Are you about starting a trucking company and you want to know the odds? If YES, here are 10 critical challenges to expect when starting a trucking business.
We already discussed some of the opportunities in the trucking industry but as is our usual custom here, we would not send you off to start a business without arming you with all the important information that you need before, during and after the business. Now, we need you to know about the challenges of starting and running a haulage company.
For those interested in starting a trucking company, below are ten most common challenges that people face in the haulage business. However, I must point out the fact that the 90% of challenges associated with running a trucking or haulage company; is basically the same worldwide. So whether you are in the united states, Canada, U.K, or Australia; you will find the information contained in this article useful.
Starting a Trucking Company – 10 Critical Challenges to Expect
1. Capital-: Getting a truck, tanker or any other heavy duty vehicle is not in any way cheap. To buy a new truck, you would need a couple of millions which a lot of people find hard to afford. This is one factor that turns people off this kind of business. Well, there are ways to combat this challenge and one common way is to purchase fairly used trucks which is way cheaper.
Another option is to import or buy engines and have local companies construct the other part of the vehicle for you; this is what a lot of haulage companies do. Lastly, you can opt for leasing or hiring trucks. For the leasing services, you need to look for people who have trucks to lease out and then you pay them monthly or quarterly from the proceeds of your business. You could also look out for hire purchase options.
2. Getting reliable companies to work for-: As a newcomer in the business, you may not be able to meet up with all the requirements to work with big companies and conglomerates. This is why most new entrants have to work as an affiliate with other bigger and established companies. Now, some of these companies take advantage of their affiliates, making them sign agreements that are not mutually beneficial or paying them unfair commissions.
To solve this problem, you need to do your due diligence before you even purchase a truck. You must look for companies that are reliable to work with. Also, you must have the backing of a legal advisor before you sign any agreement to prevent you from agreeing to conditions that you do not understand or that may be harmful to you.
3. Bad Roads-: This is especially peculiar to haulage companies in developing countries. 90% of the accidents that occur on the roads are caused by heavy duty vehicles owned by haulage companies and you cannot really blame them too; the poor road network is largely responsible for this.
Also, when these accidents occur, the haulage company may suffer losses. There have been cases of petroleum tankers spilling their contents, farm produce and food items getting crushed or destroyed, fire outbreaks leading to loss of goods and a whole lot of other misfortunes.
To prevent this problem, you must first ensure that you hire professional drivers and ensure that they stick to a specified speed limit to prevent accidents. You should also make sure your vehicles are serviced regularly and well maintained to reduce the risks of accidents.
4. Fuel Costs-: Another challenge haulage company’s face is the cost of fuelling the vehicles especially when there is a fuel scarcity. Costs of fuel fluctuates a lot due to the rise and fall of crude oil prices and you cannot keep increasing your charges each time there is an increase in fuel price. Having a fuel storage might help to counter this problem.
5. Unprofessional Drivers-: Another major challenge facing the trucking industry is that of unprofessional drivers. A lot of the drivers employed by haulage companies lack the necessary training and expertise to be able to drive the vehicles safely. A lot of them drive recklessly, park indiscriminately and refuse to adhere to simple traffic rules on the highway.
They either end up shortening the lifespan of the vehicles assigned to them or causing accidents and debts for their employers. If you want to avoid this problem, you shouldn’t even think of cutting costs by hiring quacks. You should approach companies that train professional drivers for hire; you would be able to get drivers that are properly trained to handle the job by doing so.
6. Maintenance and Servicing Cost-: Yet another challenge that haulage companies face is the cost of servicing and maintaining the vehicles they use. Heavy duty vehicles are not like your average day to day vehicles. The costs of servicing them and replacing damaged parts can be very exhaustive for investors.
It doesn’t help that the bad roads and sometimes bad fuel increases the rate at which the vehicles get damaged. Also, there are very few vehicle servicing companies that really have the expertise and knowledge to properly repair and service heavy duty vehicles.
The solution to this challenge is to look for vehicle servicing companies that are very good with heavy duty vehicles and never go after quacks because you feel that it would be cheaper because on the long run, it would be more expensive to replace the vehicle when it gets damaged.
7. Management-: A lot of people who go into haulage business have no knowledge about the intricacies of the business. Except you are going to be driving the trucks yourself, you would need to keep a very close watch on everything that goes on in the business.
If not, you would find yourself being cheated and incurring losses. To solve this problem, what you need to do is to hire somebody who is experienced to manage the business for you. You would find a lot of companies that offer fleet management services.
8. Fees and Taxes-: There are just so many tickets to be bought and taxes to be paid. In almost any state or local government you get to, there would be some ‘government official’ or ‘task force’ assigned to collect one fee or the other.
The only way that this problem can be solved is if haulage business owners can come together to build a strong union to fight all these exorbitant fees. In the meantime, you should factor these costs into your monthly budget and make adequate provisions for it beforehand so that it doesn’t hurt your business.
9. Vehicle Breakdown-: When your vehicle breaks down on a trip, it usually causes a lot of problems and losses and because mechanics know just how important it is for you to get your vehicle back up at that time, they seize the opportunity to exploit you. The solution to this challenge is to look for reliable automobile repair companies to work with.
10. Spare Parts-: Lastly, it is difficult to get good and genuine spare parts for haulage vehicles especially in countries like developing countries and even when you are lucky to get good ones, the price can be very discouraging.