that you have complied with all your local laws before you start this business!
A final note…
If you have any ideas, questions or advice on on starting a trucking and haulage business, we’re sure there are lots of people who are itching to learn from you.
Please share this inspiring idea with a friend and remember to leave a comment in the section below.
To your success!