A logistics company is a company that is responsible for helping businesses and individuals move goods from one location to another; they provide consolidation of freight consignments, trade document preparation, packing, crating, and logistics consulting services. Logistics companies provide packing and crating services primarily for the transportation sector of the economy.
The global logistics market was valued at $7,641.20 billion in 2017 and it is projected to reach $12,975.64 billion by 2027, registering a CAGR of 6.5% from 2020 to 2030. Please note that there are 14,302 Third-Party Logistics businesses in the US as of 2022, an increase of 1.4% from 2021.
Steps on How to Start a Logistics Company
Table of Content
Conduct Market Research
If you are considering starting a logistics services business, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process for your logistics services business should be to develop market-based research questions in line with your overall business goal and objective.
In this regard, you should source information that will help you maximize your business, tell you what your potential market will be looking out for from a logistics services business, and also help you operate your logistics services business with less stress and increased profitability.
a. Who is the Target Market for Logistics Services Business?
- E-commerce businesses
- Merchants and Warehouse Operators
- Corporate organization.
b. Is Logistics Services Business a Profitable Business?
Yes, the logistics services business is very profitable. Available data shows that the industry is worth over $12,975.64 billion.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to the logistics services business.
d. Who are the Major Competitors?
- UPS Supply Chain Solutions
- Deutsche Post: DHL Group.
- FedEx Corporation.
- Kuehne + Nagel Inc.
- Nippon Express.
- DB Schenker Logistics.
- XPO Logistics.
- DSV Panalpina
- H. Robinson
- B. Hunt
- Kuehne + Nagel (Americas
- Coyote Logistics
- Transportation Insight, LLC/Nolan Transportation Group
- Total Quality Logistics
- Burris Logistics
- Ryder Supply Chain Solutions
- Hub Group
- Penske Logistics.
e. Are There County or State Regulations or Zoning Laws for Logistics Business?
No, there are no county or state regulations or zoning laws for the logistics services business, but players in this industry are expected to work with regulations governing similar businesses in the county where their business will operate.
Please note that trucks and vans used for logistics services are required to stop at motor carrier safety and weight inspection stations when signs direct them to do so. So also, any truck or van with a rating of 26,001 pounds or more requires at least a Class B CDL.
f. Is There a Franchise for Logistics Business?
Yes, there are franchise opportunities for the logistics services business. Here are some of them;
- InXpress Logistics
- Unishippers Global Logistics
- Pack & Send Franchise
- United Charis Transport LLC
- BlueGrace Logistics Franchise
- AIT Freight Systems
- World Options
- Pak Mail
- Our Town America
- A.S.S. Packaging And Shipping Specialists
- Postal Annex+
- AIM Mail Centers
- Navis Pack and Ship Centers
- Central Courier
g. What Do You Need to Start a Logistics Services Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- Trucks, Vans, and Bikes
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
2. Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a logistics business are;
Creative Logistics Business Name ideas
- Move It© Logistics Services Company, Inc.
- Hedge® Logistics Services Company, LLC
- Quicker Guys© Logistics Services Company, Inc.
- The Chatters® Logistics Services Company, Inc.
- Logistics King™ Logistics Services Company, Inc.
- Prime Liner™ Logistics Services Company, LLC.
- Ralph Obed and Co© Logistics Services Company, LLC
- Adorn Groups® Logistics Services Company, Inc.
- Star Line© Logistics Services Company, Inc.
- Adolphus MBA© Logistics Services Company, Inc.
- Safe Hands® Logistics Services Company, LLC
- 100 Percent® Logistics Services Company, LLC
- Carry Go™ Logistics Services Company, LLC
- Over Land© Logistics Services Company, Inc.
- Sun Rise® Logistics Services Company, Inc.
- Kim Sanders™ Logistics Services Company, Inc.
- Pure Link™ Logistics Services Company, Inc.
- Bonne Greene© Logistics Services Company, Inc.
- Mendy Capacity® Logistics Services Company, LLC
- Beak Line™ Logistics Services Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Logistics Services Business?
When it comes to the business structure of a logistics services business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers need to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Logistics Business?
- General Business License
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections for your park and warehouse
d. What Type of Certification is Needed to start a Logistics Business?
You don’t need any certification to start a logistics services business.
e. What Documents are Needed to Open a Logistics Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval (For your parking)
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a logistics services business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Logistics Business?
