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Old 26th December 2011, 14:03   #1
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Default Queries / Guide / FAQ - Starting a Trucking Business

Hello to all members,

I am attempting to compile a comprehensive FAQ on all aspects of starting and running a trucking business. There are threads in the Commercial Vehicles section on starting bus services / taxi services / passenger services but I could not find a guide to the basic trucking / freight carrying business.

A couple of friends are getting together and plan to deploy a truck on long haul routes. I have been entrusted with the task of collecting required information. No better place than team-bhp.com as we have a large number of contributing members here as well as a dedicated Commercial Vehicles section.

While I am using this thread to collect as much info as I can, I am hoping it can develop towards a kind of detailed guide for anyone else looking for similar information.

I have attempted to categorise the queries into various sections, to structure the whole thing. Feel free to suggest a different organisational approach.

Please understand that we are new to this. So it is quite possible that I may have in fact missed out on some crucial and important queries. Feel free to suggest important points I have missed so that they may be added to this FAQ.

Startup Section
  1. Intention is to start off with a single truck. To begin with, is this possible ? Are there any issues with starting off with a single truck ?
  2. Based on preliminary queries, we were told that we cannot start up under our own name with just one truck. We will need to attach our truck to an established and registered transporter and have to run our truck under his banner/company. Is this correct ?
  3. How does this system of attaching ourselves to an established transporter work ?
  4. Does this method assure us continuous running ? Obviously, the transporter we attach ourselves to also has trucks of his own. What is the incentive for him to give us routes and business ?
  5. What will be the transporter's earning / commission from this arrangement as a percentage ?
  6. If we are attached to a transporter, can we also cater to other clients on our own ? Or are we bound to only transport what comes through him ?
  7. What are necessary permits / mandatory regulations and procedures we need to comply with ?
  8. Apart from purchase of the truck itself, what are the other startup costs ?

Truck Type/Model Section
  1. Considering that we are starting off with one truck, it makes sense to get the most versatile type so that we can cater to maximum kinds of cargo / loads.
  2. What is the recommended type to start with respect to maximum versatility and utilisation ? I would assume it would be a rigid.
  3. What kind of GVW (weight class / payload) and power should we be looking at ?
  4. What kind of trucks get higher or lower rates ? I am sure there is some difference in freight rates of a rigid vs a tractor/trailer combo.
  5. What kind of load body is preferred ? 3/4'th with tarpaulin cover or fully enclosed box ? What are pros and cons of different load body types ?
  6. Is it advisable to start off with a brand new truck or is it recommended to start off with a second hand truck ?
  7. What is average cab building cost ?
  8. What is average load body building cost ?
  9. If we are based in Mumbai, how do we purchase and register BS-3 trucks ?
  10. Is it advisable to purchase the truck outright or on loan ? What are pros and cons ?

Operational / Business Section
  1. Do trucks return to base area empty most of the time ? I would assume not most of the time.
  2. Assuming that we have regular load to lift from our base area to remote locations, how do we go about getting business at the other end so that truck does not return empty ?
  3. What is average time truck needs to wait idle at remote location before we get a return load ?
  4. Who are the people we need to get in touch with ?
  5. What kind of business networking and contacts do we need to develop ?
  6. Can we carry shipments from different customers at the same time ? For e.g. if the truck is returning to Mumbai/Bhiwandi/Panvel, can the truck pickup different loads from customers along the way for e.g. from Rajasthan and Gujarat ? How is the octroi passing for such shipments done ?
  7. How is excise/octroi passing for goods done ? Does the shipper pre-pay us or is it reimbursed later, or is it built into the payment ?

Cargo Type Section
  1. Are there specific types of goods more prone to theft ?
  2. What are the typical hassle-free and safe goods to transport ?
  3. What kind of cargo fetches higher earnings ?

Payment Model Section
  1. What is the payment model in this industry ? Based on preliminary inquiries, we have been told that this is different for different types of transportation. Some tanker drivers we spoke to, said that the payment is made after three months. However for regular goods, payment is immediate i.e. part advance and remainder on delivery. Is this correct ?
  2. How are the rates for a given load for a given route / distance determined ?
  3. How can I find out what is the average/standard freight rate for a given route i.e. from one state to another for a given load ?

Revenue / Return Model Section
  1. What kind of revenue as a percentage of startup cost should be minimum expected per month / per year for the operation to be viable ?
  2. What kind of period should we be looking at as a break-even period ?


Expenses section
  1. What are typical expenses ? Fuel, Tolls, Driver/Cleaner salaries, fines to cops etc.
  2. What are typical maintenance expenses ?
  3. What is the amount we factor into per/km of running ?
  4. What are tyre expenses ? How frequently will tyre replacement / retreading need to be done. As a percentage of operations, or as an absolute, what kind of tyre costs are we looking at as a recurring expense ?
  5. What are typical fuel costs as a percentage of revenue on a trip ?
  6. For a given route what should be the ideal amount of expenses as a percentage for the operation to be viable ?

Insurance Section
  1. What are the different insurance options available ?
  2. Which are mandatory and which are optional but recommended for peace of mind ?
  3. What is insurance cost like ?

Liability Section
  1. What is our liability in case of accidents, theft of goods, third party damage etc. ?
  2. What kind of insurance can save us in such situations ?
  3. What are the standard CYA (Cover Your As*) procedures in this business ?

Driver/Cleaner Section
  1. What are typical driver/cleaner salaries ?
  2. What is to be paid on days they are idle ?
  3. What are driver eligibility criteria ? Any mandatory / regulatory requirements ?
  4. What safeguards to ensure before hiring a driver ?
  5. What are potential problem areas with drivers ?
  6. Is it advisable to hire a local driver or an out-of-state one ?
  7. What are different ways drivers can cheat you ? How to prevent ?
  8. Any General tips / advice on driver management ?
  9. Is it advisable to travel along with the new truck and driver in the initial stages ? Or is it unsafe ? What are potential issues with this approach ?
  10. Is it recommended to possess a Heavy Vehicle License and drive the truck oneself to develop hands-on familiarity with the core operations ?

Specific Issues Section
  1. Are there any particular issues / risks associated with specific types of cargo ?
  2. Are there any particular issues / risks associated with specific routes ?
  3. Are there any particular issues / risks associated with specific types of trucks / models ?

