How to – Start a Freight Forwarding Business in Nigeria

Freight forwarding business in Nigeria is amongst one of the most lucrative  but not many Nigerians have explored the chance to make money in it, due to ignorance or lack of knowledge. Those who have this information and are acting on it are smiling to the bank daily, in spite of the recession.

If your dream is becoming a clearing agent in Nigeria, then this piece is for you. Are you conceiving an idea to start freight forwarding company in Nigeria? Then, in this piece, you will get a free sample business plan for freight forwarding company.

As long as products from any sector of the economy are coming in or going out, those in freight business will always make money. So, in this piece, you will learn the rudiments of clearing and forwarding agent as well as requirements for Clearing and forwarding business.

What Is Freight ForwardingBusiness?

The freight business is a very large one, with room for everybody. In the freight business, we have freight forwarding and freight brokerage (also known as clearing and forwarding agents).

Freight forwarding is the movement or transportation of goods by whatsoever means necessary from one location in any part of the world to another.

Who is a freight Forwarder?

Responsibilities.

The freight forwarder finds the most efficient route and organises 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 he 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 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. 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 none 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.

Difference between Freight Forwarding and Courier Services

Truth is told.  There are lots 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 (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 Ali express; 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?

2. 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 net, and ask questions. However, the best way is to learn on the job.

Remember you do not learn how to forward goods in schools; 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.

3. 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 generalist forwarder or a specialist forwarder. The bigger companies forward everything and anything. Therefore, your best bet may be to choose a niche and become reputed for it. Perhaps you could decide you want to be based on forwarding agricultural produces, or apparels etc. 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 to you plan to fix them?  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 repayment plan in your business plan. You marketing strategy should also be added to this

4. Registeryour company/get the necessary license

You will have to register your business with the Corporate Affairs Commission (CAC), and then go to the appropriate bodies to get your license, especially the Nigeria Customs Service.
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?
However , some smart ones who cannot afford the exorbitant license fees hide under registered Licensed companies to use their  licence for a mutually agreed “rental fee”! This is not a advisable and highly risky. It could lead to a lot of complications that could end up in prosecution.

5. Get the money

This money should cover your fixed and moveable assets, should be able to pay for your licenses. You will also need enough money to run for as long as six months.

Essentially, you need money to pay staff and other logistics collaborates. 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 goods 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 and 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 practises 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.

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