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How to develop a transport company?

clock10 minutes reading

October 2 / Author: Gosia Towarnicka

The TSL industry is known to be highly competitive, so running a transport and forwarding company requires well-considered business decisions right from the start. Learn how to grow your transport business and discover software that will streamline your daily workflow. 

Contents:

  • Transport fleet – minivan or set of vehicles?
  • Leased car – new or used?
  • Large transport unit or minivan?
  • Forwarding order – how to look for one? 
  • Financial liquidity in a transport company
  • Freight forwarder and efficient transport execution
  • Small transport company – smooth workflow with fireTMS

Transport fleet – minivan or set of vehicles?

The transport company should have at least one vehicle capable of providing transport services, which a driver with the appropriate qualifications will drive. In the beginning, this work is often carried out by the business owner himself, but a quick growth of the vehicle fleet helps to increase business revenue. Find out how to make this a reality.

Leased car – new or used?

The purchase of a vehicle for a transport company financed by entrepreneurial funds or a loan is not as advantageous as leasing a vehicle. All the more so as you can also become a user of pre-owned vehicles in this way. 

We tend to associate leasing with financing a brand new vehicle, which in the case of lorries or tractors generates high costs. Therefore, at the beginning of the development of a transport company, it is worth considering the leasing of used vehicles. Many of the leasing providers have offers for financing cars that are several years old, so you can expand your company’s fleet quickly at a relatively low cost. 

Large transport unit or minivan?

The choice of vehicle for a transport company depends primarily on the type of transport you intend to carry out. Many entrepreneurs start with minibuses or other vans up to 3.5 tonnes, and some also stick to such vehicles. It is a fact that small vans are much cheaper to maintain than tractors with trailers. If they are used without a trailer in domestic transport, they do not have to be equipped with tachographs (at least until 2026), which is mandatory for vans with a larger GVW. It is also usually easier to find a driver for a van than for a large truck. On the other hand, only a few international trips can be handled by a small van. 

Furthermore, the changes to the Mobility Package, which came into force on 20 May 2022, oblige minibus owners to obtain a Community Authorisation for international transport. As a result, it is becoming less and less profitable to choose a car with a DMC in the 2.5 to 3.5-tonne range for long journeys.

Forwarding order – how to look for one?

A transport company makes its living by fulfilling orders, which it must first acquire. In addition to its own contacts, there is still the transport exchange or the search for potential customers on its own. The advantages of the first solution are, first of all, on-time payments and the time saved when looking for orders on your own. The disadvantages of this method of working include a fixed, usually lower rate for each route and dependence on the forwarding agent, who sets the deadlines and destinations.  Meanwhile, sourcing orders on your own:

  • makes it possible to negotiate higher rates and shorter payment terms,
  • provides the freedom to decide on the execution of individual courses. 

The drawbacks of this solution are primarily a large number of clients, which makes it difficult to control payments, and the need to spend time searching for direct orders. 

In addition, it is also worth taking into account a certain seasonality in the industry. This applies to periods (e.g. pre-Christmas) when there are more orders than in other months. This is when rates increase, so it is worth keeping an eye on the market to be able to react accordingly. 

Financial liquidity in a transport company

Financial liquidity remains a key issue for any transport company. This is why long invoice payment times in the TSL industry are problematic for 65% of transport operators. In the course of developing a transport company, it is therefore worth reaching for mechanisms to secure financial liquidity. These include:

  • discounts and allowances, i.e. a discount to the customer for accelerated payment. A simple but high-cost solution, as it can reduce revenue by up to 14%,
  • factoring, which is the sale of not overdue payments to an external company. The cost of such a solution starts from as little as 1.5% of the value of the transferred settlements, which is why factoring is so popular,
  • fuel cards with deferred payment terms allow refuelling and purchases at petrol stations for which we do not have to pay for up to 60 days,

cash reserves. As long as sufficient funds are available, the solution to a transport company’s financial liquidity problem is the least complicated. 

