Are you interested in starting a shipping company from home? If YES, here is a complete guide to starting a shipping company with little money and no experience.
Okay, so we have provided you an in-depth sample shipping company business plan template. We also took it further by analyzing and drafting a sample shipping company marketing plan backed up by actionable guerrilla marketing ideas for shipping companies. In this article, we will be considering all the requirements for starting a shipping company. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Shipping Company?
- Starting a Shipping Company – Market Research and Feasibility Studies
- Starting a Shipping Company from Home – Legal Matters
- Writing a Business Plan for your Shipping Company
- A Detailed Cost Analysis for Starting a Shipping Company
- Starting a Shipping Company – Technical & Manpower Details
- Starting a Shipping Company from Home – The Marketing Plan
- Tips for Running a Shipping Company Successfully
Why Start a Shipping Company?
We live in a global society which is supported by a global economy – and that economy simply could not function if it were not for ships and the shipping industry. Shipping is truly the backbone of the global economy: without shipping, intercontinental trade, the bulk transport of raw materials and the import/export of affordable food and manufactured goods would simply not be possible. Businesses are done every day, and there is always the need to get goods and products to the wholesalers and end users.
Therefore, in a bid to get the products purchased to the buyers, there is indeed a need to transport these goods through different means of transportation to those who are the eventual buyers. In a bid to get this done, shipping which is one of the oldest and viable means of transportation comes into play. A shipping company is thus a business outlet that deals with the transportation of products and goods to buyers who could be wholesalers / resellers from the manufacturers from every part of the world.
Due to the increasing demand for shipping services that offer reasonable prices and promise convenience, speed and reliability, no other time could be better than now for taking a plunge into the shipping business. The industry is growing and rapidly changing largely due to the increasing demand and dependence on online shopping
Starting a Shipping Company from Home – A Complete Guide
- The Shipping Industry Overview
As stated earlier, the shipping industry is an integral part of the world economy, and it will do a great disservice to discuss this all important industry, without enumerating the facts, figures and statistics that make the industry tick. It is a general fact which is accepted by all, that more than 90 per cent of global trade is carried by sea.
- Interesting Statistics About the Shipping Industry
Throughout the last century the shipping industry has seen a general trend of increases in total trade volume. Increasing industrialization and the liberalization of national economies have fuelled free trade and a growing demand for consumer products. In fact the advances in technology have not only made shipping an increasingly efficient but also an apt and swift method of transportation.
World seaborne trade figures, which is actually the amount of goods actually loaded aboard ships have increased considerably since the 70‘s, and in 2008, reached 8.2 billion tons of goods loaded. As with all industrial sectors, shipping is not immune to economic downturns.
In 2009, the industry witnessed the worst global recession in over seven decades and the sharpest decline in the volume of global merchandise trade. In tandem with the collapse in economic growth and trade, international seaborne trade volumes contracted by 4.5 per cent and total goods loaded went down to 7.8 billion tons in 2009. However seaborne trade bounced back in 2010 and grew by an estimated 7 % taking the total of goods loaded to 8.4 billion tons.
Though developing countries continued to account for the largest share of global seaborne trade i.e. about 60% of all goods loaded and 56 % of all goods unloaded, reflecting their growing resilience to economic setbacks and an increasingly leading role in driving global trade. However, developed economies ‘shares of global goods loaded and unloaded were 34 % and 43 % respectively. Developing countries are expanding their participation in a range of different maritime businesses.
The major factor that encourages to venture into this industry is its viability as a profitable venture. The lucrative nature of the industry is unparalleled and it’s indeed one of the few industries in the world which has the highest number of turnover in terms of profit and otherwise.
Starting a Shipping Company – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who need the services of shipping companies cannot be quantified, this is so because its usefulness cuts across the public sector, the organized private sector, households, communities and people of different class and from all walks of life.
Below is a list of the people and organizations that need the services of shipping companies;
- The public sector (public facilities et al)
- Organized private sector (Corporate organizations)
- Small scale businesses
- Businessmen and Businesswomen
- University Campuses and Schools
- Religious practitioners
- Sport Organizations etc.