General Warnings / Risks / Issues / Problems Section
  1. What are typical issues one should be prepared for and aware of before entering this business ?

Hopefully I have covered most of the initial doubts / queries anyone considering starting trucking operations will have in mind.

I know there are number of active members who will be in a good position to contribute to this thread by virtue of their experience and knowledge. Request all to kindly advise and help develop this guide.

Many thanks in advance.

Last edited by hell_rider : 26th December 2011 at 14:18.
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Old 26th December 2011, 15:25   #2
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

That's some list of questions

Here is a related thread
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Old 26th December 2011, 18:51   #3
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

You have missed 2 things here.

1) Type of truck you are planning to buy (Dumper, Tanker, Tipper, Load Truck, Tractor Only(Navistar etc).
2) Bribes that you would have to pay at every checkpost / chowki even if papers are in order.

I have answers to most questions above. I am compiling them and will post them shortly.
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Old 26th December 2011, 19:33   #4
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

GTO,

I know...thats a long list. Thing is I started off with just a couple. The more I thought about it, the more questions came to mind. Thats when I thought it could become something like a FAQ.

I've seen that link you have posted. Member wishes to start a taxi service for passengers.

scopriobharath
Thanks for your response. Eagerly awaiting your post.

I have covered the truck type query in the Truck Type Section. While we have not yet decided on what we are going to buy, we know that we are not inclined towards dumpers. The decision on what kind of truck will be made once we feel around with our contacts and get an idea of what kind of cargo we will be moving. In fact, member responses to queries in that section is eagerly awaited for clarity on that decision as well. At the moment a rigid seems to be the way to go, with the limited information we have at hand.

I did not want to mention "bribes". But it was implied in "fines to cops" :-). But you are right, of course. I'm sure that will figure in octroi passing as well.

Thanks once again.

Last edited by hell_rider : 26th December 2011 at 19:45.
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Old 26th December 2011, 19:39   #5
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

Quote:
Originally Posted by hell_rider View Post
Hello to all members,

I am attempting to compile a comprehensive FAQ on all aspects of starting and running a trucking business. There are threads in the Commercial Vehicles section on starting bus services / taxi services / passenger services but I could not find a guide to the basic trucking / freight carrying business.

A couple of friends are getting together and plan to deploy a truck on long haul routes. I have been entrusted with the task of collecting required information. No better place than team-bhp.com as we have a large number of contributing members here as well as a dedicated Commercial Vehicles section.

While I am using this thread to collect as much info as I can, I am hoping it can develop towards a kind of detailed guide for anyone else looking for similar information.

I have attempted to categorise the queries into various sections, to structure the whole thing. Feel free to suggest a different organisational approach.

Please understand that we are new to this. So it is quite possible that I may have in fact missed out on some crucial and important queries. Feel free to suggest important points I have missed so that they may be added to this FAQ.
This is indeed a big FAQ and almost covered all the areas of Trucking business. I took pain in compiling answers and then I understood a similar pain you would have faced while raising these queries. Good Job!

I have tried to answer many of your part with my experience. At times the answers are little open as the questions were also in the same way.


Quote:
Originally Posted by hell_rider View Post
Startup Section
  1. Intention is to start off with a single truck. To begin with, is this possible ? Are there any issues with starting off with a single truck ?
  2. Based on preliminary queries, we were told that we cannot start up under our own name with just one truck. We will need to attach our truck to an established and registered transporter and have to run our truck under his banner/company. Is this correct ?
  3. How does this system of attaching ourselves to an established transporter work ?
  4. Does this method assure us continuous running ? Obviously, the transporter we attach ourselves to also has trucks of his own. What is the incentive for him to give us routes and business ?
  5. What will be the transporter's earning / commission from this arrangement as a percentage ?
  6. If we are attached to a transporter, can we also cater to other clients on our own ? Or are we bound to only transport what comes through him ?
  7. What are necessary permits / mandatory regulations and procedures we need to comply with ?
  8. Apart from purchase of the truck itself, what are the other startup costs ?
Its your choice to attach to other company or depending upon load factor you can start of own. Rates are based on any one of following between you and your contractor:

-Predefined routes with fare fixed.
-Fare/km fixed and can be run in any route.
-Monthly rental with over all sealing for km covered during the month
-Only monthly rental and operator can charge as per defined fare/km to customer.

Eg: Fast track. Here the operators pay Rs.5000/month to fast track and they charge the passengers based on predefined fare/km

To retain customers and to manage the fluctuating demand contractors cannot add new fleet as and when they require.so they will always have some reserve fleet (read as attached trucks)

Payment mode varies on case to case.It depends on the settlement you have made with the transporter.
wrt permit, When you register a vehicle in particular state the local permit for the state is given. Apart from this we have 3/4 state permit, National permit etc and can be taken depending upon your requirements.

Other costs includes salaries to Drivers/cleaners/mechanics/permit and other (Cops fine – running cost maybe).
Quote:
Originally Posted by hell_rider View Post
Truck Type/Model Section
  1. Considering that we are starting off with one truck, it makes sense to get the most versatile type so that we can cater to maximum kinds of cargo / loads.
  2. What is the recommended type to start with respect to maximum versatility and utilisation ? I would assume it would be a rigid.
  3. What kind of GVW (weight class / payload) and power should we be looking at ?
  4. What kind of trucks get higher or lower rates ? I am sure there is some difference in freight rates of a rigid vs a tractor/trailer combo.
  5. What kind of load body is preferred ? 3/4'th with tarpaulin cover or fully enclosed box ? What are pros and cons of different load body types ?
  6. Is it advisable to start off with a brand new truck or is it recommended to start off with a second hand truck ?
  7. What is average cab building cost ?
  8. What is average load body building cost ?
  9. If we are based in Mumbai, how do we purchase and register BS-3 trucks ?
  10. Is it advisable to purchase the truck outright or on loan ? What are pros and cons ?
This all depends on the nature of load you are going to operate. We cannot have too many variables and hence fix the load/cargo and based on that you can choose the type of truck you need – GVW, power rating, load body option.
White goods require larger load carrying capacity with reduced GVW – 16T with upto 32Ft load body. Denser goods my require 25T GVW with 20Ft load body.Variable options are available in load body.

