What type of Truck should I Invest in?
Types of Trucks - Its Capabilities and Potential Rewards
New entrants into the Industry quite often are unaware of the type of truck they should invest in. This article has been put together to provide some of my experiences and is not intended in anyway to provide an expert opinion.
I may even sound a bit biased since my personal expertise in is Mining Operations with a preference for Side Tipper Trucks. Also note that this article is not intended to offend anyone that owns trucks where I may have provided some negative info - I will always say it the way it is...
Let us first start with entry level trucks and bakkies...
This is a very inexpensive way to enter the road transport industry. This includes bakkies such as Hyundai H100, Nissan 1400 Bakkies, 2 to 8 Tonners which may be in the form of a closed bakkie/small truck, a flatdeck, tipper etc. Your total investment in this kind of market is anything from about R80 000 to around R250 000. The question is: Is there sufficient work out there for these types of trucks. The bakkie market is more for couriers, and distributions such as pharmacy distribution, liquor/beverages distribution to retail outlets and similar. Now just how many bakkies are out there? Drive the N1 and you will notice that every 3rd/4th vehicle is a Bakkie. The small closed body trucks are useful for food and similar merchandise distribution - Again the question is: Who will contract my truck? The small tipper trucks (e.g. 6CM) is useful for mini loads such as building material etc. The upside of this market is that it is inexpensive to enter and due to this, the market is flooded with such trucks/bakkies - As a result, Supply exceeds demand and any secured contracts becomes "cut throat" - To give you an idea, I have a database of about 1000 bakkies/small trucks on my database and these owners are hungry for work. It is unfortunately not a segment of the market I have any interest in (with all due respect to current players in that segment) - Some companies are doing extremely well and because the investment is not high, they tend to purchase their own trucks and need not subcontract - leaving the 1 truck owner a little helpless.
The next level - 10 Cube Tipper Trucks
From around 2000 to 2004 - This was the truck to invest in. Plenty work, plenty contracts, and Government invested Billions to repair our roads and to prepare SA for 2010. For those that made the investment, they probably reaped the rewards already. I was personally involved with the Road Construction on the N1 in the Roodepoort Area and for those 10 Cube Owners that operated with us; they made a fairly good killing. Now we are in 2010 - What does the future hold for 10 Cube Trucks? Road Construction will continue but certainly not at the recent or even current level. The strong demand for these trucks is probably gone. Road Construction companies were very smart when they were awarded the contracts, they did not invest in their own trucks, and they subcontracted other trucks. This was obviously great for the creation of new opportunities and for new entrants. Personally I feel that by mid 2010, the SA market will have an oversupply of 10 Cube Trucks by at least 40 to 50%. For those that have current 10 Cube Contracts, hold onto it - It will be worth gold soon.
Truck Tractors with Flatdecks
There will always be a need for flatdeck Horse and Trailers (whether tri-axle or Superlink) - Most cargo carried on our roads are mainly palletised cargo, bagged cargo or containerised cargo. SA has become a major player in the Global economy and as a result, the movement of containers from Harbours to internal depots (and vice versa) has increased and is continuously on the increase. This is therefore still a very lucrative segment of the market. The downside is that the larger truck companies have cut rates ridiculously. They are in a better position to secure backloads than the smaller players. Today to move a Container from JHB to Durban and running back empty is not profitable enough - You must have a backload to make the trip profitable. Cross-border transport though has taken off hugely. Exports to Zimbabwe, Angola, Mozambique, DRC i.e. within the SADC region is on the increase and this has provided huge opportunities for flatdeck trucks. If you are in this segment, stay on - we have passed one of the worst years in the past 20 odd years - If you survived 2009, then you are on your way.
Sloper Trucks (20 - 30 Cubes)
This was probably the biggest failure in the Transport Industry, especially the 30 Cube Slopers. I have seen more 30 Cube Trucks capsized on Mines than I have seen normal sedan accidents on the road. The challenge with these trucks is that the Driver must be extremely well trained to manage tipping in "soft vulnerable" areas. One of my personal Slopers capsized at Exxaro Mines in Richards Bay - A total write-off - My fault, I allowed a new driver to take over without ensuring that he was competent enough to tip. Apart from this, Slopers when tipping become very unstable and most offloading areas nowadays have height restrictions. A good example is that most, if not all the Power Stations in SA do not allow Sloper Tippers due to height restrictions. Nevertheless this is a still a great truck for operations from Mine to Mine and especially useful in the Building Industry – moving sand, stone, rubble etc. Be careful though, driver competency is critical.
Side Tipper Trucks
My favourite area – For me personally, this is by far the most profitable truck combination. Opportunities are huge. Touch Wood, Touch Plastic, Touch Steel – I always have work for Side Tipper Trucks. I have never turned down anyone who had a side tipper and I was unable to offer him contractual work. This is key equipment for any external transport from Mine to Mine and Mine to Power Stations. Apart from coal mining, this is the preferred type of truck for transporting goods such as Maize, Soya, Wheat etc. Many industries are now starting to transport loose cargo and for this they use side tippers.
Other Trucks and Equipment
There are many other areas to invest in e.g. off-road tractors, excavators, dumpers etc. which is beyond this article. The intention of this article was to address the most popular trucks.
Revenue and Profit Potential
Refer to the Article: Profit on a Truck. Typically though you will want to earn a minimum gross profit of 3 x your monthly truck installments. 4 Times - Even Better. Gross Profit = Turnover less Diesel.
Last Updated (Wednesday, 17 February 2010 17:52)