The freight forwarding business is a very large one, with room for everybody. In the freight business, we have majorly freight forwarding and freight brokerage (also known as clearing and forwarding agents). Freight forwarding is the movement or transportation of goods by whatever means necessary from one point location in any part of the world to another.
Who is a freight Forwarder? Responsibilities.
The freight forwarder finds the most efficient route and organizes the transport systems to move the goods. Now the freight broker or clearing and forwarding agent Is the go between the customer and the freight forwarders, He matches customers to freight forwarders. He usually does not handle the good himself. In addition, when the goods are delivered the freight brokers does the clearing of the goods.
You can actually start this business with little transport. You don’t have to own all the trains, and ships and airplanes. Some people start with one truck. They get the goods to the port or border and transfer to another transport company. Your job is just to ensure that there is an efficient transport system for the goods you are moving. And that they arrive safely to their destination.
Challenges You’ll Most Likely Face as a Freight Forwarder in Nigeria
This is a very capital-intensive business, and as the economy is, the banks don’t want to give out loans to starters. Sourcing of funds might be difficult
Nigeria is not a manufacturing country; therefore, we do not export as much as we should. You make more money when you do overseas shipping. Though this business is profitable, it is not half as profitable as it should be.
Nigeria is very corrupt, so you may have to give kickbacks for you to do business well in Nigeria, and as a newbie, you may not be able to afford it. Moreover, if you are an honest person, it may even be more challenging to do this job.
Bad transport systems. Our inland waterways do not work very well, our rail system is almost non-existent and the roads are bad. You know what this means, you will not have many options for moving goods, especially heavy goods. With the state of the roads, you or your transporters will have to spend more money on transport. This will definitely cut into your profits.
Truth be told there’s a lot of similarities between these two kinds of business. So much that people mistake them for each other.
The major differences between these two are their modus operandi, and the weight of goods they lift. Freight forwarders sometimes use a mixture of their own vehicles and the vehicles of other transport companies (whether they be air, sea or land).
While courier services always use their vehicles and staff to move their equipment. Freight forwarders are the heavy movers; they will move anything regardless of the weight (as long as it can be moved). Courier services move usually light weighted goods.
So. let us say you buy a phone from China on Aliexpress. It will most likely be delivered to you here in Nigeria by a courier service. Now imagine you want to move 2,500 tubers of yam from Benue to a Nigerian community in the US, you would use a freight forwarding company.
Since we have now established some facts about Freight forwarding, let us delve into something deeper.
First Steps in Starting Freight Forwarding Business in Nigeria
1.Decide if the job is for you
Can you go through the stress of looking for clients? Can you negotiate with both haulage companies and customers?
Can you work under pressure, and on commission bases? Can you work with loads of different companies? knowing that if they do not provide satisfactory service, it would affect your reputation, would you be able to manage this?
Get the right knowledge
The right knowledge and its application thereof will distinguish you in whatever you are doing. Learn all you can learn about the business, read books, surf the internet, and ask questions, However, the best way is to learn on the job.
Remember you do not learn how to forward goods in school: you will have to learn on the job. Interning with someone who is already in the business is great if you do this, you will be able to acquire invaluable knowledge.
Decide what part of the business you want to go into
The forwarding business is a cutthroat business. In addition, many already established companies out there would want to swallow a smaller competitor. You could be either a generalized forwarder or a specialist forwarder. The bigger companies forward every and anything, therefore your best bet may be to choose a niche and become reputed at it. Perhaps you could decide you want to be based on forwarding agricultural produces, or apparels. As you get bigger, you could spread your tentacles.
4. Write a business plan
A man does not go to war, without first counting the cost. This is where the monies and how they will be spent will be put down on paper. This should also contain your cash flow analysis. How soon will you start making profits?
What are the most likely challenges your new business will have to face and how do you plan to fix it? Here you should also draw out your budget plan, and what and where and how you’ll spend the money.
If you are asking for a loan, your business plan even becomes much more important. You’ll have to include your loan payment plan in your business plan. Your marketing strategy should also be added to this.
you will have to register your business with the Corporate Affairs Commission (CAC) and then go to the appropriate bodies to get your license. Getting a license could be expensive, but this will give you more confidence.
As some companies or individuals will not want to deal with you if you do not have a license. How do you prove you are not a fraud without a license?
5. Get the money
This money should cover your fixed and moveable assets, and you should be able to pay for your licenses. You will also need enough money to run for as long as six months.
Especially, you need money to pay staff and other logistics collaborators. As your new client will not pay until you have delivered the goods and it may delay even after the goods have been delivered. You will have to pay those who will do the haulage for you.
