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STARTING A NEW TRANSPORT BUSINESS.
Guidelines to Starting a New Transport Business using www.page1.co.za
The most important formula for any business is:
    Profit = Turnover - Costs
Nothing else is more important.
The Profit MUST be known before tendering for a transport contract.
Turnover = The money that the vehicle brings in based on the transport charge per km, ton, Rand/ton/km, hour, day etc
Costs = The TOTAL costs to operate the truck over the period of the contract.
These parts of the formula are quantified on www.page1.co.za in the Quick Transport Cost Estimate and Payload, Trip Times and Fuel Consumption programmes
Profit = The amount of money the transport business will return. To compare this profit against other investment opportunities, i.e. putting your truck deposit money into a bank savings account, www.page1.co.za uses the Internal Rate of Return. This is ONLY ONE method of comparing investment opportunities. Speak to your Investment adviser before committing yourself to any contract. Your Internal Rate of Return % (I.R.R.) will depend on your research, knowledge and skill in the transport management business.

Note: If you or your Truck supplier have done a Quick Transport Costing Estimate or Payload Estimate you will get an interactive Monthly costing giving the I.R.R. on your actual per month costs.
The following overview is a guide to the transport business. Use at your own discretion and risk.

Note: If kilometres per month exceed 15 000 km/month make sure that the vehicle/operation is capable of completing the task in the hours per day/week or month. More than 15 000 kms/month needs careful consideration of loading and offloading times and average travelling times.

To start a new business takes research, a comprehensive knowledge of the benefits and pitfalls surrounding this new venture and most importantly knowledge of the transport business and sector in which you intend to operate. Proper planning has to be initiated to prevent poor performance leading to foreclosure and huge losses.
What would you rather do:
Operate the truck for 5 years to find out that you would have made more money by putting the deposit in a savings account
Or
spend 5 hours doing the Payload and Quick Transport Cost Estimates and negotiating a profitable transport rate from day one?...
DO THE CALCULATIONS FOR FREE TO FIND OUT! IF YOU DON'T MAKE A DECENT INTERNAL RATE OF RETURN, DON'T DO IT.
Overview:
To begin with, commercial vehicles are not cars as a mere means of getting around, each commercial vehicle from 'bakkies' to 6 x 4 truck tractors and bigger are a business in themselves. Whether you are planning to purchase one vehicle or a large number of vehicles, each vehicle must be recognised as an individual profit center.

It is to this end that hopefully this overview can give the necessary guidance to assist with the buying decision and profitable outcome of your would be new venture.
The transport industry is divided up into all industrial sectors, and is described as the transporting of goods from the manufacturer to the end user in some instances the goods are transported to the harbours and railways for further dispatch world wide. The product moved is called the payload and varies from 1 ton to 35 tons and upwards. Normal road transport is limited by the road legislation and is rated at 56 tons including the mass of the truck, trailer and payload. The payload is described as the volume and mass of product carried on the truck or trailer from the source (loading point) to its final destination (off-loading point).

The timing of the delivery of goods is of prime importance so loading and offloading of vehicles forms an integral part of this competitive market. Late delivery of goods can result in the Transporters being fined or ultimately losing his contract with the supplier. At all times the transport contractor must be aware of trips times and performance of his drivers. A knowledge of routes, rest points, and fill up stops is imperative to collate and control trip times.

Commodities or bulk goods transported are done in various configurations, there is dry bulk in tankers, i.e. animal feeds, cement, powder additives for processing of fertiliser and fuel. The liquid bulk loads such as fuel, milk, acids are also carried in tankers. Fuel and acids and some powder additives are listed as hazardous goods and certain road legislation by-laws are required to be adhered to when moving these type of goods. Special driver training is required.

Further commodities such as Fast Moving Consumer Goods (FMCG), products delivered to supermarket outlets are packed on pallets and transported via a 6 x 4 truck tractor with a superlink trailer or tri-axle trailer usually with curtain side bodies. To the smaller supermarket outlets this is done with smaller 6 to 8 ton rigid trucks with curtain side bodies.

Beverages are carried on a "Miller's Deck" dual axle trailer with a 4 x 2 truck tractor or 4x2 rigid.

