Freight transportation is one of the key stages of buying and selling. Whether you are moving one single item or the entire container, these services act as key players in the manufacturing, buying, and selling circle.
The freight transportation services business in countries like India is profitable and filled with opportunities if you invest your time in the right areas.
This is a good business to start if you’re looking to make it big. However, there are inherent business challenges associated with the business.
One of them is getting the right loan at different stages of your business. However, if you want to start from scratch, you need funds to meet your expenditures. Hence, our discussion will revolve around understanding business loans for freight transportation businesses.
Importance Of Freight Transportation And Supply Chain
The freight transportation sector ensures that products move effortlessly from one point to another. This is easier said than done, as freight transportation is an important pillar and holds high significance to manufacturers, consumers, and distributors.
Each player in the supply chain within the business circle relies on the predictability and efficiency of freight services.
Any major issues can derail operations and cause financial losses, not just for the interconnected businesses but also for the single entity.
Now, to describe the relevance of freight transportation to society’s fabric, we will give you a simple example. If you visit the grocery store this coming week, you will see countless products on the shelves.
Now, the right construction materials used to build the establishment to the products on the shelf- have been brought to you because of the carefully coordinated freight services.
Hence, you can understand that freight transport is not just a part of commercial activity but also an important part of driving society.
Different Types Of Freight Transport Services
Now that you are slowly making up your mind to engage yourself in the freight transport business, you have to keep abreast of the different freight transport services in which you can provide services.
Here is a quick overview of the different types of freight transport services:
Sea Freight
One of the first and most common methods of carrying freight is shipping services. It is also the most cost-effective of all the existing freight services that you are using.
You can send your manufactured products in different forms, weights, and sizes and transport them over longer distances. This is the visible option if you transport individually.
Full Container Load
When you have the shipment products, you can fill them in the normal 20—to 40-foot container. The FCL is, without a doubt, a viable shipment option.
Apart from the full container loading, you have the cargo loading with other consignments.
Air Freight
There are times and circumstances when a product demands fast transfer. Air freight is the most viable option.
Freight transport is always in high demand as it offers the advantage of swiftness. However, the main disadvantage of this business is that you have to restrict the shipment.
Freight Transport In India: Stata And Facts
With a robust GDP of 3,389.69 million USD, India has emerged as one of the economic superpowers. Hence, it is one of the major hubs of business activities.
Facilitating such economic activities demands transportation. India has a potentially big logistics sector that employs millions of people.
Furthermore, the vast infrastructure, rail, and roadways also stimulate the country’s construction industry.
India has the third-largest railway sector run by public enterprises. The government has invested heavily in modernizing railway systems in recent years.
Besides, India has also built strong road connectivity throughout the country over decades. All these facilities attract direct investment from home and abroad into the manufacturing sector.
Moreover, government initiatives like “Make In India” and dedicated projects like Atma Nirvar Bharat Aviyan focus on 27 key industries under the manufacturing service, such as automotive, pharmaceuticals, electronics system design, and manufacturing processes. However, the success of these depends on a strong freight transport system.
How To Start A Freight Transport Business In India
Setting a strong foundation is one of the critical steps to starting a transport business in India. This section discusses some of the steps through which you can start your own freight business in the country.
Freight Transport Industry Specialization
You can start different types of transportation businesses in India. For example, you can start an International logistics organization or even a medical transport service. We advise you to focus on delivering solutions to specific requirements so that you ensure a consistent customer base.
Business Models
In the second step, you have to select the specialty and then learn about the different ways to establish a business. It is time to look for filing in the operational elements. There are a number of models that you can follow:
First is sole proprietorship business. In this model, you do not incorporate yourself as a single individual under the sole proprietorship model of business. The disadvantage that you have with this business is that the individual has to bear all losses suffered by the firm.
In the partnership form of business, two or more individuals join hands together. Each member of a general liability partnership is personally liable for the company’s responsibilities.
The third business model is the limited liability company. In this model, the company segregates your personal and business information, which may protect you from personal losses.
Obtaining Tax Identification Number
One step towards becoming a transportation service provider is creating a corporation. The other is procuring a license from the local or state government for operation. You need to check with your local government to see whether you require a business license in your region.
Acquiring Appropriate Licences And Permissions
If you are looking to create a truck transport business in India, then you will have to seek the right permissions and licenses. They include:
- Air Cargo Agent Association (ACAAI) registration.
- Registration with the Department of Income Tax, Registrar of Companies, the Directorate General of Foreign Trade ( DGFT), etc.
- International Air Transport Association (IATA) registration for the freight forwarders.
These are the main steps or major requirements that can help you start your freight transportation business from scratch. In addition, you have to make hiring under a systematic framework. You also have to focus on building a strong workforce in your organization. Finally, you have to maintain and renew your credentials with utmost effectiveness.
Types Of Loans to Start A Freight Transportation Business in India
The freight transport business has strong opportunities for growth and development in India. However, you have to be aware of and disciplined throughout the requirements, from the procurement of licenses to other key requisites.
The most important aspect is procuring the required money. These businesses are cost-intensive, and you have to look for sources where you can gather funds.
However, there are different types of loans that you can access to start your own shipping and logistics company in India.
1. Short- Term Loans
Business organizations use short-term loans in the early stages of starting a freight transportation business. You need these types of loans to purchase your inventory and equipment.
2. Medium-Term Loans
Medium-term loans are typically used by organizations with a great track record in the industry.
When you have already established yourself in the market and aim to go to the next level, you need to look for these types of loans. You may need these types of loans to purchase long-term assets like buildings and equipment.
3. Long Term Loans
The companies that typically use long-term loans have quite a proven track record in the industry. These loans are used most commonly for the purchase of long-term assets like buildings or equipment.
Factors For Business Loan
The loan terms are the key to selecting the right business loans for a shipping and logistics company. The terms of loans can vary depending on the scale of the business and the financing requirements.
Firstly, you have to consider the length of time you are looking to borrow the money. Secondly, you have to decide on the amount of the loan. Thirdly, you must develop an idea of the rates of interest. Lastly, you have to understand the lender’s market reputation.
Documents That You Require To Start A Business Loan
One of the key elements of starting a freight transportation business is applying for loans. But to apply for it, you need to produce documents. Below, we provide some of the key documents that can help you seek business loans to start a business:
- First, you must provide your Adhar card, utility bills, license, Voter ID card, and address. These documents serve as proof of your identification.
- Secondly, you have to provide a recent bank statement for six months. You also have to fill out and copy the ITR forms. Submit them all along with information like the calculation of earnings, balance sheet, and P&L statement for the previous two years.
- A verified copy of the partnership deed or a sole proprietorship declaration.
Apart from these, you have to provide all other necessary permits and licenses which you need for business.
Putting The Discussion To A Close
The freight transportation business in India has high potential. If you have decided to start a business from scratch, you must be disciplined from the beginning. Follow the methods that we discussed above to start your freight transport business with a new zeal.