Freight forwarder and efficient transport execution

The freight forwarder is responsible for the efficient execution of transport, so the profitability of the transport company depends on the quality of his work. In practice, a good freight forwarder takes care of everything: from searching for orders, preparing documentation, supervising transport and solving any problems, to monitoring payments. It is worth hiring a specialist for this position in a transport company when the fleet already consists of several vehicles and the business is generating a steady income. 

Small transport company – smooth workflow with fireTMS

The key to the successful development of any transport company is good management and efficient organisation of work. A tool that will help you manage your business from the very beginning is fireTMS, a comprehensive transport management programme for hauliers and freight forwarders. It is with its help that you can efficiently control even a small, start-up transport company and streamline the work involved in fulfilling orders. This is all thanks to the functionality the system offers.

Customer database in the TMS

In fireTMS, you can create a unique customer database with all data and information in one place. Besides adding and deleting contractors, you can edit their data and export it to Excel. The system also offers the possibility to add customers or hauliers to a ‘blacklist’, so that it will not be possible to select them when creating an order. fireTMS also includes a Customer Panel, which allows selected customers to be given access to create new loads, download documents or see the current position of the vehicle on a map. Thanks to this functionality, the customer will be able to see, in real-time, the stage of progress of the freight he has ordered. Moreover, once the order has been completed and the fireTMS user has issued an invoice, it will be available for download in the panel. This will undoubtedly speed up and streamline the process of transferring goods between the principal and the contractor. A customer panel is a professional tool that can be used by a start-up company to communicate with major customers. 

Digital documentation in the transport software

Good work organisation and tidiness of documentation are very important for any transport company. fireTMS is a web-based application, it provides a digital workflow and all data and files are stored in the cloud. This gives you quick 24/7 access to them and avoids unnecessary bureaucracy. All you need to do is select files from your computer and drag and drop them into the document section. This method can be used in all parts of the system where it is possible to attach documents (loads, orders, invoices, vehicles, etc.). 

Automatic generation of invoices for transport orders

The invoicing process in fireTMS is very intuitive. The system automatically generates a draft invoice when the order is completed. It also offers the possibility to send the invoice directly to the customer’s e-mail. Furthermore, in fireTMS you can send an email reminder to the customer about an upcoming or missed payment deadline. You can do this yourself or set up automatic sending by the system. A mercantile credit function is also available in the application, allowing you to enter into credit agreements with your counterparties and fully control payments and finances.

Fleet Cost Report and Fleet Profitability

The fireTMS system automatically generates reports. These make it possible to control the company’s income, turnover, expenses, etc. You can check information on the various types of costs assigned to drivers, trailers and vehicles, as well as on the utilisation and profitability of your own fleet. This will give you even better control over your fleet expenditure. In addition to reporting, there is also the ability to categorise in the system through tags. A tagging system is a multipurpose tool that will allow users to create individual summaries and help analyse data. This will make activities such as searching, sorting or grouping objects even faster and simpler.

Loads transport – on-time delivery

The system provides a Calendar of Events where you can keep up to date with dates for insurance, tyre changes, vehicle servicing and other formalities. It also allows you to check information related to your drivers, such as holidays, sick leave or training. Also of importance, it is possible to set up automatic notification sending of upcoming deadlines in the system. fireTMS also offers Drivers’ Schedule and Vehicles’ Schedule, which facilitates the planning and efficient organisation of transports and the careful monitoring of the fleet. This puts you in control of all your company’s processes.

Development of a transport company – is it difficult?

Running and growing a transport company yourself is not difficult if you are determined and have the necessary knowledge. It is worth following industry publications and using solutions that relieve you of your day-to-day duties (e.g. a TMS system). The competently managed development of a transport company will enable customer acquisition and further expansion of the business even in an environment with such numerous and dynamic competitors in the TSL industry.

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