General type of load body is

FSD - Fixed side deck

DSD – Drop side deck

HSD – High Side deck.

Cabs are also with different type:

Namakkal type - completely striped down and rebuilt.

Rajathan / Delhi type - Built over the existing FES with add ons.

Price for a complete cab with 20Ft load body (Namakkal type) - Max upto 2.5lks.
Depending upon your experience in the industry the choice will be new/used trucks.
The freight rate depends on the rigid/multi axle rigid / articulated/multi axle articulated.
Right now you cannot register any BSIII trucks inside Mumbai.

90% of CV's in India are brought under loan. And you can decide on. Normally if liability for loan is less initially you can be little free and later when you expand fleet, the same can be taken under laon and the revenue from each truck will be directed to corresponding EMI's


Quote:
Originally Posted by hell_rider View Post
Operational / Business Section
  1. Do trucks return to base area empty most of the time ? I would assume not most of the time.
  2. Assuming that we have regular load to lift from our base area to remote locations, how do we go about getting business at the other end so that truck does not return empty ?
  3. What is average time truck needs to wait idle at remote location before we get a return load ?
  4. Who are the people we need to get in touch with ?
  5. What kind of business networking and contacts do we need to develop ?
  6. Can we carry shipments from different customers at the same time ? For e.g. if the truck is returning to Mumbai/Bhiwandi/Panvel, can the truck pickup different loads from customers along the way for e.g. from Rajasthan and Gujarat ? How is the octroi passing for such shipments done ?
  7. How is excise/octroi passing for goods done ? Does the shipper pre-pay us or is it reimbursed later, or is it built into the payment ?
If your contractor has tie up for loads at both sides you can get two way loads. Normally a car carrier which brings Maruti/Honda from north takes back Ford/Toyota etc in return load.

If you are operating of your own you need to be in touch with commission agents in that area so that they can get cargo’s for your return trip.

It may take two or three days and sometimes more than this to get return load.

Commission agents in that area will help you get return loads and you need to be in constant touch with them to get return load.

If the bill is excise duty paid then there is no issues.

Quote:
Originally Posted by hell_rider View Post
Cargo Type Section
  1. Are there specific types of goods more prone to theft ?
  2. What are the typical hassle-free and safe goods to transport ?
  3. What kind of cargo fetches higher earnings ?
Bulkier(ODC's) / fragile / faster delivery loads fetches more charge.
But it may vary if the route has excess operators.



Quote:
Originally Posted by hell_rider View Post
Payment Model Section
  1. What is the payment model in this industry ? Based on preliminary inquiries, we have been told that this is different for different types of transportation. Some tanker drivers we spoke to, said that the payment is made after three months. However for regular goods, payment is immediate i.e. part advance and remainder on delivery. Is this correct ?
  2. How are the rates for a given load for a given route / distance determined ?
  3. How can I find out what is the average/standard freight rate for a given route i.e. from one state to another for a given load ?
The drivers are right. If you are getting more and more organized the payment mode gets into credit basis and it may vary from 45 to 90 days. But if you are taking a day to day goods you may get cash and carry business also.
For average rate you can be in touch with market to know.
In un attached mode fares sometimes are higher for remote places rather than to higher distance frequent routes as the chance of getting return load is sure.

Quote:
Originally Posted by hell_rider View Post
Revenue / Return Model Section
  1. What kind of revenue as a percentage of startup cost should be minimum expected per month / per year for the operation to be viable ?
  2. What kind of period should we be looking at as a break-even period ?
My advice is to put your truck on road as far as possible and rest will be given.

Quote:
Originally Posted by hell_rider View Post

Expenses section
  1. What are typical expenses ? Fuel, Tolls, Driver/Cleaner salaries, fines to cops etc.
  2. What are typical maintenance expenses ?
  3. What is the amount we factor into per/km of running ?
  4. What are tyre expenses ? How frequently will tyre replacement / retreading need to be done. As a percentage of operations, or as an absolute, what kind of tyre costs are we looking at as a recurring expense ?
  5. What are typical fuel costs as a percentage of revenue on a trip ?
  6. For a given route what should be the ideal amount of expenses as a percentage for the operation to be viable ?
The highest expense which a truck can incur next to fuel is Tyres.
Maintenance Starts from Engine / GB / Axle oil service to Hub greasing / leaf spring greasing / track rod greasing and adds on as the age of truck increses.

You need to find out the cost / ton / km to find your revenue /income and to fix your profit.
Considering 10R20 radials (JK/Ceat/MRF etc)
Cost - ~ Rs.16000 / set ( Tyre / tube / flap)
Retread cost - ~ Rs 5000
Fuel costs may be upto 50 to 55%.
If you are referring to profit % it will be upto 15%

For cops if the truck is with rated load fine is less but fines are higher if you carry overloaded cargo.

Quote:
Originally Posted by hell_rider View Post
Insurance Section
  1. What are the different insurance options available ?
  2. Which are mandatory and which are optional but recommended for peace of mind ?
  3. What is insurance cost like ?
Full cover for the truck. But normally you get peanuts for the Namakkal type bodies/cabs. Peace of mind will be take max cover for the driver. For Cargo carried there will be separate insurance.
Quote:
Originally Posted by hell_rider View Post
Liability Section
  1. What is our liability in case of accidents, theft of goods, third party damage etc. ?
  2. What kind of insurance can save us in such situations ?
  3. What are the standard CYA (Cover Your As*) procedures in this business ?
Normally the insurance company will pay for the damages / theft. But this is on theory. In reality you need to shell from your pocket to get necessary documents for you to claim. Actually you will see the worst side of insurance companies when some mishap happens. YOu should have your own mode of tackling things if things gets worser.