List of Niche ideas Within the Shipping Industry That You Can Specialize in
There are a plethora of niches in the shipping company such as we can find in other industries too. Though when it comes to starting a shipping company, the niche chosen might not really be necessary, but there are a couple of niche ideas within the industry that an entrepreneur can choose from. Aside from the existing niches in the shipping industry, an entrepreneur who is creative can carve a niche for himself / herself.
Here are some niches / areas that a shipping company can be specialized in;
- Cargo Shipping
- Container shipping
- Home-delivery shipping etc.
The Level of Competition in the Shipping Company Industry
It is a general phenomenon that it is usually difficult to survive in the business world as a starter. Shipping company requires more than, your expertise, knowing how to deliver secure contracts and also having the ability to network with the right set of persons that matters; been able to liaise with decision makers that can decide who will be able to transport a particular set of goods matters a lot too.
Definitely, there are a lot of huge time investors in this industry that have actually made a name for themselves; and due to the secrecy of the industry it makes it more difficult for outsiders to be able to venture into the business successfully.
But one thing is certain, which is that there is room big enough to accommodate both the big shipping companies and the small ones. Therefore it is expedient for the small boys or new entrants into the industry to break even and start by undertaking contracts for the small companies before expanding their base.
List of Well – Known Brands in the Shipping Industry
In any industry of the world, there are usually brands that are popular and have made a name and a mark for themselves, the shipping industry itself is not an exception. Therefore, there are leading brands in the industry in all parts of the world, and of course in the United States of America.
Here are some of the leading shipping companies in the United States of America;
- Aker American Shipping
- American Black Sea Line
- American Steamship Company
- Atlantic Transport Line
- Crenshaw Company
- Farrell lines
- Holland America Line
- International transportation Service
- Matson Inc.
- Northland Steamship Company
- Trans-Atlantic lines
- United States Lines
- Viking Cruises
- Sealift Incorporated
Starting a shipping company is indeed herculean and tiring, it is really a serious business that is not meant for the feeble minded. Hence critical economic analysis must be conducted to ensure that the risks and other threats associated with starting a business from the scratch or investing in a business idea are mitigated.
If you are considering starting a shipping business in the United States, your major concern should not be restricted to just acquiring an office facility and equipping the facility or hiring the best hands in the industry, but it will be of more concern to you on strategies you can evolve to ensure that your shipping company is patronised with mouth-watering contracts.
On the average, setting up and running a shipping business in the United States, just as anywhere in the world can be costly simply because of the logistics and the facilities that are involved in the business. Though With key good company’s profile, that which is known for delivering goods appropriately and on time coupled with highly trained, highly qualified and highly experienced staff members in your team, you won’t have to struggle much to win shipping contracts as at when due.
Is a Shipping Company Worth Starting from Scratch or is Buying a Franchise Better?
Although there is the possibility though very slim of buying a franchise from a successful shipping company or even partnering with a big and successful shipping company if you are considering owning an investment in the shipping industry.
The most important thing that must be put into consideration in this regard is the fact that, people are motivated to start a business based on various factors and incentives. If you are looking towards building a business that you intend controlling, a business brand that you hope to one day transfer ownership to your children and perhaps also sell franchise in future, then starting from the scratch should be the best option.
But if your interest lies in making money and multiplying your wealth, then you may as well buy the franchise of a successful shipping company that is willing to sell its franchise.
Possible Threats and Challenges You Will Face When Starting a Shipping Company
Generally in the shipping industry, both the already established ones and start – ups, most companies are usually subject to threat and challenges from government policies, global economic downturn which usually affects spending and unforeseen natural disasters (disasters that may cause setback).
Another threat that you are likely going to face when you start your own shipping company is the excesses and the maximum control that, the well established companies in the industry have over others, and the inability to get good contracts on time.
Starting a Shipping Company from Home – Legal Matters
- Best legal entity to use for a Shipping Company
No doubt starting a shipping company is factually a serious business largely due to the technicalities involved; likewise which is the legal entity chosen will go a long way to determine how big the business can expand. Choosing a legal entity for a business such as a shipping company is a bit easy especially if you decided to grow the business big.
