Haulage is very different now to how it was 30 years ago. Historically the transport of raw materials such as coal, and metals used in beating, was one of the main services of the haulage industry. These services are now typically offered by larger companies. However, the increasing demand for consumer goods means that there's still a sizeable market that can be targeted, even by smaller players. Haulage is still a very competitive industry, so establishing a niche, and keeping costs low, is key to success.
A keen eye for efficiency is key in the haulage business. Increasing competition in the marketplace, as well as a rise in continental companies offering low rates, means that new haulage companies must both operate as efficiently as possible and differentiate themselves if they want to gain market share.
The money side is very important; you’ll need to ensure all services are profitable, and also be able to consider, on a daily basis, how commodity costs (such as petrol costs) will impact the ability of your company to turn a profit.
Deciding what service you’ll offer is important; establishing yourself in a niche may help you win more business and differentiate yourself, but you have to ensure there’s a large enough market for your services. Some possible services include:
- General haulage
- Waste disposals
- Parcel delivery
- Warehousing and distribution
- Vehicle transport
Bear in mind that transporting certain types of goods, such as livestock, requires compliance with relevant statutes and regulations.
Fleet size and type
According to the Road Haulage Association (RHA), 87 percent of haulage companies have fewer than five vehicles, while over half (57 percent) have just one. Larger fleets mean greater overheads, which mean you need a higher percentage of work to make a profit. The competitive nature of the industry can make this hard. Always start off small and ensure you have the capacity to grow profitably and sustainably before you do so.
You’ll also need to decide whether you use diesel or petrol vehicles, or if you go for a more environmentally-conscious option which can be an effective differentiator. Vehicles also come in a range of sizes and shapes, such as articulated and rigid, and you’ll need to ensure the ones you pick are suitable for the services you offer.
If your vehicles are over 3.5 tonnes, you’ll need an operator’s license.
Location and warehousing
All haulage companies will need an operations centre to store vehicles and goods, and conduct any vehicle maintenance. The location is very important, and must be strategic – you need easy access to important road routes and also easy access for other vehicles should companies wish to deliver products into your hands.
Rental rates for vehicle warehousing are much lower than for commercial properties but the same geographical variations still apply. Units in and around London can be up to three times the price (don’t forget to consider the impact of congestion charging on your profits) of units in Wales and Scotland.
One of the biggest drains on profit for haulage companies is empty loads i.e. you drive a shipment from London to Scotland and then have to drive back with an empty vehicle, using fuel and company time without a return. Specialist networks and distribution do exist to mitigate this problem, and it's worth checking to see if you can join a scheme to help minimise your empty loads and maximise revenue.
Duties and regular costs
Haulage companies have a lot of regular costs, some of which are fixed and some are variable. Overheads can be steep; if you are considering starting a haulage business you must be fully aware of all costs to ensure profitability.
Here are some common overheads:
- Vehicle Excise Duty
- Vehicle maintenance
- Insurance (can be hefty)
- Warehouse rent
- Vehicle cleaning
Insurance and compliance
Vehicle insurance is obviously mandatory and you may wish to approach a specialist insurer who can offer policies that suit your needs. Public liability insurance and professional indemnity insurance are also essential, and you’ll need employer’s liability insurance once you hire staff.
You will also need to comply with tachograph legislation to ensure your drivers do not work longer in certain time periods than is allowed by law. Breaking these rules can result in severe penalties so it’s important to install the necessary equipment to monitor vehicle use and regularly check the data.