6. Get an office space
This should be a place that is easily accessible to your would-be clients. Most likely should be located in a business environment, or around the ports depending on your chosen niche. Your office should be comfortable and good looking, so that your clients will know you mean business.
First impressions usually are the most important impressions. You should also have a warehouse. Somewhere to store the good before they are moved .
7.Build your Network
You can move the consignments alone to every part of the world. So, you’ll have to liaise with transport and haulage companies to do the job for you. At this point, it is important you start to build your reputation as a serious business person. and someone who can be trusted.
8. Advert and Marketing
Now, you are ready for business, so advertise, get customers. I am sure you already have your marketing strategy in your business plan, Therefore, you are ready to be rich.
You have to be patient and resilient in your business, remember nothing good comes easy. Do not give up because you are not doing well at first.
Learn the best practices and put them to use in your business. Also, do not forget that to be successful you must learn from those who have come before you. There is a lot of money in this business. If you think you have what it takes, do it,
9. Your paperwork is up to date.
Before leaving your goods in the hands of your freight forwarder, you need to ensure that all of the paperwork for transporting your goods is completed.
Your freight company will be able to help you with this, but it’s an incredibly important step to reduce the risk of your items not being released from customs or the bank refusing to release your funds – neither of which would be beneficial to your business.
10. Freight Needed Document
With freight forwarding comes a lot of paperwork, especially when shipping overseas.
Your freight forwarder should provide you with all of the relevant documents, including:
Bill of Lading contract Certificate of origin statement Inspection certificate
Export packing list
Shipper’s export declaration document
It’s essential that all of these documents are provided in order to ensure that your goods reach your customer without any issues arising.
12.NETWORK IS VITAL.
Well-established freight forwarders will have an incredibly strong network of contacts and experience in the business. Not only will this help you to get the best price for shipping your cargo, but it will also ensure that your goods arrive in a timely manner. Experienced freight forwarders will have encountered a multitude of problems along the way, so they’ll be able to quickly and efficiently deal with any issues which may arise as your goods are transported.
13 THE NEEDED SERVICES.
Freight forwarders can assist with the supply chain process on multiple levels including: Customs Clearance
International export and import documentation
14.KNOW THE FREIGHT BUSINESS ADVANTAGES
Using a freight forwarding company for the transportation of goods to your consumer can be advantageous to your business in many ways. Using their knowledge and expertise, freight forwarders will ensure that your goods will arrive at the correct destination on time and save you money in the process, compared to doing it alone.
Your freight forwarder is in charge of your precious cargo, so it’s important that you establish a good working relationship with them. You want to ensure that you choose a company that you can trust and rely on: as well as one with impeccable customer service to ensure that your cargo shipments arrive safely and on time.
15. CARRY OUT RESEARCH
There are different types of freight forwarders, depending on the activities they earn/ out and also the title they have that allows them to be accredited in certain Official Registers, which is obligatory to carry out certain activities. From the highest to the lowest level of services, the following types of operators and agents can be distinguished as freight forwarders:
This function involves grouping or assembling diverse shipments from various customers so as to make up full container loads, thus obtaining lower freight rates. Some consolidators offer regular shipments on seagoing vessels that they do not own; these are referred to as NVOCCs.
A multimodal transport operator offers “one-stop shopping” for traders. This enables traders to completely outsource or subcontract their export logistics to a single service provider. Multimodal transport operators typically offer 1door~to-door,: transport, with coverage of all related functions such as insurance, customs, warehousing, etc.
These parties act as the agents of exporters and importers in order to process customs declarations and other formalities and pay duties and taxes. Because they may be liable for very large payments of duties or fines, customs brokers are usually bonded by banks or insurance companies. Traders should take care to give precise directions and limits to customs brokers to avoid incurring liability in the event that an unexpectedly high tariff or fine makes it uneconomical to process a particular shipment.
This agent represents the shipper at the point where the goods are transferred from one transport mode (typically, from a truck or lorry) to another (as to a seagoing vessel or airplane).
Road transport is characterized in many countries by the proliferation of small service providers. Road haulage brokers act as intermediaries between road carriers and shippers and are usually paid by commission.
These brokers act as the agents of ship owners to obtain and process cargo shipments. Commonly, a freight forwarder will represent the shipper while a loading broker represents the ship owner, so that there are two intermediaries between the customer and the transport provider.
If you need a complete business plan, please let us know. Or, you want us to help you set up this business kindly contact us. Otherwise, please check out these other business ideas you can do in Nigeria.