How to Start a Powerful Shipping Business in Just 3 Steps
Shipping businesses are absolutely essential all over the world. Through them, people can import and export raw materials, food, and manufactured goods from one place to another without having to travel all over the world themselves. The global economy would simply not be able to function without the shipping industry, and this is why starting a shipping business can be such a great and profitable venture.
But with so many established shipping businesses out there already, is there any point in starting one on your own? What do you even need for a shipping business?
Due in part to the ever-increasing popularity of online shopping, there is indeed a great demand for fast, reliable shipping businesses. If you want to get in on the action, let us give you some ideas on how to start a shipping business.
Step 1: Do Your Research
What Do I Need to Know to Start a Shipping Company?
Since the shipping industry is so large and there are so many ways to ship things, you should start by narrowing down exactly what you want to ship and how you will ship them through your business. A startup shipping business typically cannot handle all kinds of products at once, so it is best to decide on one type that you want to concentrate on at first. For example, some product categories include:
- Hazardous goods
- Dangerous goods
- Perishable goods, etc.
After determining what you want to ship, you should think about how you will be shipping the products. You may want to expand into other niches as your business grows, but when you first start out, it is best to focus your energy on one.
Some options include:
- Ship or sea transportation
- Road or ground transportation
- Air transportation
- Rail transportation
Since some of these niches can be very expensive and a big undertaking, so keep in mind how much money you are willing to spend to start up your shipping business.
The shipping industry can be a competitive one, so when deciding what type of product and niche you want to specialize in, do some research into other shipping businesses in your area. See if there is a gap that needs to be filled when it comes to demand for shipping services and try and focus your efforts there.
Do I Need Any Licenses or Permits to Open a Shipping Business?
Just about every business requires a business license, so find out what you need to obtain one in your area. There are likely other licenses and permits that you will need, but this depends on what you will be doing with your shipping business and your state and/or county. Get in touch with the government officials in your area to determine exactly what is necessary for your situation.
What Are Some Skills and Experiences That Will Help You Build a Successful Shipping Business?
It would certainly be helpful if you already have some experience working in the shipping industry. Those with firsthand knowledge of both the written and unwritten rules of the shipping business will certainly have an advantage over those who do not have that experience.
If you do have little to no experience, it would be good to get some professional certifications. Not all of them will apply to every kind of shipping business, but you can research the different certifications offered to find which applies to your business.
You can obtain professional certifications like:
- Certificate in Shipping and Logistics
- Certificate in Maritime Transportation (if shipping by sea)
- Certified International Trade, Shipping, and Logistics Professional (CITLP)
- Certified International Trade Professional (CITP)
Not only will these certifications make you more knowledgeable about the shipping industry, but they will look good to your potential customers.
Step 2: Figure Out Your Shipping Cost
What Are the Startup Costs for a Shipping Business?
Unless you are planning on starting really small and working with your own vehicle and out of your own house, there can be considerable startup costs for a shipping business. At the very least, you will need something like a warehouse for storage space, containers and/or boxes, trucks to pick up and perhaps also deliver goods, an office with office equipment, shipping, and logistics software, employees, etc.
Costs will also then vary depending on which method of transportation you will be primarily used for your shipping business:
- If shipping by sea, a ship can cost $11,000 – $19,000 per day to rent. If you want to buy a cargo ship, you are looking at more like $10 million.
- If shipping by ground/road, trucks can cost $80 – $2,800 per day to rent. To buy a truck it can cost $15,000 – $174,000.
- If shipping by air, cargo flights can cost $37,000 – $450,000 per trip. A cargo aircraft itself can cost over $24 million.
- If shipping by rail, containers are typically booked per ton-mile or one ton of material per one mile. The rates can vary, so check with your local railway.
If you do not have the money for these costs, you can apply for a bank loan or find an investor. It is no small undertaking to start a shipping business!
What Are the Ongoing Expenses for a Shipping Business?
The ongoing expenses are again going to depend on your method of transportation and whether you are renting or buying it, but outside of that, you will need to pay for rent and utilities for your storage space (like a warehouse), employees, marketing, and gas and maintenance on vehicles. So overall, the ongoing expenses for a shipping business will be a lot cheaper than the startup costs.
Step 3: Make a Profit
How Much is the Shipping Industry Worth?
It is difficult to account for the entire shipping industry, but in 2019 the global container shipping market was sized at $8.7 billion.
What is the Growth Potential for the Shipping Industry?
The global container shipping market is predicted to increase at a CAGR (Compound Annual Growth Rate) of over 4% between 2019 and 2027. It will therefore be valued at over $12 billion by 2027.
How Do You Market a Shipping Business?
Nearly everyone requires shipping services at some time, but your main target audience will probably be composed of businesses instead of individuals. This is because they will be able to provide you with a lot more material to ship at any given time than households.
Many different shipping companies out there offer roughly the same services for the same prices, so what sets some apart over others? It seems it largely comes down to trust. People are going to go with the company that they trust the most to deliver their goods. This trust is often earned over time by the company providing consistent, efficient, and effective service.
As a startup, you cannot really count on your company’s reputation to help market your business yet, but you can start to build that trust by showing off your credentials and experience in the shipping industry. If you have partners or a team behind you with impressive certifications as well, make sure you make this clear to your customers.
A good way of doing this is to create a website and company profile with this kind of information about you and your team. You could also include this information in introductory letters for your business, which will also state what your company is about and what you offer for shipping services. You can send these by email or regular mail to every business out there that may require shipping, for example, factories, retail stores, hospitals, hotels, etc.
It may be even more effective to reach out to businesses by cold calling or knocking on doors and speaking with the business owner or managers. It is easy for a business to ignore paper or email advertisements if they even receive them in the first place, so in-person visits are often ideal.
You can bring your introductory letter and business card with you and leave them with the business, and/or direct them to your website or social media page for more information.
How Much Should I Charge for Shipping Services?
This largely depends on what you are shipping and your shipping method. For example, UPS and other postal carriers often charge by weight. Then, depending on where packages are shipped from, shipping zones are also used to calculate rates.
The best advice is to look at other shipping businesses in the area similar to yours and then price accordingly. When you first start out, if you can afford it, try to keep your prices competitive by charging just a little less than your competitors.
Any Other Tips for Jump Starting a Shipping Business?
You bet! Here is some other advice to consider:
- Customer feedback and reviews are very important in the shipping industry. Good customer service skills are therefore essential, so make sure your customers feel like their needs are being met with your business and take care to solve any problems as quickly as possible. In addition, you can request that happy customers review your services on your business’s social media page or website to help attract even more customers.
- Customize pricing packages for your clients. To attract as many clients as possible, you need to be able to work with all kinds of budgets. Be open to negotiation when trying to land new customers.
- Networking is essential in the shipping business, so join your local chamber of commerce. Here you will be able to get to know other business owners who may require shipping services.
- Come up with a memorable company logo and put it everywhere: trucks, shirts, hats, etc.
For more helpful information and a step-by-step guide on what needs to be done to get your business off the ground, read our generalized guide on how to start a business.
Be sure to check out our other posts for more ways to start your side hustle!