Regarding choosing a legal entity for your shipping company you have the option of choosing from a general partnership, a limited partnership, an LLC, a “C” corporation, or an “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which must be properly weighed based on someone’s expectations before a final choice.
Indeed some of the factors you should consider before choosing a legal entity for your shipping company include but not limited to the following;
- Limitation of personal liability
- Ease of transferability
- Admission of new owners
- Investors’ expectation and tax issues.
At a closer look at the afore-mentioned legal entities, it will be noticed and agreed that limited liability company; an LLC is the most suitable. Therefore, you can start your shipping company as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or even a ‘S’ corporations especially when you have the plans of going public.
The essence of Upgrading to a ‘C’ corporation or ‘S’ corporation cannot be over-emphasised as it will not only afford you the opportunity to grow your shipping company so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, stock market, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
Catchy Business Name ideas Suitable for a Shipping Company
The shipping business industry is not an industry which has a penchant for names. In fact, the names might not have any significant essence in winning a business contract. Although, there is no particular structure or pattern that must be adhered to in order to choose a name for your shipping company.
However, here are some catchy business name ideas you can choose for your shipping company;
- Stevenson Shipping Company
- Williams Merchant Marine
- Oceania Transport line
- Western Steam lines
- Cosmopolitan Steamship Company
- E&P Inc.
- Parallel Shipping Company
The Best Insurance Needed for a Shipping Company
In the United States and of course in most countries of the world, you can’t operate a business without having some of the basic insurance policies that is required by the industry you want to operate from. Moreover, the nature of the shipping industry requires that you have the proper insurance cover in place or else you will be forced out of business if anything goes wrong with the goods you are handling.
Therefore, it is not only necessary but also important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your shipping company; they will guide you aright and avail of the risks involved in the business you are planning to venture into.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own shipping company in the United States of America;
- General insurance
- Health insurance
- Risk Insurance
- Payment protection insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection and Trademark
In this industry, there is no intellectual property that is been protected, but you must ensure that you have all the necessary licenses in place to ensure that you perform optimally and without harassment.
Is Professional Certification Needed to Start a Shipping Company?
The shipping industry is highly regulated all over the world, largely due to many factors that come into play in it. Therefore, if you are interested in venturing into the shipping industry, you must obtain the necessary and required certifications; it will give you edge amongst your competitors.
The fact is that, the more relevant shipping certifications that you and your team have, the more professional you become, and the easier it will be for you to convince people to patronize your services. Here are some professional certifications that you or your key staff should look towards acquiring;
- Certified International Trade Professional (CITP)
- Certified International Trade, Shipping & Logistics Professional (CITLP)
- Certificate in Marine Transportation
- Certification of Logistics Professionals
- Certificate in shipping business
List of Legal Documents You Need to Run a Shipping Company
In The United States of America and of course all over the world, the shipping industry is amongst the industries that is not only regulated but highly regulated too, largely due to the large capacity of the industry. Therefore, in order to avoid serious breaches which include security, health etc. in the country. Thus, if you are considering starting a shipping company, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.
These are some of the basic legal document that you are expected to have in place if you want to start a shipping company in the United States of America;
- Certificate of Incorporation
- Shipping Clearance Certificate
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
Writing a Business Plan for your Shipping Company
As a person who wishes to start a shipping company, therefore one of the first steps that is expected to be taken is to consult experts to help you write a good and workable business plan. The importance of having a good business plan in place in order to start your hipping company on a good note cannot be over-emphasised.
A Business plan which is the blue print that is needed to successfully run a business; thus with a workable business plan in place, you will be able to manage your business with purpose and perhaps precisions; you will know what to do per time and how to handle challenges, growth and expansion.
So if you want to start your own shipping company, you are required to write a detailed business plan that can pass reality test when subjected to it; you should work with the facts, figures and other indices in the shipping industry as it applies to the country you intend starting the business.
