Bus, minibus, collective, bus and truck are some of the means of transport used to move passengers, merchandise and/or food. Land transport services represent a good part of the tertiary sector of the economy in Nigeria. They also generate hundreds of jobs a year and their demand is very high as they meet the needs of both people and companies.
In addition, the transportation industry offers great business opportunities for entrepreneurs. Who want to dedicate themselves to land transport of cargo or passengers. Regardless of the modality chosen, there is enough scope to receive new business. That is why today we will provide you with information on how to set up a transport company in Nigeria.
We will talk about the necessary requirements for this and also about everything required to set up a passenger transport company, cargo transport and refrigerated transport. So let’s get started.
Is it profitable to set up a transport company?
As we have already mentioned, transportation services are a market in constant movement that, regardless of the season of the year, have a significant demand in Nigeria. Well, every day, hundreds of people move by land to their places of study, work and housing. In addition, land passenger transport has become a cross-cutting axis of tourism across many states in Nigeria.
Since a large number of travelers and tourists move to their destinations through bus fleets. Which offer internal transport routes through different areas of the countries. Coming to transport a greater number of users compared to air transport.
Regarding cargo transportation, we find ourselves in a highly competitive sector that has become one of the pillars of supply chain management. In other words, it plays a fundamental role in the displacement linked to the production and commercialization of goods. Becoming a fundamental element in logistics services in Nigeria.
With the above, it is possible to show that setting up a transport company, although it requires a large investment in equipment and structure, can become very profitable. This if good planning is carried out and if the operating costs of each transport unit are determined. The latter is essential to set the rates for your services and establish a profit margin.
Requirements to set up a transport company in Nigeria
At this point you will be wondering how a transport company is constituted, and it is a question that we are going to answer next. Here we will mention the general requirements that every entrepreneur must consider to set up their own transport company in Nigeria.
1. Define the type of transport
The first step to setting up a transport company is to determine the type of business with which you are going to work. Here you have to choose a specific market niche and define whether your company will be passenger transport, cargo transport or refrigerated transport. The sector you lean towards will condition the equipment you need to buy, as well as the rates for your services.
2. Acquire the vehicles
Once you define the type of company you are going to set up, you must acquire the fleet of vehicles corresponding to said activity. Here you have two options, rent the vehicles or buy them. In case you are going to buy them, these can be new or used. The important thing is that they are in good condition and can be conditioned for the provision of the service.
In the case of cargo transportation services, the type of vehicles will be determined by the weight of the goods and merchandise being transported. Therefore, it is necessary to have light cargo and heavy cargo vehicles. On the other hand, in passenger transport services you have more options. Well, you can buy everything from taxis and micro buses, to vans and buses.
Within the market you will have multiple supplier alternatives, that is why it is important that you plan a strategy with time. In which you also take into account what percentage of your budget you are going to allocate for the acquisition of the equipment.
3. Register the company
To set up a transport company, as in all businesses, it is necessary to meet a series of legal requirements regarding the creation of new companies. To do this, the new business must be registered with the corresponding entities in each country. The procedures usually vary according to the location, but as general steps for registration we have:
- Define a legal structure, this can be as a natural/physical person or as a legal person. Legal persons include corporations, limited liability companies, simplified stock companies, among others.
- Prepare the statutes and/or articles of incorporation. This is the documentation that contains the number of partners, their responsibilities and contributions. As well as the economic activity, location and legal representative of the business. It generally must be approved and signed by an attorney.
- Registration in the commercial registry, chamber of commerce or taxpayer registry, as appropriate to each country. This refers to the entity in charge of regulating the creation of new companies.
- Obtain permits and operating licenses.
- Registration with the national tax registry.
4. Obtain documentation, permits and licenses
After the registration and inscription of your new business before the legal entities, you must process the permits corresponding to your economic activity. That is to say to the transport services, there we find the following documentation:
- Permit to operate, which must be requested from the Nigeria Federal Ministry of Transportation or any related entity
- Techno-mechanical certificate for each vehicle, stating that it is in operating condition.
