5 Tips on Building a Successful Transport & Logistics Business

The transport and logistics business can be very profitable, but it is also highly competitive. Many entrepreneurs try to get into the business, but they end up failing. This outcome usually happens to those who are lacking knowledge and abilities.

Building a successful transport and logistics business is more than just choosing good routes or delivering goods faster. Here are a few tips that you can implement to grow your transport and logistics business.

1. Use the Most Suitable Shipping Method

As an owner or manager, you may already know about the two most common shipping methods; Less than Truckload (LTL) and Full Truckload (FTL). However, if you are just starting your transport and logistics business, choosing the right shipping method can be tricky. Therefore, let’s find out the differences between these two methods.

What is Less than Truckload Shipping?

LTL is a shipping method that combines multiple shipments from different clients. Thus, your clients only pay based on the weight of the goods or the space that they need to store their goods. If clients only take up one-third of the space, then they only have to pay for one-third of the truck.

LTL is a perfect choice if you have a lot of clients from small-scale businesses, because generally they only need to ship goods in small quantities, but it takes a bit longer to reach their destinations due to frequent stops. This shipping method is also prone to fulfillment errors due to multiple goods from different shippers. Therefore, your courier must be extra cautious when managing all the shipments.

What is Full Truckload Shipping?

FTL is a type of ground freight transportation that allows a company to ship their goods using an entire truck regardless of the number of items loaded in the truck. Thus, they are required to pay for one truck. However, most transport and logistics businesses offer different types and sizes of trucks based on the number and weight of the cargo.

The FTL shipping is usually used by transport and logistics businesses whose clients are from big companies and ship in large quantities. The advantages of this method are faster delivery times and a higher level of security. However, the shipping costs are rather high.

Which shipping method should I choose?

In order to figure out which shipping method you should choose, you need to first consider who your clients are, what type of goods you normally ship, and how many transports you have. If you have many clients from various business sizes, then you can combine the FTL and LTL methods. However, you must ensure that you have different types and a large number of transports so that you’re able to fulfill demands.

2. Charge the Right Rate

Your shipping service rate determines how much profit you will get. Your rate should be high enough to make a profit and cover your operating costs. However, setting your rate too high with no added value can cause you to lose to your competitors.

Remember, that there are many other transport and logistics businesses out there that are targeting your prospects as well. Moreover, you will also have to compete with brokers with alluring offers. So you need to conduct a market research. And, if you want to increase your rate, then make sure you have added value which also benefits your clients, for example like a shipment tracking app or shorter shipping times.

A few factors to consider when determining a shipping service rate are:

  • Type of transportation
  • Type of shipping method (FTL or LTL)
  • The amount and weight of the cargo
  • Type of goods
  • Shipping routes
  • Distances and time
  • Your added value
  • Insurance (if any)

3. Analyze and Control Your Operating Costs

Understanding your operating costs is crucial. If you don’t know your fixed and variable costs precisely, then you will have difficulty knowing your business profits and losses. Fixed costs include driver salaries, insurance, permits, and so on, while variable costs include fuel and maintenance costs.

Fuel costs are usually the hardest part to track. But, with an automated transportation management system, tracking fuel usage is effortless. This system allows you to monitor fuel usage per truck, making it easier for you to know which truck consumes the most fuel, how many miles a truck has traveled, and how much fuel costs spent by each truck.

Saving operating costs is a lot easier if you have an efficient accounting system. Manual financial statements are usually prone to errors and they make it difficult for you to figure out your business income. But with an automated accounting system, not only can you comprehensively figure out your profits and losses and get real-time financial data, but you can also accurately estimate your income and expenses, thus keeping your cash flow under control.

4. Use an Automated Solution for the Transportation Business

Managing a transport and logistics business manually is undeniably tiring and exasperating especially if you have a large fleet. Moreover, you must have difficulty analyzing your business performance; what factors cause losses, what factors need improvement, or what factors lead to profits.

In order to stand out from your competitors, you should keep on improving your transport management. One of the most effective ways is to implement an automated solution for the transport business or better known as transport management software. This system allows you to centrally keep and manage all data related to your transport operations. Shipment scheduling as well as fuel usage, cargo and driver tracking can be done automatically by the system, thus helping you significantly save costs, time and effort.

5. Have an Efficient Back Office

Having an efficient back office is the key to the success of the transport and logistics business. Although couriers have an important role in completing shipments, the back office is what makes successful shipments, ensures customer satisfaction, and watches over the smooth running of your business operations.

To create an efficient back office, you not only need competent people, but also a system that integrates all the operations, from finance and HR management to customer management and marketing. An ERP system enables you to automatically manage all your business aspects and provides you with complete insights into your entire business.

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Kanya Anindita

Kanya Anindita

A creative writer who loves traveling more than anything.