Buying a truck is one of the most important activities which have to be given serious consideration to when starting a haulage business, because failure to do so may cost the company a whole lot of unavoidable losses. Many investors have failed in haulage business in the past solely because they didn’t pay adequate attention to purchasing the right trucks for their business.
In haulage business, your truck is your office and if you have to make any profit, that office must continue to operate, regardless of the surrounding economic or climate conditions. Anytime your vehicle is down, you would be losing a lot of potential income.
NOTE-: This article is culled from: “The Complete Guide to Starting a Trucking Company from Scratch.”
You may even lose clients due to bad vehicles because your clients would expect that their goods get to them at the agreed time and if a breakdown of your vehicle causes clients goods to be delayed and their businesses interrupted, such customers wouldn’t be so thrilled to patronize your business again.
From the moment you make a decision to go into haulage business, you must start to pay attention to the type of trucks you would purchase. Very crucial factors to be considered when buying trucks for haulage business include the following-:
10 Crucial Factors to Consider When Buying Haulage Trucks
1. Will You Buy New or Used Trucks-: First, you have to look at your budget to determine what kind of truck you can afford. You could either purchase fairly used trucks or brand new. Brand new trucks are usually very reliable and you would be able to avoid all the excessive repairs and maintenance costs usually associated with fairly used trucks but the challenge with buying new trucks is that it’s expensive and very few people can really afford them.
Those who cannot afford new trucks go for fairly used trucks which are way cheaper than the new ones. Although they are cheap and investments made on them could be recouped faster, sometimes the costs of repairs and maintenance and the general unreliability fairly used trucks make them a not so perfect choice.
2. Lease, Hire purchase or Outright Purchase-: This also depends on the capital you have to start this business. Usually, insufficient capital is not a deterrent in this business; you can always find alternative financing for truck purchase if you don’t have the money to purchase one out rightly. The most popular credit financing options for haulage contractors is to either lease a truck or get one on hire purchase. Both methods offer flexible repayment plans such that you can pay for the trucks from the business income.
3. Niche-: There are different niches in haulage business with different truck specifications. You can use a tanker to carry petroleum products and liquids but you cannot use it to carry electronics. This is why you have to give careful consideration to the category of haulage business you want to do before you go ahead to buy a truck. You shouldn’t buy a tanker unless you are guaranteed a job in the oil industry. It would be more advisable to purchase a general truck which can carry different types of goods.
4. Availability of Spare Parts-: It is also important to buy trucks whose spare parts are easy to find. This is one of the challenges facing haulage contractors in Nigeria; most times they find it hard to get replacement parts for some of their trucks and even when they eventually get parts, some of these parts turn out to be substandard and outrageously expensive. Trucks like Mack and DAF are used buy a lot of haulage contractors in Nigeria, so the parts for these brands are easier to get. Whichever brand you choose, just make sure that you can get spare parts easily.
5. Engine-: The next important factor to consider is the engine of the vehicle. In Nigeria, truck engines are usually classified into Grade A and fairly used engines. Grade A engines are engines of trucks imported from Europe or America. These trucks are believed to be stronger because of the good road networks and vehicle maintenance culture in these countries.
Then there are the fairly used engines which are from vehicles used in Nigeria by another haulage contractor who now wishes to sell it off. People are often advised to purchase Grade A engines if they can afford it because it is more reliable than other engines.
6. Tonnage-: Also, you have to consider the tonnage of the trucks before you go ahead to make your purchase. Haulage contractors are usually advised to purchase vehicles with a minimum capacity of 33 tons.
7. Costs of maintenance-: Some trucks are usually more expensive to maintain than others. A truck that would be used for haulage business should not be a high maintenance truck because it would gulp down too much of your profit. Some of the things you should look out for are the fuel consumption, cost of replacement parts and costs of labor. You should also consider how easy it is to repair because every minute your vehicle spends at the mechanics workshop costs you money.
8. Tires-: Next, you have to look at the number of tires the truck has. The roads in Nigeria are bad and that calls for a regular change of tires to ensure safety. If you feel that it would cost you too much to keep changing tires, you should consider going for a truck with fewer tires.
9. Technical Know-How-: Also, it is important to find out how well mechanics in your area can handle the type of truck you want to buy. Like I said earlier, maintenance is very important in this business and the level of maintenance your truck gets would go a long way in determining its life span therefore, you have to ensure that there are people competent enough to handle that type of truck in your area before you make your purchase.
10. People’s Reviews-: No one can give you a more practical advice about the best type of truck to buy than someone who is already in the business. A person who is already successful in the business would be able to give you an idea of what works and what doesn’t and also give you practical advice which would guide you in making your purchase.
Buying New Vs Used Haulage Trucks: Which is the best?