Quote:
Originally Posted by hell_rider View Post
Driver/Cleaner Section
  1. What are typical driver/cleaner salaries ?
  2. What is to be paid on days they are idle ?
  3. What are driver eligibility criteria ? Any mandatory / regulatory requirements ?
  4. What safeguards to ensure before hiring a driver ?
  5. What are potential problem areas with drivers ?
  6. Is it advisable to hire a local driver or an out-of-state one ?
  7. What are different ways drivers can cheat you ? How to prevent ?
  8. Any General tips / advice on driver management ?
  9. Is it advisable to travel along with the new truck and driver in the initial stages ? Or is it unsafe ? What are potential issues with this approach ?
  10. Is it recommended to possess a Heavy Vehicle License and drive the truck oneself to develop hands-on familiarity with the core operations ?
Salaries depends on number of days they are in truck. It goes upto(reputed firms for highly experinced drivers) 20000 for 18/20 days for driver and 7000 for cleaner. But its as low as 8000 and 4000 resp also in smaller companies.
Drivers drive your business and they are the most centered one. They may turn to be good or bad.
Now the scenario is, getting driver itself is a big task. So no question of experience / requirements.
Needed thing is, live driving license for the appropriate truck.

Quote:
Originally Posted by hell_rider View Post
Specific Issues Section
  1. Are there any particular issues / risks associated with specific types of cargo ?
  2. Are there any particular issues / risks associated with specific routes ?
  3. Are there any particular issues / risks associated with specific types of trucks / models ?
General Warnings / Risks / Issues / Problems Section
  1. What are typical issues one should be prepared for and aware of before entering this business ?
Hopefully I have covered most of the initial doubts / queries anyone considering starting trucking operations will have in mind.

I know there are number of active members who will be in a good position to contribute to this thread by virtue of their experience and knowledge. Request all to kindly advise and help develop this guide.

Many thanks in advance.
Business as a whole is full of issue only and nothing can be told specific. Don’t get into this business until otherwise you are completely aware of the nook and corner and don’t test your waters here. There is equal amount of people who have burnt their fingers and have succeeded.
Dont think that I am giving so much negative words but in reality its the truth.

If everything goes well - means you are able successfully come with some problems and tacking mishaps, you will come out with an able entreprenuer with high level of contacts from Politicians to Police officers.

Last edited by Ashley2 : 26th December 2011 at 19:58.
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Old 26th December 2011, 20:34   #6
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

Quote:
Originally Posted by hell_rider View Post
[*]Intention is to start off with a single truck. To begin with, is this possible ? Are there any issues with starting off with a single truck ?[*]Based on preliminary queries, we were told that we cannot start up under our own name with just one truck. We will need to attach our truck to an established and registered transporter and have to run our truck under his banner/company. Is this correct ?
I recall a statistic from 2009 that about 80% of trucks (M&HCV) sold in India are to the "unorganized" sector and the rest to fleet operators. If im not mistaken unorganized refers to owners with one or two trucks. Im curious to know if this is indeed the case or if things are different today.

Its possible that many of these small owners attach their trucks to a larger recognized outfits but as stated by Ashley2 this is not a prerequisite - Unless there are cartels in your region that keep new players at bay using arm twisting tactics.

Last edited by Zed : 26th December 2011 at 20:39.
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Old 26th December 2011, 20:36   #7
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Default Re: Queries / Guide / FAQ - Starting a Trucking Business