Coal, ore, and sand are carried in semi trailer configurations such as sloper trailers, twin bin tri-axle semi trailers or interlink side tippers and pulled by 4 x 2 or 6 x 4 truck tractors.

Smaller construction companies use rigid 6 cubic meter tippers or 10 cubic meter tippers. Construction companies, electrical companies and garden services use 4 to 8 ton rigid vehicles with cranes situated at the rear of the cab and drop side bodies. The movement of bricks can be done with a rigid flat deck truck with a draw bar trailer with a crane mounted at the rear of the rigid truck or a 6 x 4 truck tractor with a tri-axle flat deck semi trailer with a center mounted crane.

Parcel services use bakkies, 4 to 8 ton vehicles and sometimes 4 x 2 truck tractors with double axle or single axle semi trailers with closed van bodies to ensure that the goods do not get damaged by rain.

Frozen goods are transported in refrigerated trucks with freezer units built into the body these can be of any tonnage depending on the requirement of the supplier.

As you will see from the above outline there are many uses for trucks and it is imperative that the correct vehicle is specified for your particular contract.

Maximum payloads should be carried wherever possible in order to be a viable transport operator with the best returns on your investment.
Your management skills are vital to the realisation of the investment opportunities and the Internal Rate of Return %
Introduction to http://www.page1.co.za
From my 20 years buying, selling and operating trucks there are always a few frequently asked questions. What is the cost of running the vehicle? What is the best configuration? What must be charged for transport to make decent return for the risks taken?

The Transport Contractor, Sales Person, Financier and Buyer of Transport Sevices can calculate these answers using the Quick Transport Cost Estimate (QTCE) or the more in depth Payload, Trip Times, Fuel Consumption and Quick Transport Cost Estimate programme.
The Buy In and Selling Price programme can estimate the value of vehicles up to 25 years into the future and 25 years ago and under any Operating Condition. The economic viability of refurbishing is also calculated. Supply and Demand for vehicles is also addressed.
Buyers expect honest values in any Cost Estimate. Costings on page1.co.za can be emailed to the buyer who can make any changes to suit and recalculate the values to check profitability.
The calculations highlight the following:
* Legal payloads and Bridge formula loads for popular vehicle configurations including front and rear mounted cranes.
* Trip times as a % of engine power on all terrain types.
* Fuel Consumption according to engine type, Driver Proficiency, Gearbox and Rear Axle efficiency, Road Surface and Tyre Rolling Efficiency. The effect of wind drag is covered extensively.
* Costs per hour, km, trip, day, week, month, year, Payload Unit etc...
* When the life span of the truck Engine and Gearbox is exceeded the approximate month and repair cost is noted in the Cash Flow calculation pages.
* The number of vehicles required to complete the job.
* Monthly Cash flow for up to 8 years.
* The Maintenance and Repairs and Tyres are calculated for the month when they are due.
* The Internal Rate of Return % for each month are calculated.
* The Buyer can do an actual Monthly costing against the original costing estimate. This will hightlight problem areas so timeous corrective action can be taken.
* The cost of different configurations can be compared.

Other programmes on the website:
Buyers and Sellers can search and advertise new and used trucks (with photos), truck specifications, truck loads and get quotes for transport.







