Why starting a transport logistics business and trucking company will benefit you
ruck logistics play a significant role in our economy and daily lives.
According to the Commodity flow survey (CFS) trucks transported 71.6% or $10.4 trillion of the $14.5 trillion worth of all goods shipped in the United States in 2017. Clearly, starting a truck logistics business comes with a lot of rewards but it is hard work too.
What is logistics and how has it evolved to truck logistics?
The word logistics originates from the French term loger or logistique which means shortage. Historically, logistics was a term associated with the military where the function of logistics was supplying troops with suitable equipment for war.
With the rise of consumerism and the growth and complexity of supply chains, the word logistics evolved in the 1950s. Logistics became a term used in the business sector to refer to the process of planning, implementing, and controlling the transportation of goods, resources and information from the point of origin to the point of customer consumption. The focus of logistics shifted from the war to meeting customer expectations and reaching customer satisfaction in the most timely and cost-effective manner.
Today, the industry logistics markets have further developed as a concept that is utilised for business analysis and planning to help businesses achieve strategic competitive advantage by considering all possible factors involved in the business operation.
Truck logistics, therefore, refers to the research and planning of trucking operations. The logistics of trucking take into consideration all the factors involved in the transportation of goods and resources with the use of trucks, to boost productivity and efficiency. Trucking logistics include:
- Planning and optimising the most efficient routes for truck drivers
- Improving fuel consumption through fuel management
- Ensuring trucks are in good condition to complete tasks
- Hiring an excellent staff of truck drivers
- Applying effective fleet management
In today’s industrialised world, trucks are one of the primary means for commercial transportation and the transportation of goods. Efficient trucking logistics not only helps a trucking company achieve success but also contributes positively to the economy. It is therefore safe to say that the trucking industry plays a large role in the economy.
Let’s take a closer look at how this important and large industry operates.
How does the transport business industry work?
A truck logistics company falls under the transportation business industry which is made up of businesses that transport goods, resources, or even passengers from one location to another. These businesses provide services to different target markets, from individuals to companies and even global trade partners. This means that businesses in the transportation industry can specialise in various niches and activities from e-hailing or hauling customer goods to international shipping of supplies and products.
Businesses in the transportation industry are commonly classified into different categories based on their target customer, the type of routine, and the service provided, namely:
- Personal transport: This is catered to individuals and small groups of people and includes one-on-one services such as taxi services, bus services, and most recently e-hailing services.
- Local transport: This category provides services to regional markets by transporting cargo such as livestock, materials, consumer goods, and more. Local transport may be commercial or private, depending on the distributed materials.
- Global transport: Global transport offers services for sea shipping or air-based delivery of cargo. These services consist of aspects of the personal and local categories but on an international scale.
Truck logistics focuses on local services. In providing these services, truck logistics prioritise road safety to ensure the secure transportation of cargo and the safety of both truck drivers and individuals as well as the preservation of specific goods, products, and loads.
What trucking logistics does is examines factors such as trucking routes, types of loads and delivery times to best facilitate the different types of transport services and determine the best means of transport. For example, heavy hauling and long hauling are more demanding aspects of trucking than e-hailing personal services.
The role of truck logistics in transport supply chain businesses
A supply chain refers to a network of individuals and companies who are involved in creating a product and delivering it to the consumer. Truck logistics is an aspect of the supply chain that plays a role in delivering goods or services to customers, manufacturers, distributors, or consumers.
Simply put, the supply chain covers the production and distribution of goods and services to all types of customers while truck logistics focuses on the movement and storage of products in the supply chain. When efficiently implemented, both supply chain management and truck logistics work together to give companies a competitive advantage and bring value to their customers.
The goal of truck logistics is to get goods and services delivered on time. To achieve this goal, truck logistics follows a logistics flow that entails the movement and direction of goods, resources, products, or information within a supply chain network between the point where the goods, resources, products, or information originate to where they are consumed by customers.
The three types the logistics flows are:
- Inbound logistics: Raw materials, tools, machines used for manufacturing, consumable items needed for fuel, or various spare parts and other elements for production inputs are moved, transported, or stored from suppliers to manufacturers for processing and production. Being the first stop of the supply chain, effective inbound logistics allows for a swift and integrated supply chain.
- Outbound logistics: Finished products from manufacturing are moved to the next stop of the supply chain. These finished products are shipped and delivered from the warehouse to the logistics business customers. All the products that move through this outbound logistics flow are intended for consumer consumption and satisfaction- this is also referred to as the order fulfilment process.
- Reverse logistics: This involves returning, servicing, repairing, refurbishing, reselling, recycling, recovering, or properly disposing of products. Reverse logistics, therefore, refers to moving items or goods from the consumers back through the supply chain. This process is most common in the automobile and electronics industry.