- Valid driving licenses of each of the employees who will operate the vehicles.
- Insurance policies for vehicles, as well as for passengers and/or goods as appropriate.
5. Make a business plan
A business plan becomes essential in the entrepreneurship process, not only to set up a transport company, but for any other business. Well, that is where the idea is described in detail and an analysis of the environment is carried out. This thorough market research that studies the competition and the target audience. In addition to this, the business plan must include within itself a marketing plan. To establish the strategies and tactics to promote the new venture.
In addition, it must also contain a financial plan, in which the resources and the initial budget necessary to execute the business idea are contemplated. As well as a financial evaluation that allows to have an idea of the profitability, economic viability and profits that are expected to be obtained.
At this point, basically, the strategies and tactics proposed in the marketing plan of the previous point are put into operation. As promotion strategies, traditional marketing actions and digital marketing actions can be combined. In order to be more effective. The promotion of the business is vital for its success and growth, since we are referring to a new company with no market share and unknown.
That is why you must work hard to know the needs of your target audience and guide your services to meet them. In addition to gaining recognition, differentiating yourself from the competition and being visible to your potential customers.
Steps to set up a transport company in Nigeria
In addition to the steps seen in the previous point, the process of how to have a transport company must consider certain aspects specific to each type of business. Therefore, below, we will see one by one how to set up a passenger transport company, a cargo transport company and a refrigerated transport company.
How to form a passenger transport company
Passenger transport companies can be both public and private , and they are the ones dedicated to moving people from one place to another by land . This transport can be local, regional or national depending on the company. Next, we will see the key steps to set up a transport company of this type:
1. Space, structure and vehicles
To set up a passenger transport company in Nigeria, it is necessary to have a well-located space that is close to commercial areas. As well as offices, schools and tourist areas. It is also important that it be easily accessible both on foot and by public and private transport. You must rent a place with an area large enough to set up an office, a reception and a parking area for your fleet of vehicles.
Regarding the characteristics of the vehicles , generally these companies handle from cars and vans of 4 to 7 passengers, to minibuses of 12 to 19 passengers. Also, buses from 20 to 28 passengers and buses from 35 to 40 passengers. This guarantees the ability to cover different types of needs and diversify the service offer.
Part of the process of how to set up a passenger transport company is to select the personnel that will be part of the work team. Within the main roles and functions you will need a manager, who will be in charge of all the administrative management. As well as an assistant who fully supports said work. In addition to this, you will require a receptionist and a sales agent for commercial management.
For the provision of the service and the handling of the vehicles, you will require more than 3 drivers and, in some cases, assistants on board . The auxiliaries on board are more necessary in relation to tourist transport. As you add more vehicles to your fleet, you will have to increase your staff, mainly the number of drivers.
Among the main services offered by a passenger transport company we find 3:
- Business transportation: This is an exclusive type of service that is usually provided in vans or trucks. Here transportation of 1 or more people to the company is offered. As well as transfers to events or different areas of the city or country.
- School transportation: This service is provided specifically to educational institutions . Here transportation is covered for educational outings, student routes, transfers to academic events, etc.
- Tourist transport: Tourist transport companies offer routes to different destinations nationwide . Generally, they also provide their services by the hour, to companies and institutions. In addition, many of them have their own tourist packages and tours or are allied with travel agencies.
How to form a freight forwarding company
Freight transport companies are part of the entire logistics chain and are responsible for moving certain merchandise, goods and/or products from one point to another. They are an essential part of this chain as they cover the entire distribution and security service of the elements.
To know how to set up a freight transport company, keep in mind the following aspects:
1. Space and structure and vehicles
As in other transport companies, here it is necessary to have a sufficiently large and spacious space. In which an office, a reception, a customer service room and a bathroom area can be adapted. As well as a storage warehouse and a parking area for vehicles. The dimensions of the space will depend on how large your fleet is and how many personnel make up the company. But a space of about 300 m2 is recommended to start. In addition to this, when the company is better consolidated and extends its operation nationwide, it is important to have road checkpoints.