Listed below are the Vehicle Configurations available on www.page1.co.za for Cost Estimates.
HomeBack | Quick Transport Cost Estimate
Click the Radio button in the First Column of the Vehicle Type/Combination row of your choice and click the Submit button at the end of the page.
Note: T = Tons.     T/T = Truck/Tractor.     Semi = Semi-trailer.     DB = DrawBar Trailer.
  Rigids Vehicle Type/Combination Payload Range T G.V.M. Range T G.C.M. Range T
Motor Car 0.5 T 1.5 to 2.5 T Up to 2.5 T
Bakkie/Pick Up 0.5 to 1 T 1.8 to 3 T Up to 3.5 T
Bakkie/Pick Up + small trailer 0.5 to 1.5 T 1.8 to 3 T Up to 3.5 T
Rigid 4x2/4 Truck/Van/Bus/Tipper... 1 to 10 T (150 T abnormal) 3 to 15 T 10 to 32 T
Rigid 4x2 + 2 Axle DB 3 to 10 T 5 to 15 T 10 to 50 T
Rigid 6x2/4/6 Truck/Bus/Tipper/Mixer... 10 to 18 T 22 to 35 T 30 to 75 T
Rigid 6x4 + 2 Axle DB 13 to 20 T 30 to 35 T 56 to 75 T
Rigid 6x4 + 3 Axle DB 13 to 20 T 30 to 35 T 56 to 75 T
Rigid 6x4 + 4 Axle DB 35 to 40 T 25 to 35 T 56 to 75 T
Rigid 8x4/6/8 Truck/Tipper/Mixer/Crane... 13 to 20 T 30 to 35 T 56 to 75 T
Rigid 8x4 + 3 Axle DB 33 to 40 T 30 to 35 T 56 to 75 T
  Truck/Tractors Vehicle Type/Combination Payload Range T G.V.M. Range T G.C.M. Range T
T/T 4x2 + Single Axle Semi 2 to 16 T 12 to 16 T 32 to 40 T
T/T 4x2 + 1 Axle Semi + 2 Axle DB 20 to 25 T 17 to 21 T 40 to 50 T
T/T 4x2 + 2 Axle Semi 18 to 22 T 14 to 19 T 32 to 40 T
T/T 4x2 + 2 Axle Semi + 2 Axle DB 25 to 30 T 17 to 21 T 40 to 50 T
T/T 4x2 + 3 Axle Semi 25 to 30 T 17 to 21 T 38 to 50 T
T/T 4x2 + Interlink 2/1 Axles 25 to 30 T 17 to 21 T 40 to 50 T
T/T 6x4 + 2 Axle Semi 25 to 30 T 25 to 33 T 50 to 65 T
T/T 6x4 + 2 Axle Semi + 2 Axle DB 25 to 33 T 25 to 33 T 56 to 75 T
T/T 6x4 + 2 Axle Semi + 2 Axle Pup 25 to 33 T 25 to 33 T 56 to 75 T
T/T 6x4 + 3 Axle Semi 25 to 33 T 25 to 33 T 50 to 65 T
T/T 6x4 + 3 Axle Semi + 2 Axle DB 25 to 33 T 25 to 33 T 56 to 75 T
T/T 6x4 + 3 Axle Semi + 2 Axle Pup 25 to 33 T 25 to 33 T 56 to 75 T
T/T 6x4 Interlink 2/2 Axles 35 to 40 T 25 to 35 T 56 to 75 T
T/T 6x4 Interlink 3/2 Axles 34 to 40 T 25 to 35 T 56 to 75 T
T/T 6x4 + 2 Axle Lowbed 30 to 35 T 22 to 26 T 45 to 50 T
T/T 6x4 + 3 or 4 Axle Lowbed 35 to 40 T 26 to 33 T 50 to 75 T
T/T 6x4 + 1 Axle Dolly + 3,4,5 Axle Lowbed 50 to 60 T 33 to 45 T 90 to 120 T
T/T 6x4/6 + 2 Axle Dolly + 3,4,5 Axle Lowbed 70 to 115 T 33 to 45 T 110 to 160 T
Roadtrain... 55 to 65 T 26 to 40 T 90 to 120+ T

These screen shots serve as a guide of how to get answers to important questions when planning a Transport Operation.
Remember when you are doing a Cost Estimate - Garbage In, Garbage Out.
2
Select options to suit your operation or to see how different options affect costing. 2
IF a cheaper truck has higher Maintenance and Repair costs and Downtime, when will a Premium priced truck be cheaper to run? Do a QTCE and Cash Flow for the Premium priced truck for the Finance Period. Do the same calculation with the cheaper truck and increase or decrease Purchase Price, Maintenance and Repairs, Non Productive Days and Kilometers per Year (Downtime), Fuel Consumption, Kilometers/Trips per Day/Week, Payload Capacity, Actual Driving Kilometers per Hour, Residual Value etc... to suit the truck. The IRR% in the Cash Flow calculations will indicate if and when the IRR% are the same i.e. if and when the Premium priced Truck becomes cheaper to run.