Startup Section
  1. Intention is to start off with a single truck. To begin with, is this possible ? Are there any issues with starting off with a single truck ? It is possible to start with a single truck, but you would not get premium routes and large cargo. Large and premium cargo mostly go to fleet owners and reputed transporters and also the Cargo quantity is huge that they would mostly need more than 1 truck.
  2. Based on preliminary queries, we were told that we cannot start up under our own name with just one truck. We will need to attach our truck to an established and registered transporter and have to run our truck under his banner/company. Is this correct ? Yes this is correct. You have to affiliate to the transporter’s banner. You may work as a freelancer with one Truck individually, no harm but the business you get would not do justice. Relate to this - If you need to send your passport to UK, who would you prefer ? The local 10 Rs courier guy or Professional Couriers/ Blue Dart etc.
  3. How does this system of attaching ourselves to an established transporter work ? Brand building is already done. Reputation is already high. If you attach with KPN/TVS (Example) the banner does the talking. It is the Company’s headache to get business for your truck. Your role would be to drive it from point X to Point Y. Imagine if you have to scout for business too.
  4. Does this method assure us continuous running ? Obviously, the transporter we attach ourselves to also has trucks of his own. What is the incentive for him to give us routes and business ? He gets a “percentage” of your money. Secondly, his profit is that he gets to make some money, without even having to spend a rupee (read buy a new truck).
  5. What will be the transporter's earning / commission from this arrangement as a percentage ? Yes it is a percentage of the payment you would receive.
  6. If we are attached to a transporter, can we also cater to other clients on our own ? Or are we bound to only transport what comes through him ? This depends on the transporter policies. But since the transporter is no IT MNC, rules will not be stringent. If you have to idle 2 days, due to unforeseeable circumstances, no harm in taking other business.
  7. What are necessary permits / mandatory regulations and procedures we need to comply with ? State Permits are necessary but with the maturity level of the transport industry, now-a-days reputed people go in for All-india permit vehicles only.
  8. Apart from purchase of the truck itself, what are the other startup costs ? Bribes and Permits are a considerable cost. To get affiliated with a company, you must pay bribes and to get well-paying routes and long routes, you need to tip the person assigning the truck to the cargo.
Truck Type/Model Section
  1. Considering that we are starting off with one truck, it makes sense to get the most versatile type so that we can cater to maximum kinds of cargo / loads. Let me ask the same question back to you. What is the target segment you are planning to support. Choose your truck after deciding what cargo you plan to move (Dumper, Tipper, Flatbed, Tractor-trailer etc)
  2. What is the recommended type to start with respect to maximum versatility and utilisation ? I would assume it would be a rigid.You may start with a simple tractor trailer or even a 5 tonner.
  3. What kind of GVW (weight class / payload) and power should we be looking at ? 5 Tonner should be a good start
  4. What kind of trucks get higher or lower rates ? I am sure there is some difference in freight rates of a rigid vs a tractor/trailer combo. Its like this. If there is a cargo which takes 2 ordinary trucks @ 100Rs per truck, and you have a tractor trailer which can take up the same load, you would be paid Rs 150 in all. Profit for both sides. Also your tractor-trailer can cater to “Oversize and Heavy” loads, which a conventional truck cannot haul.
  5. What kind of load body is preferred ? 3/4'th with tarpaulin cover or fully enclosed box ? What are pros and cons of different load body types ? This depends on the operator. If you attach yourself with TVS, they would prefer a “Box”, but if you attach to a grade 2 operator, he would prefer an open top, so that he can overload.
  6. Is it advisable to start off with a brand new truck or is it recommended to start off with a second hand truck ? No doubt – Brand new truck is any-day better than even 2 used trucks. Trucks are hardly maintained in india (Average) so best no to try your luck.
  7. What is average cab building cost ? –read next question pleaseWhat is average load body building cost ? Cab and body building start from 4 lacs.
  8. If we are based in Mumbai, how do we purchase and register BS-3 trucks ? – You need to register the same outside mumbai city limits, as you would do for a BS3 Car.
  9. Is it advisable to purchase the truck outright or on loan ? What are pros and cons ? – Outright anyday. You would save money on Loan interest and that itself could buy you a Eicher 3 tonner.
Operational / Business Section
  1. Do trucks return to base area empty most of the time ? I would assume not most of the time. If you have bribed the operations in-charge well, you may get good round trips. Example Mum-Chennai-Trivandrum-Pune. You may have to do a pune-mumbai stretch empty (if at all). Your operator may have tie up with local operators at locations, who also would give good business.
  2. Assuming that we have regular load to lift from our base area to remote locations, how do we go about getting business at the other end so that truck does not return empty ? Answer similar to question above.
  3. What is average time truck needs to wait idle at remote location before we get a return load ? If you are in a Minig Operation driving a CAT, your wait time is zero. Yes I mean as soon as you are at the loading point, A bull-dozer would fill you up with Mineral raw. Others have waiting period utpo a week. Best thing is to Bribe the operations in-charge to cover this aspect.
  4. Who are the people we need to get in touch with ? Your In-charge. He would provide you all leads at various points too.
  5. What kind of business networking and contacts do we need to develop ? You need not bother about this for the short term, as your affiliate company would do that. If you have a good rapport and slowly build a fleet of trucks, you could start on you own. Trust me, provide good customer service. Cost is not important, but customer service is. Do this and you have made a customer for life. Even if there is some dispute, accept the loss. Short term loss is long term gain in reputation.
  6. Can we carry shipments from different customers at the same time ? For e.g. if the truck is returning to Mumbai/Bhiwandi/Panvel, can the truck pickup different loads from customers along the way for e.g. from Rajasthan and Gujarat ? How is the octroi passing for such shipments done ? Yes this is a common practice. Octroi is flat 8% (guess) whether it is a product from Gujrat or Jupiter.
  7. How is excise/octroi passing for goods done ? Does the shipper pre-pay us or is it reimbursed later, or is it built into the payment ? The Shipper/transporter will pay you, but you need you ask for it by telling that you have no money etc. Lot of bribery here, so you will learn the tricks as you mature.
Cargo Type Section
  1. Are there specific types of goods more prone to theft ? – No. Just forget the theft aspect. Thief would not know what your cargo carries. If your cargo is insured, needless to worry.
  2. What are the typical hassle-free and safe goods to transport ? – Best thing and most preferred is a “Full Truck House shifting” Cargo.
  3. What kind of cargo fetches higher earnings ? – Oversize loads pay more, but note that they are hard to come by too.
Payment Model Section
  1. What is the payment model in this industry ? Based on preliminary inquiries, we have been told that this is different for different types of transportation. Some tanker drivers we spoke to, said that the payment is made after three months. However for regular goods, payment is immediate i.e. part advance and remainder on delivery. Is this correct ? Transportation is a “Prepaid” Business (99%). The shipper has to pay the transported full amount when the cargo is picked up at the doorstep. Payment delay is purely the “whims and fancy” of the transport company.
  2. How are the rates for a given load for a given route / distance determined ? If you do anti-social activities like smuggling sand, illegal mining, whisking Govt FCI Rice meant tobe delivered to ration shops to private sellers, you would earn more but it is not recommended. They pay in most scenarios is by Tonnage and it is the transport company’s responsibility to provide a full load. Even if you don’t get a full load, your full-payment is guaranteed.
  3. How can I find out what is the average/standard freight rate for a given route i.e. from one state to another for a given load ? Check with any trucker or visit the transport office that you plan to get affiliated with.
Revenue / Return Model Section
  1. What kind of revenue as a percentage of startup cost should be minimum expected per month / per year for the operation to be viable ? You should maintain at least “15-20%” profit (in your pocket) post all expenses.
  2. What kind of period should we be looking at as a break-even period ? 3 years minimum, 4 years at the max.
Expenses section
  1. What are typical expenses ? Fuel, Tolls, Driver/Cleaner salaries, fines to cops etc. Bribes even if all your papers are in order. Bribes for passing the FC Certificates.
  2. What are typical maintenance expenses ? The same as per the manual. Just follow the company schedule and the truck will not let you down.
  3. What is the amount we factor into per/km of running ? Fuel+Oils+Salaries+Bribes+Tolls
  4. What are tyre expenses ? How frequently will tyre replacement / retreading need to be done. As a percentage of operations, or as an absolute, what kind of tyre costs are we looking at as a recurring expense ? Keep Tyres good. They help in emergency braking and avoid accidents. They should last you 40,000 kms. Change them at 40K.
  5. What are typical fuel costs as a percentage of revenue on a trip ? 30-40% on an average
  6. For a given route what should be the ideal amount of expenses as a percentage for the operation to be viable ? Ensure you get a 15-20% Profit
Insurance Section
  1. What are the different insurance options available ? Vehicles have Full insurance and 3rd party. Take full insurance with eyes closed, even though its expensive.
  2. Which are mandatory and which are optional but recommended for peace of mind ? There is no optional insurance for vehicle. There is full vs 3rd party and mentioned in point 1.
  3. What is insurance cost like ? 1.25 lakhs approx for a 20 lac truck.
Liability Section
  1. What is our liability in case of accidents, theft of goods, third party damage etc. ? Goods Insurance if opted for by the shipper would pay. Else you have no liability since its clearly mentioned in the form that goods if stolen or lost is not the transporter’s problem.
  2. What kind of insurance can save us in such situations ? Goods Transport insurance is opted by 99% of the people.
  3. What are the standard CYA (Cover Your As*) procedures in this business ? Build a rapport with fellow truckers and other business groups. This is for your own growth. Full vehicle insurance would help you in the unlikely event of an accident. Service your vehicle as per the recommended schedule. Customers don’t like a delay because of break-down.
Driver/Cleaner Section
  1. What are typical driver/cleaner salaries ? Fleet owners pay around 12-15K per truck driver on an average per month.
  2. What is to be paid on days they are idle ? Monthly Pay, whether idle or driving. Same as what and how you would pay your car chauffer.
  3. What are driver eligibility criteria ? Any mandatory / regulatory requirements ? He/she must have a valid Commercial vehicle license.
  4. What safeguards to ensure before hiring a driver ? Ensure you have a control of the driver. Verify his previous job and ensure he has a track able permanent address. This would be essential if the driver is caught with contraband in your truck and the police is at your doorstep.
  5. What are potential problem areas with drivers ? Drinking and Driving, Careless & Rash driving, thereby damaging your truck. Replacing original company parts with aftermarket parts and Fuel Pilferage.
  6. Is it advisable to hire a local driver or an out-of-state one ? Anyone but ensure you have control on him and a non-fictious address.
  7. What are different ways drivers can cheat you ? How to prevent ? Same as Number 5
  8. Any General tips / advice on driver management ? As far as possible recruit a /middle aged man 37-40+ so that his experience plays a role. Young blood with a new license and the keys of a Mahindra Navistar cab is a recipe for rash driving and a disaster.
  9. Is it advisable to travel along with the new truck and driver in the initial stages ? Or is it unsafe ? What are potential issues with this approach ? It is not needed. There are numerous GPS trackers available that pin point locations and also provide how much time a vehicle stopped a point. This will help you audit the case. No need to stress. If you are an enthusiast, please go ahead.
  10. Is it recommended to possess a Heavy Vehicle License and drive the truck oneself to develop hands-on familiarity with the core operations ? If you are attaching your self to a company, the modus operandi is like this. Go to warehouse-load the cargo-get the destination city-Drive. That’s it. Nothing more nothing less.
Specific Issues Section
  1. Are there any particular issues / risks associated with specific types of cargo ? Insurance does not cover perishable goods. If you are transporting sugarcane, and your cargo is damaged in rains / you get stuck in rain because of floods on the roads, its your headache. No one will rescue you.
  2. Are there any particular issues / risks associated with specific routes ? Some routes are dacoit prone in the North eastern states, but Police escort is provided. Trucks generally drive in convoys anywhere, so getting help is not a problem. They fellow trucker is always courteous to a fellow trucker in India.
  3. Are there any particular issues / risks associated with specific types of trucks / models ? Maintenance if you buy a 2nd hand truck. Otherwise not many. I would suggest you to buy a First Hand Navistar or a Prima. Navistar preferred.
General Warnings / Risks / Issues / Problems Section
  1. What are typical issues one should be prepared for and aware of before entering this business ? Trucking is a business than can make you rich and can also make you a pauper. Have a fallback plan. You should be able to demand work from your co-driver (if you hire) else you would be a sitting duck.
Good to Know things
  1. Bribe costs can be included in transportation costs. It is the end consumer who would suffer by paying more money and not you.
  2. Never argue with the RTO/Police. This can cost you dearly. Pay whatever they ask for and leave. It is much better to pay and leave rather than get delayed by their detaining tactics.
  3. Ensure you check the cargo as far as possible. If you get caught at some check post with illegal stuff that’s the end of the road for you. Ensure your driver does not indulge in any of this. YOU as the owner is responsible and not the driver. Sad but that how Indian law is.
  4. Be prepared to pay bribes anywhere and everywhere however right or wrong you may be.
  5. You may face long queues at checkposts. Quote your delivery time accordingly. I have heard trucks take 3 days at walayar check post.
  6. NEVER involve in any anti-social activities like Sand mining, Water pilferage carrying contraband etc. It pays very well and may seem lucrative, but if caught nothing said more.
  7. Install GPS trackers and speed governors on all your vehicles before you even get your first cargo.
  8. Instruct your driver that he is responsible for accidents / over speeding / fines paid to police.
Sorry for the long post. Hope this is informative.

