The logistics business is the backbone of the global supply chain. With the world more connected than in human history, globalization has created a worldwide demand for goods and products.
There are three main logistics sectors: sourcing, storage, and transportation of goods. The most important aspect of logistics is the transportation sector. Without it, products would not be shipped from one country to another, thus destroying the concept of globalization.
Globalization is the fuel to the logistics business. According to market research, the global logistics industry is projected to grow substantially.
But, before you start drafting your business plan, there are a few things you need to know. Here are four fundamental factors to consider when launching a logistics business.
Transportation Niche
Shipping of products can be done in various ways, most predominantly by air, land, or water. If you consider starting a logistics business, you will have to choose one of these three niches.
The niche you choose highly depends on whether you will be transporting goods domestically or globally. Local transportation is a subset of domestic logistics. It renders services of moving goods from ports to various parts of a country. Local logistics are done via freight trucks and trains.
Trucks are the most popular form of local transportation, they can carry a significant amount of goods, and they travel via roads, allowing them to deliver goods closer to consumers. Therefore, truck companies are the most prosperous of all freight businesses.
Personal transportation is another subset of domestic logistics. It delivers one-to-one services that cater to moving people around. An excellent example of personal logistics is ride-sharing, taxi, and bus services.
Starting Costs
Once you have chosen your niche, the next thing to consider is the starting costs of your business. The most considerable expense you will incur is the purchase of trucks or other commercial vehicles. You will then have to include the costs of hiring drivers, fuel, insurance, and software systems.
There are various ways to fund these starting costs. Funding options include bank loans, partnerships, or leasing deals with truck distributors. There are also alternative funding solutions.
Service Plan
New vehicles typically come with a warranty valid for three to four years. The contract will cover costs for scheduled maintenance and repairs. However, vehicles older than four may have their warranty expired. In this instance, you will have to purchase your service agreement either with the auto manufacturer or a reputable mechanic.
Getting a service plan will assist you in offsetting expense maintenance and repair costs. The scheduled service checks can reveal potential threats of breakdown, rust, or aggressive signs of wear and tear.
Hiring Trained Staff
Another thing that will significantly reduce repair costs and increase productivity is hiring trained and competent drivers. Qualified drivers are more likely to abide by the road rules, thus avoiding reckless driving that may cause accidents or exasperate wear and tear.
Hiring trained staff eliminates the need for training and saves you both time and money.
There are a lot of factors that go into launching a logistics business. Preparation and knowledge of the industry will significantly assist in the many decisions you will have to make at the beginning.
However, the passion for logistics and the satisfaction of delivering goods to customers is what will keep you going. Anchoring your mission and vision on serving your customers will be the driving force that keeps your business operational.