Investing into the Nigeria’s Haulage Business

1 comment

Since the collapse of the rail system in Nigeria, more emphasis has been given to road transportation. The haulage market is national. With a population of over 160 million people and an average economic growth rate of 6.12 percent from the year 2005 to 2013, Nigeria has a large expanding and sustainable market for haulage business.

In the northern part of the country, the products readily conveyed are agricultural produce and solid minerals while in the southern part of the country, the products and other finished goods through the commercial and economic nerve centers of Lagos, Abuja, Kano, Porth-Harcourt, Anambra etc.
Nigeria has remained a strong member of various international organizations such as the Economic Community of West African States (ECOWAS) which allows for free movement of people, goods and services amongst member countries, hence, deepening the market opportunity in the haulage business.

Basic Requirements to Start Haulage Business In Nigeria

Persons and companies usually in need of haulage services include multi-national manufacturing companies, exporters and importers amongst others.
Generally, in Nigeria opportunities exist in the lifting and transportation of petroleum products, granite from quarry site, sand from rivers and finished good from industries and these have led to a broad classification of the haulage industry into three(3) categories, namely:
  • Tanker-Trailer or Truck
  • Tipper
  • Cranes

Tanker-Trailer or Trucks: They are different in sizes, shapes and capacities and these also affect the use to which they are put. Tankers are usually used in the transportation of petroleum products. The size also reflects the to which the truck might be put. The trailer can also be used to convey agricultural products from the North to the South. If the entrepreneur intends to use the truck in the transportation of petroleum product he/she would have to register with the national Union of Petroleum and Natural Gas Workers(NUPENG).

Tippers: Tippers are used in the transportation of granites and sands from the quarry site, rivers and lakes respectively for use in the construction industry. To be involved in the business, you have to be registered with the quarry site you intend to lift the product from.
Cranes: Cranes are used in the lifting and transportation of heavy duty equipment like generators, transformers, containers, electricity poles and other such heavy duty equipment. Cranes comes in different design, capacity and use.

How to Enter the Nigeria haulage Market

There are three(3) basic ways of entering the haulage market and they include:
  •  As an Independent operator
  • As a contractor or sub-contractor
  • Truck rental service to haulage companies

Independent operator: as an independent operator you operate your truck and seek for contract from the multi-nationals and other interested parties on your own and get paid for deliveries made.
As an independent operator, you would do your own maintenance and repairs. You’ll also employ your own driver(s). You can decide to employ a manger who would scout for goods and also do the day to day running of the business.
As a contractor or sub-contractor: With a multi-national or manufacturing company, you have decided to place your fleet with the company, and they would manage it for you, secure the drivers and undertake the maintenance and repairs. The company will pay you every month an agreed amount ranging between N400,000 to N600,000. Of course, you have to be registered with the company.
As a sub-contractor, you’re coming under a contractor in that company to register your fleets as their own. The contractor will pay you an agreed sum after taking its commission.
The contractor will pay you an agreed sum after taking its commission.

It is important that you study the TOS of the contract with your lawyer before going into this agreement.

Truck rental service to haulage companies:  Renting out the truck to a haulage company is same as being a contractor with a multinational. The only difference is that this time you are going to be dealing with a haulage company instead of multinational though the TOS might not be different. Again it is important to go with your lawyer.

Market Competition

The entrepreneur would meet strong competition from companies already in the business, especially when the entrepreneur wants to be a contractor.
As a newbie in the haulage market with relatively small start-up capital, it is better to lease the truck to Haulage company. However, if you have the funds to compete in the market, go independent.

Feasibility Study Of the Project

Just like it would be difficult to place a fixed amount as the start-up requirement, it would be difficult also to state for sure how much to be made from the business, because it depends on the method of management the entrepreneur wants to employ.
The start-up capital required would depend on whether you are buying a brand new trailer, second hand or buying a trailer head and refurbishing the engine. The cost of a brand new trailer ranges from N15 million to N20million , depending on the brand and capacity. The cost of a second hand trailer ranges from N6million to N7million.
However, since the entrepreneur would be buying the truck personally, the start-up capital would depend greatly on his/her negotiation skills

How Much Can I Make from Haulage Business

The money to be made from the business depends greatly on the management style, the entrepreneur choices to rent out the truck, he/she can be making N400,000 to N600,000 monthly after deducting expenses. If a trailer travels from Lagos to Kano, a fee between N180,000 is charged, depending on the distance and the product the truck is transporting.

Tippers used in the transporting of granites and sand charge between N30,000 to N35,000per trip.
The business of finished/semi-finished products which sometimes are dangerous if wrongfully handled, especially in petroleum products.
Haulage business give high return on investment and the investor can recoup his/her investment 1-2yrs with minimal participation in the day to day running of the business.

Make a thorough research before embarking on this business including the possible way of losing your investment.

Don't Miss Next post, Type In Your Email To Get Updated!!

Enter your email address:

Delivered by FeedBurner

1 comment :

  1. Thanks for sharing excellent information. Your site is very cool . I am impressed by the details that you have on this site


Use the comment box to make your views, your contribution is kindly appreciated. Urge not to SPAM! Your comment will not be published if noticed as SPAM!! Thanks!!!