Last edited by scopriobharath : 26th December 2011 at 20:59.
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Old 26th December 2011, 20:52   #8
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Absolutely brilliant responses all !!!

Many thanks bharath, ashley and Zed. Your responses have indeed been detailed. Request a little time for me to compose my next set of questions for any further clarification required in your replies, that I have not understood well.

Once again, many thanks for taking out time and putting in effort for your replies.
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Old 28th December 2011, 20:47   #9
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Hi Hell rider,

I recently had an opportunity to interview a couple of water tanker operators, as part of work. From what they said, a couple of expense related points might be relevant to you.
Tyres - Both of them said, that they need to change the tyres once in 3 months. Per day running is approximately 80 - 100 kms (Half of this with full load). So you are looking at a tyre change frequency of every 10k kms. Retreading cannot be done more than once.
Fuel efficiency - They dont get more than 2 kms per litre of diesel.
Fitness Certificate - You will have to account for an annual recurring expense of 1.5 lakhs and above.

Of course, all these values would be pertaining to their specific model of trucks.

cheers
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Old 29th December 2011, 09:13   #10
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The lorry owner always gets the short end of the stick so to speak. How?

Lorry owning is the least value adding segment of the transport business. Why? Either the load will go to a big name transport company who will generally farm it out to an affiliated lorry owner or the load will go to a freight booking agent who has close links to the consignors and will also farm the load out to a small time lorry owner. The cream is always skimmed off by the entity which is booking the load on behalf of the consignor. The lorry owner gets a subsistence wage so to speak.

Keeping the above in context, look at the Carriage of Goods act. The Carriage of Goods Act puts the onus for ensuring the safety of the load/goods squarely on the person ferrying the cargo i.e. the lorry owner. In the event of a mishap such as a robbery(which are very common) or an accident which too happen quite often, the lorry owner is liable.

So you plump in a good 15 odd lacs. Carry a load where your margins per trip are maybe 20-25K on the Del-Mum line with a max round trips possible not exceeding 2.5 per month. Now factor in as we used to say tair(tyre)/permat(permits)/insurance at the end of each year. Suddenly it does not look so rosy any more.

Note from the Team-BHP Support Team: Please avoid quoting an entire large post. It inconveniences our small screen & mobile readers.

