Haulage / Logistics Business Plan in Nigeria

EXECUTIVE SUMMARY ON HAULAGE BUSINESS

Haulage simply means the movement of goods from one destination to another. What the haulage business charges for is the distance in mileage over which the goods are being moved as well as the weight of what is being moved. In a nutshell, haulage business has to do with making goods available where they are needed at the time they are needed.

Also Read: Haulage Business Plan in Nigeria

With the constant rise in the population of Lagos State there is a need for more trucks to ensure that Honeywell products are efficiently distributed to wholesalers and retailers weekly. Currently there is a shortage of trucks required by Honeywell for effective distribution within Lagos metropolis.

OJC Logistics Ltd. propose providing a truck to solve this issue and with time grow the number of trucks at our disposal to improve the partnership with Honeywell and move beyond Lagos to other States in the country.

With a projected weekly income of #100,000.00 we expect the business to breakeven within 4 years of operation. This is considering offsetting the loan from the bank, payment of salaries, and maintenance of the truck.

CHAPTER TWO

INTRODUCTION

Usually haulage begins at the point of loading the truck and ends when the trucks are offloaded at the prescribed destination. Ultimately the business seeks to satisfy the consumers made up of production companies, wholesalers and retailers. The goods transported can be intrastate or from one State to another. This means the haulage company can focus on moving goods between States or within the State of residence of the operator.

Examples of products moved by haulage companies

Building materials – sand, gravel, iron rods, granite, cement, etc.
Cargo from ports.
Agricultural materials and products.
Natural resources and solid minerals.
Petroleum products – Automotive Gas Oil (AGO), Premium Motor Spirit (PMS), Low Pour Fuel Oil (LPFO), Dual Purpose Kerosene (DPK), among others.
Commodities – salt, flour, sugar, food materials, etc.

Economic Importance of Haulage business in Nigeria

Usually haulage business involves the use of both road and rail but since the breakdown of the rail means of transport in Nigeria, the business has operated more on the road via the use of trucks. The haulage business in undoubtedly one of the most lucrative in Nigeria as the country has a huge population and good road network linking the 36 States and the Federal Capital. The only challenges faced on the roads are poor condition of the roads and robbers on the roads.

When you consider the financial reports presented by the Ministry of Finance yearly, it is evident that Transportation, especially haulage, is large contributor to the Nigerian GDP. Efficiency in the haulage sector births employment opportunities and benefits. The ultimate result of this improved accessibility to markets and improvements in investments.

Benefits of Haulage business

Haulage assists manufacturers in transporting raw materials to the factories for production and in movement of finished products to distributors and wholesalers.
Haulage makes movement of goods to wholesalers easier and more efficient thus helping them to spend less and buy more on the long run.
Haulage improves competition since more wholesalers have access to a variety of goods with efficient haulage services. When consumers have an array of goods at their disposal then the market becomes open, prices drop and innovation is promoted.
Haulage makes more jobs available thus causing the economy to develop quickly. The haulage business creates several job opportunities such as management, freighting, and shipping.
Since finished goods are transported from the warehouse to the wholesalers and distributors, haulage helps to decongest the manufacturers’ warehouses. Thus creating space for more goods to be produced.
Haulage improves market accessibility and creates a link between manufacturers and the final users.

Industry Analysis of Haulage Business in Nigeria

Types of haulage business in Nigeria

Having discussed what haulage business is and the benefits derived from the business, it is imperative to discuss the sections of haulage business predominant in Nigeria.

Tipping Haulage. This involves the use of tipping trucks generally known as tippers. The tippers are used in the movement of granite, sand, gravel and other construction materials. The trucks are usually between 20 and 30 tons in capacity.
Craning haulage. These are used in the lifting of heavy materials and equipment especially construction equipment, industrial machines, big generating sets, electrical poles, transformers, etc. The trucks usually have dual functions, lifting loads and moving them to the desired destination.
Pay loading. This involves the use of tractors to load trucks at quarrying sites. The business is quite capital intensive and so many entrepreneurs avoid it.
Tanker haulage. This is also referred to as Petroleum Haulage. It involves the movement of petroleum products from refineries or depots to retailer stations. This is one of the most lucrative forms of haulage business in Nigeria.
Truck Haulage. Without doubt this is the most popular form of haulage in Nigeria, probably because it requires minimal capital and brings in much profit. It involves the movement of different classes of goods from one point to another. Different sizes of trucks are used based on the kind of load to be transported.

Challenges of Haulage Business in Nigeria

Every business has several risks attached. The haulage business is not different, there are a number of risks faced by operators of haulage business in Nigeria. The most pronounced are stated below:

Dishonest drivers.
Poor condition of the roads.
Accidents on the roads, especially in intercity haulage.
High cost of maintenance.
Dishonest mechanics handling repairs and maintenance.
Poor management.

Combating the risks involved in the haulage business

The fact that risks are present is not an excuse to discard the business. It just means one must seek for ways to go around the challenges faced. Here are a few suggestions to combat the risks faced in the haulage business:

Employ trustworthy drivers.
Employ a trusted fleet manager who can supervise drivers and the use of trucks efficiently. If the fleet is not large, it is best the entrepreneur doubles as the fleet manager.
Install trackers on each truck. This way the movement of the driver can be monitored.
Get a trusted mechanic, most preferably on recommendation from other operators, who can assist in maintaining the trucks at affordable costs.

Problem Statement

Lagos State is the most populous city in Nigeria with a population above 12 million people and rising on a daily basis. Statistics show that 2,000 people at the minimum are added to the population of the city every day. Honeywell is one of the top food production companies in Nigeria with its headquarters and factory located in Nigeria’s commercial capital.

What we propose

We believe that with more trucks Honeywell will be able to transport goods all over Lagos with ease, thus satisfying her teeming customers and improving profit. OJC Logistics Ltd. propose providing a truck to solve this issue and with time grow the number of trucks at our disposal to improve the partnership with Honeywell and move beyond Lagos to other States in the country.

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