Whether it is about a new business/startup in the Transportation and Logistics Industry or any other sector, the individuals involved in growing the business must have to face some unavoidable challenges. The urge to rise high by starting from the very scratch makes you forget every other thing and requires you to be focused. Failures in any industry are a must as we all learn from the experience.
A person who has never failed has not achieved anything great in life. To stay in the business, one must learn to face challenges and search for an appropriate solution in any given situation. We have shared a story-cum-discussion of a startup in the transportation sector. This can prove out to be highly beneficial for aspiring entrepreneurs in the transportation industry or any other industry for that matter.
We are among the most reputed names of this sector and have been dedicated to providing quality services to the customers for the past 12 years. Being active in a complex industry like transportation, we are today aware of the ups, downs, and loopholes of the industry and such capabilities help us serve better to our clients. Connecting the above-stated thoughts, we have gained this level of excellence by continuously making efforts in the Transportation and Logistics Industry and thus, providing optimized business solutions.
Factors that lead to Variation in Logistics Industry
(a) Truck Owner
There is no definitive parameter in the Logistics Industry and various aspects of this sector are vague. The feature of being transparent here lacks behind and a wider scope of exploitation lies with the service provider. There are uncountable businesses and operators of this industry and they all belong to a different league or potential. Several transporters don’t have access to massive infrastructure and possess only a few trucks. These kinds of businesses fail to hire professional truck drivers as the profit margin is already less for them. Therefore, these business owners end up driving the heavy vehicle by themselves and pave their way to earn a larger portion of the profit. By operating like this, the industry experiences huge variation in cost. Let us provide an example, that a standard 32 feet close body truck container charges around Rs. 50,000 for a spin from Delhi to Mumbai, while some players provide this service for say Rs. 40,000 as they have to incur less cost.
(b) Commission Agent
Another notable factor that leads to a huge variation in cost is Commission Agent. These agents are kind of silent players and are known for changing the dimensions of the cost. These agents operate without trucks or infrastructure and are dependent on borrowing from other businesses. These businesses have the less operating scope and outsource the facilities to serve their customers. Commission Agents provide services to their clients which they have already outsourced from an external business.
Apart from the cost of these borrowings gets added with the profit of these agents. There are numerous costs involved in such scenarios like rent of the truck that has been borrowed, driver charge, etc. Thus, the overall cost and charge for the services of these agents automatically shoot up. Commission Agents play a significant role in manipulating the transportation cost of this sector.
(c) EMI Pressure
The transportation industry is one of the rough sectors, especially in a country like India. The transportation businesses and logistic operators face some huge costs throughout their operations at almost every stage. While commencing the complex business in the transportation sector, the business owner has to make sure that it has all the required assets and infrastructure.
The transportation business involves some major and heavy-duty equipment and resources like different types of trucks, loading and unloading machinery, etc. An average businessman who is willing to start a new transport venture fails to buy the resources and assets in one go. The business owner has to take advantage of the EMI options and take loans to make such big purchases. The trucks, which are the most important acquisition in the transportation business do not come cheap and costs a lot.
Now, the main point where these business operators focus is repaying the loan to the bank/money lender. Therefore, earning the bare minimum amount to repay the loan becomes an unavoidable obligation of the business owners. The EMI has to be paid at any cost and no external factor can affect it. Therefore, to repay the loan taken, some players of the transportation industry agree to provide their services at a lesser cost also as their primary focus is to reach a breakeven point where they have to earn a bare minimum amount so that the EMI shouldn’t get lapsed.
(d) Business Leads
Getting genuine business leads in any given sector is bliss, as these leads allow the business operators to grow in a shorter period, that too with comparatively less effort. The business leads are beneficial in a way that the service provider can straightforwardly approach the targeted customers. These leads allow the business operators to stay ahead of the competitors as they have the connections to reach potential clients.
The beginner businesses are in real need of getting such leads as they are less experienced and are unaware of the numerous loopholes. Logistics Business, being a most challenging one for the newcomers, has a wide scope of speedy growth if the business operator has access to business leads.
These leads help make contact with the client and thereby, providing the services. Approaching a potential client directly is a task and therefore, an excellent strategy is required to commence and regulate the transportation business.
Techniques like Cold Calling, where the business operator reaches out to the client on his own and pitch the sales process. Online-Offline Marketing can prove out to be greatly beneficial in the transportation sector as the role of the internet in the 21st century is highly commendable.
(e) Finding Vehicle and Quotation Preparation
The business startup involves people who have less experience in the industry and are more prone of getting failed in primary attempts. In the absence of experience, factual knowledge about the business plays an important role in making the mark. There are a large number of challenges for the transportation business operators like procurement of capital goods like trucks and types of machinery as well as the employees of these startups have to acquire knowledge so that they can pitch their potential clients and provide them with the quotation.
Here, the new players can reach out to the registered and experienced commission agent. They are known to be extremely experienced in their fields and are capable of providing solutions to the startups of this sector. However, these commission-based agents have access to fewer resources, but they are known to have a huge client base as the customers find it easy to approach such agents in the first place.
The commission agents have undoubtedly a massive client base as well as information about the various players of the sector. These commission agents have some great connections on both sides; i.e., the service provider as well as the customers. These agents act as the means of connection and provide a platform where the businesses and clients can connect. These external agents require trucks daily as they receive a large number of bookings as compared to the business operator.
Conclusion
The purpose of this writing is to develop connectivity among the business startups, especially in the transportation sector and the clients who are seeking transportation services. The various challenges in the transportation and logistics sector can be overcome by developing a strong strategy and operating on the lines of ethics. Business startups must be capable to make use of external forces like commission agents, financial institutions, etc.
The business owner can protect the organization/company from being in a vulnerable state by simply following the business leads. Whether the startup is in the transportation sector or any other, it is highly recommended to conduct business on the lines of moral codes.