Last edited by Rudra Sen : 29th December 2011 at 19:53.
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Old 29th December 2011, 11:33   #11
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Quote:
Originally Posted by hell_rider View Post
Hello to all members,

I am attempting to compile a comprehensive FAQ on all aspects of starting and running a trucking business. There are threads in the Commercial Vehicles section on starting bus services / taxi services / passenger services but I could not find a guide to the basic trucking / freight carrying business.

A couple of friends are getting together and plan to deploy a truck on long haul routes. I have been entrusted with the task of collecting required information. No better place than team-bhp.com as we have a large number of contributing members here as well as a dedicated Commercial Vehicles section.

I work in the Shipping industry and we deal with transporters all the time. If you are looking to purchase One truck my advise is to - STAY AWAY from this business unless you just buy the truck and give it on rental.

Here is how it will work.

Type: 16 tyre Trailors
Income: 90k to 100k per month
Expenses: You have to hire a driver and maintain the vehicle.
Fuel: Will be borne by the person who has hired the truck.

If you follow this simple model, you can get into this business.

Remember the margins will be low and maintenance costs very high(example: 16 Tyres need to be changed every 20- 30k kms and a tyre costs 14 k per tyre)

If you intend to actually follow up / drive with the truck etc my advise is - Dont get into such a business.
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Old 31st December 2011, 22:21   #12
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Quote:
Originally Posted by Saptarshi B View Post
...
Income: 90k to 100k per month
Expenses: You have to hire a driver and maintain the vehicle.
Fuel: Will be borne by the person who has hired the truck.
.....
Does the rental tractor/trailer fetches 100K/ month.
Are you speaking about Port to yard and back container movement?
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Old 4th January 2012, 16:37   #13
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Yes. We can work out trailor rentals in case anyone is interested
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Old 5th January 2012, 13:25   #14
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Hello and Happy New Year to all :-)

Have just returned from the New Year break and read up on all the posts. Many thanks for all your valuable inputs. I am listing down further queries based on your responses.

** [ I am not quoting your individual posts as the resultant post tends to get very long. ] **

As ZedMae and RS_DEL have pointed out after calculating fuel, permit, tyre and other mandatory costs, you aren't left with much net net. Based on that I have some specific queries:
  1. What are total regulatory and mandatory expenses ? Insurance is one. The Fitness Certificate as mentioned is 1.5 lakhs per annum. But is this applicable to a new vehicle ?
  2. I have received Fuel Efficiency figures over a wide range. 2 kmpl to 4 kmpl. Some truckers I spoke to mentioned that a new vehicle will definitely give around 4 kmpl for at least the first 2 or 3 years. Later, if the vehicle has been maintained well it should give around 3 kmpl. Would appreciate further experienced opinions on this point.
  3. Tyre expenses are obviously another major factor. I have again received widely differing estimates. From a 30K limit to 50k to once a year. How are tyres managed ? For e.g. for a 10 wheel MAV, are all 10 tyres replaced at 30k or are they replaced / retreaded in a phased manner, for e.g. 2 every month ? Also with respect to retreads, I have again received differing numbers. Some say tyres can only be retreaded once, whereas some have said at least 3 retreads. Is this dependent on the type of tyre ? What kind of tyres take a higher number of retreads ? Also how time consuming is this retread process ? How long does it take me to get the tyres back after retreading ?
  4. What is the regular maintenance cost ? I understand an oil change is once every 30-40k kms. What else needs to be done with the oil change ? How much does this kind of maintenance typically cost ? Greasing , other lubricants and oils, re-torquing etc etc ?
  5. At first analysis, the obvious way to increase returns is to either increase number of trips a month or the rate per ton has to go up. Increasing number of trips (i.e reducing time per trip), (apart from putting two drivers in the truck), seems to be dependent on a number of factors mostly out of our control - for e.g., time wasted in octroi and check points, time spent in waiting for the labour to load / unload the vehicle, time limit constraints in each city / municipal zone rules as to when trucks are allowed to ply on the roads and other such factors.
  6. The other point is the rate per ton. We have received rates ranging anywhere from 1500 per ton to 2000 per ton for a typical 1000-1250 km trip. My query is, are there different rates per ton for different kinds of loads ? Are liquid tankers (fuel oils / checmicals / edible oils / industrial liquids) paid better rates per ton than regular loads ? How are rates for such tanker loads fixed ? Because obviously the tankers will only have a load in one direction. How is this managed ? What kind of loads / goods get better rates / ton ? (Not talking about oversize loads as already been pointed out by scopriobharath. Am talking about regular goods only)
  7. Another issue is of theft and vandalism. A couple of truckers mentioned that apart from NH8, many routes have the problem of local village elements attacking them and robbing them of the money they carry. They normally come in bikes and halt in front of the truck forcing the truck also to stop and are armed. The driver I spoke to specifically mentioned the route to Chattisgarh. Surprisingly, he has this problem in Maharashtra in the Akola - Amravati stretch. Is this really a regular issue on all routes ? Are there particular routes where this is an issue ? Also, are routes that carry to the East (i.e. that run through East Maharashtra, Chattisgarh, Jharkhand and onward to WB and Assam dangerous in this respect ? Scopriobharath has encouragingly pointed out this is not an issue as trucks move in convoys and there is safety in numbers. However, understandably, this is a major concern as there is danger to life and limb, which is why I am seeking further clarification on this point.
  8. Saptarshi, about the option you have mentioned - Are you talking about deploying a full tractor/trailer combo solution or are you only talking about renting out the trailers ?
  9. Along the same lines, if I were to not operate the truck myself but just provide it to another operator, what kind of monthly return can I expect for a typical multi axle 25 ton GVW truck with a rated 16 ton payload ?