3 reasons why you should start a trucking company
With the current shortage in the logistics industry, starting a truck logistics business can be rewarding. Here are three reasons why you should start a truck logistics business:
- You can make money
Amongst other reasons, people start businesses to make money. So yes, you can make money from a truck logistics business, however, only if you manage it efficiently. This is because the profit made in the trucking logistics business is heavily affected by the costs. Fuel costs are one of the factors that can lead to high costs, especially in trucking and logistics- fuel costs eat up your profits.
- You can work from home
Working from home has become a new norm. Today, the basic needs of managing a truck logistics business are a computer, phone, and internet. With these gadgets, starting, owning, and managing a truck logistics business from home is possible. Trucks can be busy on the road all day while you use fleet management software to monitor the activity of your fleet with the use of GPS location software.
- You do not need to own trucks
Most people have the assumption that to start your own trucking business you need to invest in a truck or trucks- this is not the case. As an owner of a truck logistics business, you do not need to be the owner of the truck or trucks. A start-up trucking business can be started with another person’s truck- just like Uber and Bolt. This is called an owner-operator and you can simply register the owner-operator’s truck under your authority.
Thinking of starting your own logistics company? Let’s get you started with the following steps!
6 actionable steps to plan and start a truck logistics business
- Complete the required training
Truck logistics requires the right set of training and skills, therefore it is important to acquire the right training suitable for the job. The form of training will vary based on the type of service the trucking business will provide- whether global, local transportation, or both. The following are some of the training requirements:
- Transport Management Systems: This training gives an understanding of how transport management systems (TMS) work and why it is vital for transport systems. The training equips you to manage and track all the different aspects of transport management such as vehicle maintenance, warehousing, communications, cargo handling, and more.
- Management and Inventory Operations: The ability to handle and control inventory plays a vital role in the transport and logistics business. Inventory management is integrated with warehouse management to inform and educate you on how products move through your operation.
- Transportation Regulations and Law: To run a trucking logistics business that provides both domestic and international services, training should include regulations on interstate commerce and global shipments and carriers.
There may be additional training or courses that may have to be acquired depending on the type of service your truck logistics provides and local government regulations.
- Do your research
Before you get into truck logistics it is important to research the industry. Research helps you understand the business and how viable it is, even before entering the market. Here are some research points that could give you an overview of the business:
- Costs: As mentioned above, the purpose of owning a business is to make a profit. It is important to find out the costs of the business and whether the business is profitable.
- Competitors: Researching competitors will help you understand what other service providers are doing right or wrong. This way, you will gain an understanding of what the customer’s expectations are.
- Niche: The truck logistics business is a big industry. Find out what goods and services you would like your business to specialise in. Successful businesses pick a lane.
- Set it up
Starting a truck logistics business will take a lot of time, money, and energy, this is because it involves planning, making key financial decisions, and completing a series of legal activities. Here is a guide to setting up your truck logistics business:
- Create a business plan
- Choose a business entity
- Open a business account
- Ensure fleet compliance
- Get funding
Transport tools and different road and cargo shipping requirements are some of the capital needed to start a track logistics business. Therefore, you need start-up capital to start a truck logistics business. Luckily, there are many funding and financing options accessible, based on the type of service a truck logistics business provides as well as the geographical location of the business. There are traditional financing options such as loans and private financial aid. However, if you have no money, you can opt for financing that can help you start a trucking logistics business with no money. The trick is doing the research and finding the funding that is ideal for you.
In South Africa, truck logistics presents a major business opportunity with a few good funding options- these include both government funding options as well as private funding.
- Put together a team to operate your fleet
A truck logistics business without truck drivers is non-functional. There are many things to take into consideration when hiring employees:
- Do they have a history of safe driving?
- Check the applicant’s compliance, safety, and accountability profile (CSA)
- They must have a commercial driver’s licence (CDL) or road test certificate
- Make sure the applicant’s medical certification is up to date
- Have a road test
Finding a suitable employee will take a lot of time and effort but hiring the right applicant for the job will positively impact the business.
- Invest in fleet management software
Finding the best fleet management software will help you ensure the success of your business. A good fleet management software will help you optimise routes, track truck drivers and cargo, ensure your fleet is compliant, help you manage fleet-related costs, protect you from fuel fraud and ensure you keep your truck drivers safe.
Oversee your logistics company and save time with Cartrack’s software as a service (SAAS)
Cartrack’s fleet management software allows you to streamline your entire fleet operation from monitoring driver behaviour and using GPS tracking to pinpoint drivers and assets to managing vehicle usage and fuel usage.
Contact Cartrack today and kick-start your successful trucking company with us.