Regarding the vehicles, these can be tow trucks, unit trucks, stakes and tractor trucks. Which have the capacity to support between 1 and 10 tons of weight.
The staff is a crucial gear for the proper functioning of your freight forwarding company. That is why you should make sure that you hire qualified and experienced people and, preferably, have their skills evaluated to corroborate this. Here you will need to hire an administrative assistant, an accountant , and at least one sales assistant. In addition to this, you must have a group of loading and unloading assistants for the merchandise. And, of course, more than 3 drivers with a valid license to maneuver the vehicles.
Do not forget that you must also have available people who are directly responsible for the maintenance of the vehicle fleet.
As main services offered by a cargo transport company we find:
- Special cargo transport : Here merchandise, refrigerated products, bulk cargo, extra dimensioned merchandise, among others, are mobilized.
- Removals : They can be from very small or personal, to large or business removals.
- Express freight transport: In this service, goods are transported for urgent and/or exclusive deliveries.
- Specialized transport by sector: This service is focused on cargo transport specific to a sector, such as hardware, telecommunications or banking.
How to form a refrigerated transport company
A refrigerated transport company responds to the need for vehicles designed to refrigerate and freeze perishable foods. Since these products require certain special conditions to preserve their quality. And that way they arrive in optimal conditions to the final consumer. The market niche for this type of service in Nigeria is focused on food and export companies. Therefore, it requires good equipment for cold transport.
Some of the most important aspects to take into account when setting up a refrigerated transport company are the following:
1. Space, structure and vehicles
The first measure to set up a refrigerated transport company is to select the appropriate location to install it. Here, the best thing to do is to establish the business near industrial poles, since this is where the main contractors of their services are located. This will make the development of activities simpler while the business grows. In addition, it is also important that it is located in a location that is accessible to employees and supply vendors.
Regarding the structure, for the operation of the company it is advisable to have a physical space of approximately 50 m². Which will be divided between the office to deal with administrative issues, equipped with a table, chair, computer with internet, printer and telephone, and the reception area , as well as bathrooms for employees . In addition to this space, there must be an area designated solely for parking and storing vehicles.
As for vehicles, for those who are starting out in this activity, the ideal is to opt for semi- trailers that are suitable for transporting most loads . It is necessary to understand that depending on the type of load it will be necessary to make adaptations to the vehicles. Because perishable food products such as meats and dairy products are transported here, the semi-trailer has to be equipped as a cold room.
To start the activities of the refrigerated transport company, it is necessary to hire trained personnel for each task. Among the most important members of the staff are: an administrative manager, 2 to 5 drivers, duly authorized to direct these types of vehicles, and a receptionist. In addition, it is also important to have sales consultants, a general service assistant and a mechanic specialized in semi-trailers.
Among the main services offered in a refrigerated transport company we have:
- Frozen cargo transport: Here you must have a fleet of trucks conditioned to temperatures of -18 to -15ºC . Being the best solution for the transport of loads such as: meats, seafood, pizzas, etc.
- Refrigerated cargo transport: in this service the transport of refrigerated products and foods that are fragile to temperature variations is carried out , such as: milk, vegetables, etc.
- Break-bulk, refrigerated and frozen cargo: Here products are collected in small volumes, grouped and delivered through previously defined routes .
- Monitored, refrigerated and frozen cargo: This service is a little more exclusive, since deliveries are generally nationwide . Therefore, they must be monitored and controlled at all times in real time.
It is clear that setting up a transport company in Nigeria, whether passenger, cargo or refrigerated, can represent a business with a high flow of customers. As well as great opportunities to grow in a very well consolidated market of great importance in the economy. That, although it is somewhat competitive, the door is open for new entrepreneurs to enter and make a difference. We hope that with the information in this article you will be motivated and start the process to set up your own transport company in Nigeria. We wish you much success with it!