The startup cost for a logistics services business is not uniform. But basically, a standard logistics services business will cost over $250,000.
b. What are the Costs Involved in Starting a Logistics Business
- The total fee for registering a business in the United States of America – is $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services – $10,200.
- Marketing promotion expenses – $5,000
- The cost for hiring a business consultant (writing of business plan inclusive) – is $4,500.
- Insurance (general liability, workers’ compensation, and motor vehicle insurance) coverage – of $12,400.
- The cost of logistics software, accounting software, CRM software, and Payroll Software – is $7,500
- The cost for leasing a warehouse facility (long term lease agreement) – is $120,600.
- The cost for facility remodeling and installations – is $20,000.
- The cost for the purchase of vans, trucks, and bikes – is $80,000
- Phone and utility deposits will cost – ($2,500)
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $80,000
- The cost for store equipment (cash register, security, ventilation, signage) – $3,150
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, tables and chairs et al) – is $20,000.
- The cost of launching an official website – is $600
- The cost for our grand opening party – is $10,000
- Miscellaneous – $25,000
c. What Factors Determine the Cost of Opening a Logistics Business?
- The size of the logistics services business (the number of vans, trucks, and bikes owned)
- The choice of location
- The required licenses and permits
- The cost of branding, promotion, and marketing the logistics services business
- The cost of furnishing and equipping the logistics services facility
- The cost of the insurance policy covers
- The cost of registering the business
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost of the grand opening of the logistics services business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your logistics services business, but, if you have the required finance, it will pay you to build a warehouse facility and administrative office. The truth is that building or reconstructing a warehouse facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Logistics Business?
- Utility bills (internet subscriptions, phone bills, signage, and software renewal fees et al)
- Salaries of employees
- Vans, trucks, and bikes maintenance
- Marketing costs
f. What is the Average Salary of your Staff?
- Chief Operating Officer (Owner) – $68,000 Per Year
- Admin and HR Manager – $48,000 Per Year
- Transport and Logistics Manager $48,000 Per Year
- Marketing and Sales Executive (Business Developer) – $42,000 Per Year
- Accountant $38,000 Per Year
- Truck and Van Drivers – $36,800 Per Year
- Material Handlers / Yard Spotters / Forklifts Operators – $28,000 Per Year
- Customer Service Officer (Receptionist) – $26,100 Per Year
- Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Logistics Business
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks.
Write a Business Plan
a. Executive Summary
Move It© Logistics Services Company, Inc. is a licensed logistics services company that will be based in the heart of Los Angeles, California. We are a comprehensive provider of supply chain management services including warehousing, transportation, logistics, repacking, sequencing, light assembly, packaging, sorting, kitting, local shuttle, and inventory management.
Move It© Logistics Services Company, Inc. has been able to secure all relevant licenses and permits to operate throughout the United States. We will ensure that we abide by the rules and regulations guiding the shipping and logistics industry.
b. Products and Service
- Inbound transportation.
- Outbound transportation.
- Fleet management.
- Materials handling.
- Order fulfillment.
- Inventory management.
- Demand planning
c. Mission Statement
Our mission is to provide efficient logistics solutions to the world. In partnership with top manufacturing and distribution companies, we will ensure timely delivery of the products that make modern life possible.
Our Vision is to become one of the preferred choices for individuals and organizations when it comes to the demand for logistics services across the United States.
d. Goals and Objectives
The goals and objectives of a logistics services business are to transport goods within short and long distances across the sea, air, and land.
e. Organizational Structure
- Chief Operating Officer (President)
- Admin and HR Manager
- Shipping and Logistics Manager
- Marketing and Sales Executive (Business Developer)
- Truck and Van Drivers
- Material Handlers / Yard Spotters / Forklifts Operators
- Customer Service Officer (Receptionist)
a. SWOT Analysis
- Excellent operational history
- Attention to detail.
- Accurate estimates with no hidden costs.
- Experience and trained professionals.
- Large storage facility.
- Excellent customer testimonials.
- Access to reliable transport and logistics software.
- Not enough existing clientele to run at full capacity immediately
- The owner is new to large scale marketing
- We will need a loan to build our facility and to purchase our first set of trucks and vans
- The owner is currently running the business solo and will need to manage construction/build out the existing business
- Lack of economies of scale.
- Growing import, export, commerce, and eCommerce activities in the United States.
- Build upon existing clientele
- Online market, new services, new technology, and of course the opening of new markets.
- Increase in production activities and warehousing.
