Haulage involves the transportation of goods by road and railway. It is very important to the socio-economic development of any nation and if the vision 20: 2020 of the present administration is to be achieved, the government would have to develop the transportation system . An efficient transport system is an essential component in the production and distribution of goods.
Since the collapse of the rail system in Nigeria, road haulage business has assumed a wider dimension and has become the most utilized way of intercity movement of goods and services. Goods usually convened petroleum products, building materials, containers, solid minerals, agricultural products and other finished products.
MARKET ANALYSIS OF THE PROJECT
The market analysis of the project would be viewed under the following
1.Country Background
2.Market Review
3.Projected Demands
4.Competition
Country Background:
Nigeria has one the fastest growing economies in the African continents. The country is located 50 degrees north of the equator covering an area of about 923,968 square kilometers.It has boundaries with the following countries/locations :North – Republic of Niger, South – Atlantic Ocean, East – Republic of Cameroon and West – Republic of Benin.
Nigeria’s major exports are crude oil,rubber,cocoa,sesame seed,solid minerals,cotton,hides and skin etc. The country is aggressively developing her tourism sector.Nigeria can currently boast of over one thousand {1000} 3 star hotels and 5 star hotels scattered in different parts of the country.
The banking sector has also been fully developed to service the expanding economy.The country has about 25 commercial banks and hundreds of micro-finance banks for easy access to funds for short,medium and long term development projects to small,medium and large enterprises.
The transport sector is also receiving a major boost from the various tiers of government .Currently.more than twenty shipping lines do business in Nigeria. The country’s domestic water ways is also aggressively being developed especially with the recent dredging of the lower Benue river.The country has network of roads linking the thirty-six states to each other though the state of the roads is at various stages of disrepair. Also over twenty international and fifteen domestic airlines do business in Nigeria.
Market Review:
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 140 million people,an estimated national population growth rate of 5.7% per annum and an average economic growth rate of 3.5% in the past five {5}years,Nigeria has a large ,expanding and sustainable market for haulage business.
In the northern part of the country,the products readily convened are agricultural produce and solid minerals while in the southern part of the country ,the products readily transported are petroleum products and other finished products through the commercial and economic nerve centers of Lagos, Abuja,Kano, Kaduna, Port-Harcourt, Aba etc.
Nigeria has remained a strong member of various international organizations such as the Economic Community of West Africa States {ECOWAS} which allows for the free movement of people,goods and services amongst member countries hence dipping the market opportunity in the haulage business.
Project Demand:
Person and companies usually in need of haulage services includes manufacturing companies,exporters and importers amongst others.
Generally, in Nigeria opportunities exist in the lifting and transportation of petroleum,granite from quarry site ,sand from rivers and finished products from industries and these has lead to a broad classification of the haulage industry into three namely
1. Tanker-Trailer
2. Tipper
3.Cranes
Tanker- Trailer: They vary in size, shape and capacity and these also affect the use to which they are put to. Tankers are usually used in the transportation of petroleum products. The size also reflects the use to which the truck might be put to as kerosene and diesel delivery trucks especially home delivery are smaller then those use filling stations. The trailer can also be used to convene 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 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 products from.
Cranes:Cranes are used in the lifting and transportation of heavy duty equipment like generators, transformers, containers, PHCN poles and other such heavy duty equipments.Cranes comes in different design,capacity and use.We have the 20 tons cranes,a crane that can carry 20 tons and below weight of load.The self loader,that can load it self and the low bed crane used in the transaction of other earth moving equipment like excavators and graders.
There are three {3} basic way of entering the haulage market and they include
As an Independent Operator
As a contractor or Sub-contractor
Leasing of truck to Haulage companies
Independent Operator:
As an independent operator you operate your truck and seek for contract from the multinationals and other interested parties on your own and get paid for deliveries made.
As an independent operator,you would do your own maintenance and repair,employ your own driver. You can decide to employ a manager who would scout for goods and also do the day to day running of the business.
As a Contractor or Sub- Contractor:
As a contractor with a multinational or manufacturing company, you have decided to place your fleet with the company and they would manage it for you,secure the driver and the maintenance and repair and pay you every month a agreed amount ranging between N400,000 to N600,000.
Of course , you have to be registered with the company .
As a sub-contractor, you are coming under a contractor in that company to register you fleets as their own and pay you an agreed sum after taking there commission.
It is important that before going into these agreement you study the terms and conditions of the contract with your lawyers.
Leasing of truck to Haulage Companies:
Leasing 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 the dealing with a haulage company instead of a multinational though the terms and condition might not be different .
Again it is important to go with your lawyer.
A lot of haulage companies exist that wants to go into partnership with truck owners.
Competition:
The entrepreneur would meet strong competition from companies already in the business especially when the entrepreneur wants to be a contractor.
For first time operator with small start-up capital, it is better to lease the truck to a haulage company but if you have the funds to compete in the market ,go independent.
FINANCIAL ANALYSIS 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 form the business because it depend on the method of management the entrepreneur wants to employ.
The amount of start-up requirement would depend on whether you are buying a brand new trailer,second hand popularly known as “TOKUNBO” or buying a trailer head and refurbishing the engine. The cost of a brand new ranges from N 15 Million to N20 Million depending on the brand and capacity while the cost of a second hand ranges from N6 Million to N7 Million.
However,since the entrepreneur would be buying the truck personally, the start-up capital would depend greatly on his/her negotiating skills.
The money to be made from the business depends greatly on the management style the entrepreneur wants to adopt.
If the entrepreneur choices to lease out the truck ,he/she can be making N400,000 –N600,000 monthly after deducting expenses .If a trailer travels from Lagos to Kano,they charge between N180,000 to N200,000 per trip but if it within Lagos they charge between N40,000 to N80,000 depending on the distance and the product the truck is carrying .If it carrying petroleum product, the fee is usually high.
Tippers used in the transportation of granites and sand charge between N30,000 – N35,000 per trip.
You can order our detailed feasibility report on haulage business in the downstream sector of the Nigeria oil and gas industry by clicking on the link below.
Report Title: FEASIBILITY REPORT ON HAULAGE BUSINESS IN THE DOWNSTREAM SECTOR OF THE NIGERIAN OIL AND GAS INDUSTRY.
Report Code: FORA/2013/004/63452
Get our market research report on the following related topics by clicking on any of the titles below
1. HAULAGE OF MANUFACTURED GOODS IN NIGERIA THE FEASIBILITY REPORT.
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