Will a cheaper and heavier steel trailer be more cost effective than a more expensive and lighter aluminium trailer?
What if Aluminium Maintenance and Repairs is more than steel?

If the speed limit for trucks is 80 km/h then the Actual Driving Kilometers per Hour will be about 65 km/h for long distance and 45 km/hr for In Town driving. To average 80 km/h the truck would need to drive at speeds of up to 120 km/h!




For your notes











Notes
1st Engine overhaul due in 25th month. The truck should be paid-up before any major component overhauls are due. Make the Finance Repayment Period 24 months or less?

CONTRACTS:
This is a legal document drawn up by the supplier and given to the Transporters, binding the Transporters to the supplier for a certain period. All obligations to the supplier and to the Transporters are listed in this document and signed by both parties. Should the supplier or Transporters renege on his obligations this contract can be cancelled. This means that the Transporters could be left with bank payments for trucks and trailers and no work to make up the payments. All contracts should be read very carefully to ascertain the fairness and viability to ensure that the obligations can be met. Transport rates given by the supplier must be carefully studied and verified by a third party economist. It is advised that www.page1.co.za be used to do this study. A careful study must be taken of the routes, loading/off loading times and number of loads/tons to be moved per day/week/month/contract period. A minimum of a 5 year contract is required by the finance institutions in order to request finance for your project.

The finance institutions also require the contract to be direct between the supplier and the Transporters, no third party or sub contracts will be considered. There are very few exceptions to this rule.

Heavy duty long distance trucks and truck/tractors have a first life span of around 750 000 kms and 5 years.(156 000 km/year)

Medium duty trucks have a first life span of around 400 000 kms and 6 years. (67 000 km/year)

Light duty trucks have a first life span of around 250 000 kms and 5 years. (50 000 km/year)

If the truck is used in Quarry/Construction work, Off Road, Abnormal or Double/Triple shift operations the first life span and the Residual Price will be substantially reduced.

If your contract exceeds these kilometers, operating conditions or years then make provision for components such as engines, gearboxes and differentials that will need major refurbising.
FINANCE REQUIREMENTS:
All financial institutions will need certain documents and forms from you before they will consider financing your new venture. Banks are quite sceptical of new ventures and will require a deposit on the vehicle/s to ensure that their risk is minimised. The individuals applying for finance also need to have resources available for the running of their vehicles for the first two to three months before the money starts to come in. Some type of knowledge or transport experience is also required by the banks from the individuals applying for finance.

Documents required by the financing institutions:

  1. Copy of company registration forms/certificate to commence business.
  2. Latest audited financial statements of the applicant company/shareholders/affiliated companies, signed by directors. Management accounts also required if older than six months.
  3. Copy of VAT registration.
  4. Completed business applications and last three months bank statements.
  5. Detailed cash flow projections of the business for next financial year, including new vehicle costs.
  6. Debtors list, and list of Assets and Bank facilities/Hire Purchases, Income and Expenditure of all members/shareholders.
  7. Completed personal application, last three month bank statements and balance sheets of each member and/or directors including personal assets and liabilities and income and expenditure lists.
  8. Copies of contracts, letters of intent, and other supporting information such as shares/investment/property certificates.
  9. Business profile/plan. See Below
  10. Income and Expenditure and Balance Sheet to be drawn up for an individual or firm where no formal balance sheet and profit/loss accounts have been drawn up. See Below
Your management skills are vital to the realisation of the investment opportunities and the Internal Rate of Return %
The following 4 pages are general guidelines for a Business Plan. Attach the Quick Transport Cost Estimates to support your Business Plan.
All rows with a feint grey underline are editable. Change to suit your requirements. Select and print if required.
The 4th page has guidelines for requirements by financial institutions when considering funding.
Print the 4 pages in portrait.
 
