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Investing in Haulage Business

Services

Have you heard about Haulage business in Nigeria before now? Well, haulage is one of the best business you can do in Nigeria despite the hardship involved. Transportation of goods from one location to the other has been a major challenge in Nigeria due to the very poor state of the Railway system in Nigeria. The only means through which goods can be transported effectively right now is by the road and that is why haulage business is booming in the country.

Haulage means the transportation of goods from one part of the country to the other. Haulage services is rendered using vehicles that is capable of lifting much quantity of goods at a time. Such vehicles are: tankers, trailers, cranes, tippers, trucks, etc.

Some of the products that can be transported through haulage services are:

Petroleum products such as Kerosene, Liquified natural gas, Premium motor spirit, Engine oil, Diesel, and any other related petroleum products.

Consumer goods from the manufacturing companies. All consumable goods such as foods and drinks from the manufacturing plants to the distribution or retail destination.

Sand and stones from the dredging sites and quarry sites to the construction sites.

Building materials such as cements, woods, irons, ceiling boards, corrugated sheets, and every other construction materials of these kinds.

Containers from the seaport to the final destination or from destination to the seaport. There are thousands of other goods transported through haulage services that are not mentioned here.

Opportunities In Haulage Services

The opportunities in this sector of the economy is many and mouth watering and below is just the major ones you can take advantage and invest in right away.

Haulage Company – The first that comes to mind is owning a haulage company with your own fleet of vehicles and using it to transport goods for individuals and companies and getting paid for the services rendered. This is a very profitable aspect of haulage business but also comes with higher risks.

Let us look at the profit first using the 40ft trailer as the study case. The table below shows the cost charge to transport goods using 40ft trailer from some of the major cities in Nigeria to the other. It also shows cost of fueling and other costs as well as the take hope profit after expenses.

Destination Charges Cost/Fueling Take Home Profit
Lagos – Aba N250,000 N100,000 N150,000
Lagos – P/Harcourt N270,000 N150,000 N120,000
Lagos – Kano N300,000 N160,000 N140,000
Abuja – P/Harcourt N250,000 N150,000 N100,000
Lagos – Abuja N260,000 N140,000 N120,000
Lagos – Ibadan N70,000 N30,000 N40,000
Lagos – Onitsha N180,000 N80,000 N100,000

With this rough estimation, you have been able to understand what profit possibility that is opened to you if you decides to setup your own haulage company in Nigeria.

Risks and Challenges: Like every serious business, there risks in involved in operating haulage services in Nigeria and understanding these risks will help you plan your investment properly. Below are some of them.

1. Loosing your trucks due to bad road – With the state of roads in Nigeria, most people will think twice before delving into haulage business. Hardly can you travel any major roads in Nigeria without seeing tens of truck breakdown on the roads. Some fall and somersaults into creeks and rivers due to bad roads.

  1. Drivers habits – Most drivers have the tendency to cheat by all mean. If this is not properly handled or you don’t have the mechanism to take care of this, your drivers have the singular ability to rundown your haulage company to to the ground within short period.
  2. High cost fueling and maintenance – From Lagos to Port Harcourt will guzzle a whooping N150,000 worth of diesel to and fro. When you subtract that from the amount you charge, you find out that most of the money goes to fueling alone. You run the risk of charging much and earning little.
  3. You need minimum of 5 truck to have your haulage company registered. Buying one truck isn’t easy let alone five and higher start up cost means higher financial risk.

Other Facts To Consider In Haulage Business

1) You MUST take into consideration the maintenance cost, insurance cost, Niger Delta permit papers, cost of paying salary to drivers etc. These take up a significant cost of your business and it is not all pure profits.

2) There is no haulage company/agent that I know of in Nigeria that would payout 230,000 Nairas per truck. Considering the best haulage which is consumer goods and edibles, there is no probability of a 500,000 Naira payout even on a 40 foot trailer.

3) We ourselves payout close to 130,000 Nairas for a 20 footer and maybe 200,000 – 230,000 Naira for a 40 footer, depending on the number of runs that we take.

4) Fuel is a significant cost, and also getting pure diesel instead of contaminated diesel is a very high challenge. Contaminated diesel wears down your engine extremely quickly, and you will be faced with high maintenance costs.

Fleet Managers – Fleet Managers or Haulage Agents are owners of registered haulage company who specializes in handling other peoples fleets in addition to their own. While some really does it as addition to their own fleets, others specialize exclusively in handling other peoples trucks.

It is the same as running your own haulage transport company and comes with almost the same level of risks. The major difference is that the cost of acquiring those trucks is passed over to the truck owners while the maintenance most times goes to the agent who manage and maintain the vehicles and pay agreed commission to the truck owners on monthly basis.

Leasing out to us – This is the aspect most investors finds more convenient. All you do is to acquire the trucks starting from one to as many as you can afford. Get a reputable haulage company who will manage it and pay you monthly revenue per truck.

No stress of managing the truck, no drivers troubles, no fueling cost; just get your money at the end of the month. Imagine you have 10 40ft truck under good management that pays you N200,000 monthly each, you will be making N200,000 x 10 =N2,000,000 monthly without management stress?

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