One of the important activities you would have to carry out strategically when starting your haulage business is building your fleet. You have to make a choice of whether to build your fleet with brand new trucks, used trucks or leased trucks.
However, each option comes with its own advantages and disadvantages. This article seeks to provide you with extensive information on the upsides and downsides of buying used and new trucks especially for those who are trying to start their haulage businesses on a low budget. You can get as much as two or three used trucks at the same price that you would buy one new truck. So, you see why most people opt for used trucks.
However, buying used trucks can create a kind of ‘penny wise, pound foolish’ impact if not carried out carefully. You can discover that the costs of repairing your used vehicles with the constant mechanical faults that used trucks usually give could be extremely high that one would wish he had rather bought a new truck. Some other disadvantages of buying used trucks include-:
5 Disadvantages of Buying Used Trucks
a. Uncertainty of truck conditions-: You cannot be 100% certain about the condition of the vehicle you are buying. A truck that has already been used by another person can be in any condition and you can end up inheriting somebody else’s truck problems in a bid to purchase a cheap truck.
b. Low Performance-: The performance level of a used truck cannot be compared to those of new trucks. When you buy used trucks for your haulage business, expect break-downs from time to time and this may affect your business and drive customers away.
c. Lack of Warranties and Guarantees-: When you purchase new trucks, you would be given warranties or guarantees for some years which can help you to save some costs/business expenses but these warranties are mostly expired or invalid for used trucks.
d. Increase in running Expenses-: Because used trucks are prone to damages regularly, your costs of running your haulage business would increase.
e. Longevity-: Another disadvantage of buying used trucks is that when you buy used trucks for haulage business, you would soon find yourself needing new trucks after a short period. This is because the estimated useful life of used trucks is usually very low compared to new trucks.
Nevertheless, buying used trucks is not all bad and no good as buying used trucks has some benefits as described below-:
4 Benefits of Buying Used Trucks for your Trucking Company
- Cheaper Rates-: It is cheaper to buy used trucks and new entrants into haulage business can easily buy used trucks, use it to start the haulage business and then progress into buying new trucks eventually, when they have made enough profits.
- Low Usage Trucks-: The fact that it is tagged ‘used’ doesn’t necessarily mean that it was heavily used. You can find trucks that have been sparingly used by its previous owners and can even pass for new trucks. If you are lucky enough to get such bargains, it’s almost like buying a new truck.
- Valid Warranties-: You may also be lucky enough to find trucks whose warranties are still valid.
- Business Testing-: If you are the type who is still new in haulage business and wants to take things slow, used trucks give you the opportunity to start out very small so that you can easily opt out without losing too much money in case you don’t find the business satisfactory.
When buying a used truck, you must carefully consider some important factors which include-:
4 Factors to Consider When Buying a Used Truck
- Age of the truck-: You must know how long the previous owners have had the truck for. Anything beyond five years is not too good for your business.
- Mileage-: You must know how many miles the car has done. High mileage shows high rate of usage and wear and tear.
- Purposes-: You should also consider your purpose of buying the truck and whether or not you feel that a used vehicle would serve you better.
- Maintenance-: When you purchase used vehicles, you need to consider the costs of maintaining the vehicles. If you feel that it would be too expensive to maintain a used truck, then it is advisable to go for a new truck.
When you buy new trucks for your haulage business, these are some of the benefits that you would enjoy-:
- Reliability-: New trucks are reliable and you can’t expect it not to break down all the time and complete assignments as scheduled.
- Freedom of Choice-: Unlike buying used trucks where all you are concerned with is getting a good engine and low mileage trucks, when you buy new trucks, you have the freedom to make a lot of choices on things like color, specifications, interiors and exterior; you can even get manufacturers to make trucks to your specification if you wish.
- Warranty and Guarantees-: You have a valid warranty on new trucks which you can redeem at any time you want.
- Safety-: A new truck is safer for your drivers and business because all the parts are new and would work properly. Therefore, the chances of an accident occurring is greatly reduced.
- Fuel Efficiency-: A new engine would consume less fuel compared to an old engine.
- Vehicle Financing-: You can get lower financing rates from banks when you are buying new trucks.
- Maintenance-: You would also find it easier and cheaper to maintain a new truck.
Buying a new truck also has some disadvantages which include some of the following-:
- Price-: It is more expensive to buy a new truck than a used truck.
- Depreciation-: Trucks depreciate and whether you buy a new or used truck, you would find yourself needing another truck after few years.
- Insurance-: Insuring a new truck is costlier than insuring a used truck.
So, you see that each option has its own potential advantages and disadvantages therefore, you have to carefully weigh the advantages and disadvantages of each option before you make your choice.