Writing a comprehensive business plan is one of the most important steps towards starting a successful shipping company. Your business plan will include all necessary factors such as business overview, your competitors, their skills and prices, your target market, your unique selling proposition and core competencies, your prices, your financial plans, your marketing plans, your funding sources, the threats and opportunities in your country’s shipping industry, and your exit strategy.
A business plan does more than guide you through the processes of successfully launching and operating your business; it presents your business idea to third party funders such as investors and banks.
A Detailed Cost Analysis for Starting a Shipping Company
There are several expenses that you would have to make before successfully launching your own shipping company. It is important to state that the location you choose to launch your business will definitely impact on the overall cost of starting the business, this is the major reason why it is very important to have concluded and analysed your feasibility studies and market survey before drawing up a budget and sourcing for funding for your business.
Here are some of the basic costs you must look towards fulfilling when starting a shipping company in the United States of America;
- The Total Fee for incorporating the Business in United States of America – $750.
- The budget for Insurance, permits and license – $5,000
- The Amount needed to rent a suitable office facility with enough space in the United States of America (Re – Construction of the facility inclusive) – $50,000.
- The Cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $15,000
- The cost for acquiring shipping equipment – $50,000
- The Cost of Launching an official Website – $700
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
- Other miscellaneous – $1,000
Going by the report from our research and feasibility studies, we will need about $130,000 to set up a small scale shipping company in the United States of America. On the average, you would need over 220,000 US dollars to start a medium scale shipping company in the United States of America.
If you choose to start a large scale shipping company, then you should look towards budgeting about 2 million US dollars and above. This money include paying experts in the field of shipping that will assist in running the business effectively.
- Financing Your Shipping Company
If you choose to start your shipping company on a small scale, it might not really be necessary to have a lot of resources to launch the business, but if you decide to start on a large scale, it is expedient that you need to raise the required start – up capital to launch the business.
If you are starting your shipping company on a large scale, you will need a decent office facility, office equipment and furniture, and money budgeted for the payment of salaries and utility bills for at least a period of 3 months and you will also need money to purchase shipping equipment that will aid your business.
When it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to struggle much before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your shipping company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for loan from your bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choosing a Suitable Location for Your Shipping Company
Choosing a location for your business is not what you should do without due consultation. The truth is that if you get it wrong with the location where you have decided to pitch your business tent, you are more likely going to struggle to make headway with the business. Choosing a wrong location for the business will definitely affect the business negatively.
Some of the factors that you should consider before choosing a location for your shipping company include;
- The demography of the location
- Accessibility of the location
- The numbers of shipping companies in the location
- The local laws and regulations in the community / state
- Traffic, parking etc.
Starting a Shipping Company – Technical & Manpower Details
If you are on the verge of starting a shipping company, then you should be ready to purchase effective shipping equipment, and other state of the art gadgets, these are some of the basic technical areas you are expected to spend part of your startup capital.
When it comes to choosing between renting and leasing an office space, the size of shipping company you want to build, will play a critical role in this, likewise your entire budget for the business should influence your choice. If you have enough capital it will be best for you to lease an office facility.
The financial capacity must be taken into consideration before choosing the number of employees that will be employed in your company. Though, there might not be much need to employ many people in the company. But averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Security Consultants and Associates (Different areas of specializations as it applies to your business), Business Development Executive / marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.
Mostly, you will need a minimum of 10 key staff to effectively run a medium scale shipping company. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high profile shipping contracts. Though you might not be able to start with the required experts as a start-up.
The Services Process Involved in the Shipping Industry
The services process involved in the shipping industry depends on the niches of shipping services a company is into. Averagely, the process starts with bidding or submitting proposal for shipping contracts, once a contract is won, then it is expected for the entire contract document to be signed and advance payment made as required.
Once the payment has been sorted out, then the shipping firm will be able to ship the goods and products to its destinations.
Starting a Shipping Company from Home – The Marketing Plan
- Marketing Ideas and Strategies for a Shipping Company
In this business, you do not necessarily retail products, which is why you must make ample use of opportunities as they unfold.
