8 Tips For Successfully Starting Your Truck Transport Company
Like most businesses, establishing a truck transport company requires patience, a clear strategy and substantial investment. A trucking business has a high growth potential; however, its market is also quite competitive. This is why a lot of people wanting to build a truck transport company do not always succeed.
What usually happens is that very good, knowledgeable truckers attempt to start a truck transport company without the necessary business acumen. So, although you may be an expert in trucks, know about every single truck component and have mastered all the best trucking routes, successfully starting a truck transport company and growing it is an entirely different matter.
If you’re about to venture into building your own truck transport company and are uncertain about the next steps to take, consider the following tips. These are meant to help you navigate the world of business and help get you on your way to becoming the successful owner of a reputable truck transport company.
1. Cater to a Specific and Stable Market
To identify the best market to focus on, it’s worthwhile to do some market research in the trucking industry. Selecting the right niche market is crucial, whether you’re starting big or small, as it will determine which freight lanes you will service, what equipment you need and the rates you can charge.
In general, those markets that large carriers tend to avoid are best targeted by small to medium trucking owner-operators. This means it’s highly recommended that you focus on handling specialty loads.
Most fleets focus on serving relatively easy dry van markets that move consumer packaged goods, electronics, fabrics and the like as these are non-perishable and relatively easier to handle. As a result, there are already several large carrier companies, so competition in that segment is stiff.
One thing you might want to consider is catering to the fresh produce and meat market. This market segment is relatively stable as food is always in demand, so you’re assured of year-round operations. There is also less competition in this market and since you’ll be hauling food products (a basic need), it’s a market that’s virtually recession-proof.
2. Have the Right Fleet and Equipment
Aside from acquiring the right type of vehicles for your truck transport company, make sure these are equipped with components and accessories designed to improve how you conduct your business. Good examples of accessories you might want to include in this list would be:
- Tenacitex Load Restraint Truck Curtains: These are innovative truck side curtains that efficiently, easily and safely secure loads.
- StrapNGo: The StrapNGo load restraint system can significantly reduce loading times while maintaining safety. The faster loading time can help improve productivity and efficiency, which can translate into more profit.
3. Know the Operating Costs and Keep Track of Paperwork
To be able to calculate profit for your truck transport company, you need to know your expenses in detail first. Identify fixed costs, such as insurance, licences and permits, truck payments, etc. You also need to know what your variable costs are – those items that depend on the distance or duration of each trip, such as fuel expenses. Another expense to consider is maintenance and repair costs.
As your truck transport company grows, you’ll need to take care of more ongoing expenses such as wages, superannuation contributions, workers compensation insurance, provision for long service leaves and administration costs.
Keep all expense records organised and keep everything together so when you need to file paperwork at the Australian Taxation Office, you’ll have everything ready.
4. Make Sure You Charge an Optimum Rate
Determining the best rate to charge your clients for every load you haul is paramount if you are to make a profit and cover your operating costs.
Before communicating with shippers and offering them your services, make sure you already have ready, fixed rates. The key here is to maintain a competitive advantage. You also need to be familiar with the going market rates or the rates charged by brokers to your target shippers.
To calculate your rates, choose a freight lane and go to a load board (otherwise known as a freight board). A load board is a matching system that lets shippers and freight brokers post their loads online. It enables carriers and shippers to meet virtually and enter into contracts for moving goods or freight.
Identify ten loads headed in a single direction, and then get in touch with the brokers to find out how much the charges are. Calculate the average for the ten loads, and then top up the result by 10 to 15% to determine how much brokers charge shippers. Do the same for the direction going back. After this, you’ll already have a round trip rate, as well as rates for single direction trips.
5. Implement a Cost-Effective Fuel-Buying Strategy
In running your truck transport company, you need to be familiar with the Road User Charge (RUC), which is added to the cost of every litre of diesel a truck uses. Make sure you know how relevant taxes can impact your operating costs and work these into your rates.
You can also have Airtabs installed to reduce fuel consumption in your vehicles. These work to alter, control and smoothen airflow around a vehicle.
6. Eliminate the Middle Man
Freight brokers and load boards are great to work with if you have empty carriers. They can also be quite expensive as brokers usually take 10 to 20% of the load price. Load boards can cost as much as $100 per month, or $50 for a monthly subscription. This is, of course, understandable as they are providing a service for the shipper and you.
To maximise profit and reduce operating expenses, try to do away with freight brokers and load boards. Learn to market yourself by:
- Building a quality website
- Attending trade shows and other industry events
- Offering special referral packages or discounts
- Encouraging clients to provide testimonials and honest reviews
There are other ways to make your company known, but the main objective here is to have you working directly with your shippers.
Curate a list of reliable direct shippers who can keep you engaged all year long. Grow your truck transport company by offering competitive prices guaranteed to attract more shippers and always strive to provide top-notch freight carrier services.
7. Have Efficient Back-Office Support
If you plan on keeping your truck transport company steadily growing, you also need to manage administrative and accounting tasks efficiently. Trying to do these on your own would be tough, as administrative tasks can require specialised training and qualifications. This is where hiring back-office support comes in.
With a professional back-office setup, you can stay on top of your truck transport company operations even as you add more leased drivers to your operations. You may also need to hire a dispatcher and an accountant at some stage.
Make sure you carefully assess each candidate and choose the right one as getting a dispatcher or accountant on-board will cost you.
8. Monitor Cash Flow
Managing a truck transport company requires a steady flow of cash as you’ll always need to buy fuel and make the required truck and insurance payments, as well as manage payroll. If shippers and brokers have the option to pay invoices in 15 to 30 days (with some taking as much as 45 days), you may encounter cash flow problems. This is especially true when you’re just starting out.
In this instance, you can try freight bill factoring so you can advance as much as 95% of your invoice. Some factoring companies also provide other services such as fuel advances and cards.
Starting a Truck Transport Company Is Serious Business
Starting and growing your own truck transport company is not easy. You need to be committed and patient and possess business management skills. You also need to be prepared to make substantial investments and shell out cash initially.
To ensure your fleet is equipped with the latest innovations to save on fuel, time & enhance safety, partner with Bee Jay’s Canvas Co. Get in touch with our team today to see how we can contribute to your business.