- Loans diminish profitability until they are paid off
- The first year will be financially tight while we gain customers and pay off loans
- Competition in the area could increase
- Management of employees requires time, money, and efforts
- Liability problems (trucks and vans that are bound to depreciate)
- The transport department could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses.
b. How Do Logistics Businesses Make Money?
Logistics services businesses make money by charging clients for the following services;
- Inbound transportation.
- Outbound transportation.
- Fleet management.
- Materials handling.
- Order fulfillment.
- Inventory management.
- Demand planning
c. Payment Options
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- Introduce your logistics services business by sending introductory letters alongside our brochure to importers and exporters, merchants and warehouse operators, and key stakeholders in and around your city and state
- Print out fliers and business cards and strategically drop them in offices, libraries, public facilities, train stations et al.
- Use friends and family to spread the word about your business
- Place a small or classified advertisement in the newspaper, or local publication about your company and the services you offer
- Leverage on referral networks such as agencies that will attract clients who would need your services
- Advertise our business in relevant magazines, newspapers, TV and radio stations.
- Attend relevant expos, seminars, and business fairs et al to market your services
- Engage in a direct marketing approach
- Encourage the use of word-of-mouth marketing from loyal and satisfied customers
- Join local chambers of commerce and industry to market your services.
a. How Much Should You Charge for your Service?
We will charge our clients based on the cost of the package and it will depend on the size, weight, and destination.
b. How Much Profit Do Logistics Business Owners Make a Year?
Although some logistics company owners earn as high as $382,500 and as low as $41,500, the majority of their salaries mainly range around $113,000 to $276,000, with top earners making $358,500 annually across the United States.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the logistics services business (number of trucks, vans, and bikes owned)
- The types of related service offerings (advanced warehouse management, inbound freight coordination, order fulfillment, and outbound shipping and delivery et al)
- The location the logistics services business is covering
- The management style of the logistics services business
- The business approach of the logistics service
- The advertising and marketing strategies adopted by the logistics services business.
- The number of years the logistics service is in business
d. What is the Profit Margin of a Logistics Business Product/Service?
The profit margin of a logistics services business is not fixed. It could range from 35 percent to 65 percent depending on the distance of the goods to be transported.
e. What is the Sales Forecast?
Below is the sales forecast of a logistics services business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $550,000
- Second Fiscal Year: $1.2 million
- Third Fiscal Year: $2.5 million
Set Up your Office
a. How Do You Choose a Perfect Location for Logistics Business?
- The demography of the location especially as it relates to commerce and eCommerce activities
- The demand for the services offered by logistics services businesses in the location
- The purchasing power of businesses and the residents of the location
- Accessibility of the location
- The number of logistics services businesses in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Logistics Business?
- South Louisiana, Louisiana
- New York City, New York
- Houston Texas
- East Rutherford, New Jersey
- Long Beach, California
- Baltimore, Maryland
- Pittsburgh, Pennsylvania
- Pascagoula, Mississippi
- Tampa Bay, Florida
- Hampton Roads, Virginia.
c. What Equipment is Needed to Operate a Logistics Business?
You should be prepared to purchase forklifts, loaders, packaging containers, pallets and crates et al. You will also need computers or laptops, an internet facility, telephone, fax machine, and office furniture (chairs, tables, and shelves) amongst others.
When it comes to hiring employees for a standard logistics services business, you should make plans to hire a competent chief executive officer (you can occupy this position), admin and HR manager, transport and logistics manager, marketing and sales executive (business developer), accountant, truck and van drivers, material handlers/yard spotters/forklifts operators and customer service officer (receptionist).
Launch the Business Proper
In recent times, no logistics services business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the logistics services business, you will be able to inform people in your city that your logistics service is open for business.
a. What Makes a Logistics Business Successful?
- Choose a good location and reliable trucks to launch the business
- Hire only competent, hardworking, and trustworthy staff
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your logistics business
- Leverage all available online and offline platforms to promote your logistics services business
b. What Happens During a Typical Day at a Logistics Business?
- The business is open for the day’s work
- The trucks and vans are cleaned and ready for deliveries
- Loading and offloading of deliveries
- Scheduled maintenance of trucks is carried out
- Marketing/website upkeep
- Supply ordering
- Administrative duties
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Logistics Business?
- Business management skills
- Customer services skills
- Interpersonal skill
- Logistics and material handling skills
- Bargaining skill
- Work experience in the shipping and logistics industry
- Experience in managing people
- Experience in business administration
- Experience in handling logistics and shipping software.