So when you are drafting your marketing ideas and strategies for your shipping company, make sure that you create a compelling personal and company’s profile which must include the profile of your board of directors and management team. The truth is that if you have highly qualified, trustworthy and successful shipping professionals in your board and core management team, it will definitely give you an edge over others in the market place.
Here are some of the platforms you can utilize to market your shipping company;
- Advertise your business in relevant business magazines, TV and radio station and also make yourself available for talk shows and interactive sessions on TV and Radios) that are related to shipping
- List your business on local directories / yellow pages (both online and offline)
- Leverage on the internet to promote your business
- Join local chambers of commerce around you with the main aim of networking and marketing your shipping company.
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, community leaders, schools, hospitals, hotels and government offices in your target area.
- Promptness in bidding for contracts
- Create different packages for different category of clients in order to work with their budgets.
- Engage in direct marketing, referral marketing and also email marketing.
Possible Competitive Strategies for Winning your Competitors in the Shipping Industry
It might be challenging competing as a newbie in the shipping industry especially in a highly organized market like that of the United States of America, which is why you must be deliberate in choosing your board members and your core management team.
As a shipping company, if you are able to deliver products on time, and as when due, then it will not be difficult for you to be known in the industry. You should ensure that Creativity, excellence and attention to minute shipping regulation details is your watchword.
Lastly, ensure that your organization is well positioned and if possible form strategic partnership with other key stakeholders in the shipping industry; it will sure give you competitive advantage over your competitions.
Possible Ways to Increase Client Retention for your Shipping Company
One of the best and easiest ways to increase customers’ retention and perhaps to attract new customers is to satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.
Statistically, it has been reported that one of the major reasons why customer’s source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to improve on the quality or your services and your customer service delivery, then you won’t struggle to maintain your loyal customers.
Strategies to Boost your Brand Awareness and Create a Corporate identity for your Shipping Company
When it comes to creating brand identity for a shipping business, the calibre of clients you have worked for and the nature of shipping contracts you have handled is always a major brand booster.
As a matter of fact, you should ensure that your brand is visible and well communicated which is why you should make provisions to work with different class of people in the society. All your publicity materials and jingles should be done by some of the best hands in the industry.
Below are the platforms you should leverage on to boost your brand awareness and create a corporate identity for your shipping company;
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, community leaders, schools, hospitals, hotels and government offices in your target area.
- Advertise your business in relevant magazines and websites
- List your business on local directories / yellow pages (both online and offline)
- Promote your business on satellite TV stations and radio stations.
- Engage in direct email marketing
- Leverage on the internet (social media platforms and your official websites) to promote your business
- Ensures that your workers wear your branded shirts at all times during working hours and also make sure you brand all your company’s official vans, trucks and cars et al.
Creating a Suppliers / Distribution Network for your Shipping Company
The nature of the shipping industry makes it easy for shipping companies to network amongst themselves and also network with government own shipping agencies. This is so because the issue of shipping cannot be handled in isolation. This is more so, because there is always a need to get updates from custom services of governments of various countries to ensure that everything goes on smoothly.
Since there will always be a strategic alliance between shipping companies, it is therefore expedient for them to network together.
Tips for Running a Shipping Company Successfully
Irrespective of the kind of business you run, your ability to get all the members of your team on same page at all times is one of the keys you need to successfully run the organization in the first place.
As the chief executive officer or head of a shipping company, it is your task to ensure that you give direction to the business. Hence you must ensure that you create time for office meetings; these meetings should be an avenue for challenges, feedback, projections and relevant issues to be discussed. These meetings could be daily, once in a week, twice a week or once in a month. As a matter of fact, there should be consistent meetings in your organization.
Training your employees and carrying out appraisals on a regular basis will help you run your organization effectively. Also you should encourage your employees to pursue certifications in their various areas of specialization; it will help your organization’s profile and of course it will help the individuals. You can choose to fully or partially sponsor some of the certifications.
Lastly, you should keep your doors open for suggestions from members of your team and your clients. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.