Any start-up business nowadays can find it extremely challenging when they launch however within the trucking industry it is even far more difficult. This extremely competitive marketplace is very crowded and has a lot of technological advances making it even more difficult for some of the companies in this field to succeed. Here are some of the things that a new start-up needs to consider if they want a truly successful start in the trucking industry.
Profit Margins
The profit margins with a trucking company are extremely tight. For every $1 that is made in this industry, only $0.05 is actually made in profit. This is clearly extremely challenging and is a profit margin that is lower than what you would find in most other industries. There is a lot of things that trucking companies are doing to help try and maximise their profits in this area which includes things such as using more efficient trucks. With a lot of countries now also really taking climate change very seriously and the emissions produced by trucks, there has also been a massive increase in fuel prices where the government have placed increased taxes on fuels.
Competition
The competition is tight in this industry with there being over half a million different trucking companies based in the US. 80% of these companies are small businesses. This seems to be an industry that is growing based on consumer demand however not one that has a good success rate for new start-ups. From all the trucking companies that start out, only 15% of these will make it to Year 2.
Initial Funding
Trucks are not a cheap asset and cost a lot of money. When starting up in this industry there needs to be a lot of consideration on the upfront costs needed for this business to succeed. This will not only include the trucks that are required to be purchased (or rented) but also the management of these trucks. There are a lot of minimum legal requirements that are mandated in terms of servicing the trucks to make sure they are of a legal and safe standard. Maintenance plans will be required also remembering that simple things like tyres are not cheap for trucks. There are ways to get this money up front from specific trucking loan companies and this may be a consideration supported by a robust business plan. If you are looking for a specific loan like this, click here for more information.
Technology
As technology is changing a lot in this industry, it is important that the companies keep up with this to ensure that they are not left behind. This will include simple things such as electronic logging (where the truck centre can keep tabs on where trucks are and what breaks the drivers are having – legal requirement), but also things such as dash cams and anti-collision accessories. The cost of these technologies should be incorporated up front in the project plans or as the needle moves, financing should become available to ensure the trucks are as safe and efficient as possible.