BUSINESS PLAN
FOR
 
Page 2.
Page 3.
Page 4.
Income and Expenditure Statement of:
Monthly Income:
Salary 
Commisions 
Investments 
Other 
Total IncomeR R
Monthly Expenditure:
Taxation 
Pension 
UIF 
Medical Aid 
Rent/Bond/Payments 
Lease Agreements 
Credit Card Accounts 
Insurance Premiums 
Transport 
Children's Clothing and Education 
Loan Repayments 
Donations 
Entertainment 
Budgeted Savings 
Alimony Maintenance 
Life Insurance Premiums 
Electricity and Water 
Rates and Taxes 
Groceries 
Clothing Accounts 
Telephone Accounts 
Internet Accounts 
Medical/Doctors/Pharmacists 
Domestic/Gardening Services 
TV Rentals/Mnet/DSTV 
Other 
Other 
Total Expenditure R   - R  
Surplus Available for Bank Loan Repayment ( = Total Income - Total Expenditure ) = R  
Balance Sheet.
Liabilities of:  Date:
Previous
Year
Bonds and /or amounts owing under deeds of sale
Name of Farm/Plot #          Name of bondholder/seller          Annual capital reductions         Maturity Date
Rand Only Bank use
  Owing under instalment sale transaction and leasing transaction agreements
Moveable encumbered          To whom          Instalments payable         Amount still owing
  
  Bills payable   
  Sundry Creditors   
  Loans
By whom due            Rate of interest           Date repayable            Amount            
  
  Other liabilities ( Note: State if any of the liabilities are covered by a notarial bond )   
  Liability for income tax
Date to which assesment paid:



Surplus ( Balance in my favour )
  
  Specify here contingent liabilities as guarantor, surety or otherwise  
Total  
Assets on next page
Balance Sheet.
Assets of:  Date:
Previous
Year
Fixed Property (Registered in my name). Give particulars of each property separately, stating whether freehold, leasehold etc. and state if affected by any servitudes, usufruct or fiduciary interests.
Name of Farm/Plot #            Size            District            Date Purchased/Price            Municipal Valuation   
Rand Only Bank use
  Machinery, plant, etc.(Specify important items only)   
  Vehicles, implements (Specify important items only)   
  Furniture and Fittings   
  Investments (Private company shares/loans, etc.):   
  Loans
By whom due            Rate of interest           Date repayable            Amount            
  
  Life Policies ( Payable to the undersigned and not to any third party )
Date issued            Company           Number            Maturity Date       Amount     Surrender value less loans
  
  Shares
Number held                                        Company                                                     Market value
  
  Stock in trade:  
  Book debts:  
  Bills receivable (Not discountable):  
  Bank balances (Specify):  
  Cash:  
  Goodwill and other assets (Specify):


Note: State if any assets are encumbered.
  
Total  
Minus Liabilities from previous page -
Net annual emoluments/profits =
I/We hereby declare that this is a full , true and correct statement of my/our position and that of my/our assets. I/We agree that the bank may verify the information contained in this statement and may make whatever enquiries may be deemed necessary.
Dated at:                                                                               on (Date) :
Signature:                                                                               Name (Print) :
(Bank use) R
General Admin. cost details.
Note: If you run your own truck workshop, the costs associated with the workshop should be included in the Maintenance and Repair costs in Cents per Km above. Otherwise include here.
Transport Contractors need to cover all their General Admin. costs. Ancillary operators will have a much lower General Admin. cost.
The cost calculation requires the cost per Year per Vehicle. Divide the Total Costs per Year by the Number of Vehicles and/or proportion by payload.
General Admin. costPer MonthPer YearPer Year
Per Vehicle
Directors fees   
General Admin. and Depot Salaries   
General Admin. and Depot Wages   
Marketing Salaries   
Staff and Driver Training   
Advertising   
Entertainment   
Permits and Certificates   
Staff Benefits   
Travel expenses   
Vehicle expenses   
Audit Fees   
Bad Debts   
Bank Charges   
Data processing costs   
Depreciation   
Office Equipment   
Stationery, Postage   
Telephones, cellphones   
Depreciation, Rent, Building and Depot maintenance   
Insurance   
Security   
Electricity   
Water   
Rates and local Taxes   
Legal Fees   
Donations   
Other   
Total  
The cost calculation requires the cost per Year per Vehicle.
Divide the Total Costs per Year by the Number of Vehicles and/or proportion by payload.