Haulage business is one of the most lucrative endeavors any investor can do in Nigeria. In the developed countries, most goods are taken from one point to the other with the use or rail wagons. In Nigeria, the comatose state of railway has created a huge opportunity for people willing to move goods through road trucks.
About 90% of goods moved around in Nigeria are done by the use of heavy duty trucks, light trucks, buses and cars. This falls under the haulage business. The internet is full of all sorts of posts about haulage business; however, these notes hardly proffer solutions to the problems investors in haulage business face day by day.
As lucrative as haulage business may be, about 3 out of 4 start-ups in the venture in Nigeria fail within 24 months. Most investors do not envisage the problems in the business before they commit their funds. They rely on the sweet and juicy information given to them by rogue consultants. These consultants who do not know anything about the business just deceive people in order for them to get their own fees. The investors are often inundated with problems they never thought who come up, hence the closure of their ventures within a short time.
Do not get me wrong. Haulage business is very lucrative. There is still a big gap in Nigeria. In some locations in Nigeria, it is a big challenge to get a truck to help you move your goods around the country.
Multinationals, produce merchants, traders and other logistics user demand the services of haulers almost every day. Unfortunately, they hardly get good haulage companies to solve their logistics problems.
A recent survey among fast moving consumer goods manufacturers showed that haulage remain one of their greatest problems. Most companies needing logistics solutions outsource this service; they prefer good haulage companies to help them sort out the movement of their goods from one point to the other.
Problems facing haulage business in Nigeria
Most haulage companies start on the wrong footing in Nigeria. There are brands of trucks that are suitable for Nigerian roads. Availability of truck parts is also an issue in Nigeria. The spare parts of some brands of trucks are readily available in Nigeria while some are very scarce and expensive.
You may also face the challenge of getting mechanics experienced in the repair of the brand of trucks you have. Some trucks cannot withstand the bad roads and other harsh realities in Nigeria. There are some brands of trucks that cannot last for 2 months in Nigeria without you spending heavily on their repairs.
Trucks manufactured in China and South Korea are not as rugged as those manufactured or assembled in the US.
DAF trucks are very popular in Nigeria. There are several mechanics who can repair them and they can face the problems of bad roads in Nigeria without you incurring high cost to repair them. MAN trucks are also very common in Nigeria and they can be repaired or maintained by a lot of artisans in Nigeria.
Character of drivers
It is a common fact that most heavy duty truck drivers in Nigeria have bad characters like stealing, consumption of alcohol and hard drugs, reckless driving and general lackadaisical attitude towards the business of their employers.
Your drivers can make or mar your haulage business. Your drivers can crash your trucks due to their drinking attitude or recklessness on the road. Your drivers can collude with rogue mechanics to inflate the bills for repairs. Your drivers can collude with artisans to exchange good parts of your trucks for bad or sub-standard parts.
Bad drivers may use your truck to move loads of goods without informing you. This can lead to loss of revenue and wear and tear of the truck.
There was a case of a driver with one of the most popular logistics companies in Nigeria; he changed all the tyres of the heavy duty truck he was driving for bad and worn-out ones. You can imagine the loss this his employer will incur due to this criminal attitude.
Dangote Cement once announced that some of their drivers sold their trucks’ parts and diesel worth several million of Naira. This is one of the unfortunate realities of haulage business in Nigeria. A smart investor or operator in the business should find a way to mitigate this risk.
Aside from the fact that mechanics for newer versions of trucks are very rare to see in Nigeria, a lot of the existent mechanics are very corrupt. These artisans can make you incur unnecessary expenses on your trucks’ repairs.
A mechanic who does not know how to repair your type of truck can cause more damages to the truck because of his incompetence.
A rogue mechanic may conspire with your drivers with the aim of defrauding you. These bad mechanics may tell you that your trucks need repair while the trucks may not need any repairs. The mechanics may also change good parts of your trucks for bad ones. Mechanics can also steal handy things in your trucks like jacks, tools kits and fire extinguisher etc.
Seasonal lull in business
If you don’t deploy strategies to tackle seasonal dwindling of revenue, your haulage business may go under. Some haulage companies do complain that during some seasons, they hardly get business. If your business is funded with a loan, the seasonal lull in business may strain your finances and the ability to fulfill your obligations to your creditors.
Mr. Hassan registered 3 trucks with a maize milling company. The maize milling companies pays over N5 million monthly to Mr. Hassan for his trucking services. However, during some months of the year, the milling company hardly does any business, this impacts Mr. Hassan’s business negatively.
Most businesses have the peak and off peak production seasons every year. They sell more during a period and experience reduction in sales volume during other times. A haulage business must consider this factor.
Strategies to use to solve the major problems in haulage business
Employing good drivers
You should employ drivers with good guarantors. References from his past employers should be taken and a simple test to gauge the character of the driver should be done.
Drivers who are married with kids have shown on several occasions to be more responsible than unmarried drivers.
Remunerate your drivers well, pay them performance bonuses and accident free bonuses.
Register your trucks with a good company
Avoid as much as possible to make your trucks operate from a truck park controlled by drivers and their unions. Attaching your trucks with companies make you have guaranteed number of trips. Your drivers will not handle any cash as the companies will pay directly into your bank account.
Using GPS tracker can reduce the risk of theft and the urge of drivers to take your trucks to unauthorized locations to do illegal business. With a tracker, you can use your mobile phone or laptop to know the location of your truck at any point in time. You can even remotely switch off the engine of your truck.
There are several types of smart and intelligent sensors you can use in your trucks. Fuel sensor can make you know the fuel consumption of your truck; your driver will not be able to tamper with your fuel. Load sensor communicates the weight of load on your truck at any point in time. If your driver tries to do business without your authorization, you will know as the load sensor will tell you the weight of the load your truck is carrying at any point in time.
The use of RFID
The use of Radio frequency Identification tags can stop the criminal acts of drivers of mechanics. With RFID tags on key parts (tyres, fuel injector, fuel pump and transmission etc) of your trucks, if any driver or mechanic changes these parts and put a bad or substandard one, you will know as the RFID reader will not be able to detect the new parts. This technology can save you a lot of money and solve the headache of drivers and mechanics switching parts for bad ones.
Use only one company for the purchase of fuel
You must register with only one company for the purchases of diesel or fuel. Ask for their payment card, load the card and buy only from this company. With the card, you can truck the usage of fuel by your drivers. This will also not let your drivers handle cash.
Get your trucks services by repair companies
Truck repair companies are somewhat expensive but they will do a good job and save you some other expenses. Most road side mechanics may further damage your truck because of their incompetence; they can also collude with your drivers to rip you off. There are professional truck repair companies in Nigeria that have good names to protect. Also, pay for repairs by using cheques or bank transfer. Never allow your drivers to handle cash.
There are other strategies you can deploy for your haulage business to be successful. You may contact us for solutions if you have problems with your haulage business or you want a business plan if you want to start this business.
Do you like this article, you may share it on Instagram, Twitter or Facebook and stand a chance of winning of N50,000.