Looking forward to your responses. And many thanks again.
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Old 10th January 2012, 23:14   #15
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Quote:
Originally Posted by hell_rider View Post
Looking forward to your responses. And many thanks again.
I am answering the below questions keeping a tractor trailer in mind with load. Replying late as i did some home-work too.
  1. What are total regulatory and mandatory expenses ? Insurance is one. The Fitness Certificate as mentioned is 1.5 lakhs per annum. But is this applicable to a new vehicle ? Vehicle insurance, FC (Yes applies for a new vehicle after the first 2 years), Cargo Insurance (if your shipper is not insuring the same due to cost cutting), Bribes for FC passing even if papers are in order, Bribes at border check posts et all. Adhoc bribes by various squads on the highway, Permits are the most common ways to rip your pocket. However, your permit, bribes at checkposts, adhoc etc will be at actuals so your cost will go up, which the average trucker claims from the end consumer. You do not have a loss here.
  2. I have received Fuel Efficiency figures over a wide range. 2 kmpl to 4 kmpl. Some truckers I spoke to mentioned that a new vehicle will definitely give around 4 kmpl for at least the first 2 or 3 years. Later, if the vehicle has been maintained well it should give around 3 kmpl. Would appreciate further experienced opinions on this point. You would get 3kmpl on flat good roads at a speed of 40-60 kmph in ovedrive. If you have steep climbs, that would reduce to even 0.5 kmpl. If you maintain the vehicle as per the service manual, it should give you 3 kmpl for at least 5,00,000 kms. GQ Drives would fetch you 3kmpl on most occassions. TIP: NEVER Idle your rig. It drinks fuel like nobody's business. shut off your rig as soon as you feel you would be halting for 5 mins or more.
  3. Tyre expenses are obviously another major factor. I have again received widely differing estimates. From a 30K limit to 50k to once a year. How are tyres managed ? For e.g. for a 10 wheel MAV, are all 10 tyres replaced at 30k or are they replaced / retreaded in a phased manner, for e.g. 2 every month ? Also with respect to retreads, I have again received differing numbers. Some say tyres can only be retreaded once, whereas some have said at least 3 retreads. Is this dependent on the type of tyre ? What kind of tyres take a higher number of retreads ? Also how time consuming is this retread process ? How long does it take me to get the tyres back after retreading ? Ideally retreading will save money but it may not be reliable in the long run. Retreading in layman's terms adds a coating of rubber and creates treads. Considering reliability and a "customer first" Motto, it is better to change the tyres at 35K intervals. If at all you retread, it would take you 3 days in all, assuming you are prioritized at the retreader. Be prepared for "Sorry Sir,will take 2 more days" funda.
  4. What is the regular maintenance cost ? I understand an oil change is once every 30-40k kms. What else needs to be done with the oil change ? How much does this kind of maintenance typically cost ? Greasing , other lubricants and oils, re-torquing etc etc ? The Average service would work out to be 12,000/- for your tractor.
  5. At first analysis, the obvious way to increase returns is to either increase number of trips a month or the rate per ton has to go up. Increasing number of trips (i.e reducing time per trip), (apart from putting two drivers in the truck), seems to be dependent on a number of factors mostly out of our control - for e.g., time wasted in octroi and check points, time spent in waiting for the labour to load / unload the vehicle, time limit constraints in each city / municipal zone rules as to when trucks are allowed to ply on the roads and other such factors. If you are in a tractor trailer, most probably you would be moving goods from outskirts of one city to the outskirts of another. No Police problem here. You Shipper would tell you when the goods need to be delivered and you can quote your delivery days, citing the check post delay etc. No Shipper is unreasonable in most cases. It is NOT possible to bypass any checkpost like they show in movies. The transporter and Shipper understands this and will give you sufficient time. Time to load and unload is built into your cost and if the un-loading time exceeds because of the receiver's mistake, you will be compensated. example Crane not avaible. Warehouse not free, Labor Strike etc. If you are moving Government property say something like a huge boiler, no bribes at all. Same applies for loads for Metro rail, BRTS and other govt initiatives.
  6. The other point is the rate per ton. We have received rates ranging anywhere from 1500 per ton to 2000 per ton for a typical 1000-1250 km trip. My query is, are there different rates per ton for different kinds of loads ? Are liquid tankers (fuel oils / checmicals / edible oils / industrial liquids) paid better rates per ton than regular loads ? How are rates for such tanker loads fixed ? Because obviously the tankers will only have a load in one direction. How is this managed ? What kind of loads / goods get better rates / ton ? (Not talking about oversize loads as already been pointed out by scopriobharath. Am talking about regular goods only). Yes in tankers say for transporting Fuels, You would get around 1.5 times your distance on an average. That is why it is common to see adulterated fuel at pumps . Same applies for Chemicals too, but in chemicals chances of cheating is very less compared to petrol, milk, kerosene etc. Milk is siphoned off and water is added to compensate the difference. There is a certain chemical to add in case of petrol, diesel and kerosene theft. NOTE: I am not suggesting you to follow this practice, but i am just portraying what the average person does. To follow or not is totally upto you.
  7. Another issue is of theft and vandalism. A couple of truckers mentioned that apart from NH8, many routes have the problem of local village elements attacking them and robbing them of the money they carry. They normally come in bikes and halt in front of the truck forcing the truck also to stop and are armed. The driver I spoke to specifically mentioned the route to Chattisgarh. Surprisingly, he has this problem in Maharashtra in the Akola - Amravati stretch. Is this really a regular issue on all routes ? Are there particular routes where this is an issue ? Also, are routes that carry to the East (i.e. that run through East Maharashtra, Chattisgarh, Jharkhand and onward to WB and Assam dangerous in this respect ? Scopriobharath has encouragingly pointed out this is not an issue as trucks move in convoys and there is safety in numbers. However, understandably, this is a major concern as there is danger to life and limb, which is why I am seeking further clarification on this point. This is India. Yes you very much run this risk, but trust me even those vandals are not fools. They would not attack a convoy of trucks. They target only lone trucks. If you notice,during nightime, trucks travel in a convoy and even for cars and Volvos is makes it difficult to overtake a convoy. As i said earlier, the average trucker is courteous. You need not pull over, flag down a fellow driver and pool into a convoy. It is an "understanding" between all truckers. Remember what risk you face against a vandal is same as what the other trucker would face. Maybe this would help. Try to park at a Dhaba / lots of activity. Do not park at lonely spots in unknown places.
  8. Saptarshi, about the option you have mentioned - Are you talking about deploying a full tractor/trailer combo solution or are you only talking about renting out the trailers ? A Tractor-Trailer makes more sense. An industry would not invest on a trailer only. If he does he has to pay the same money for an empty return trip as the trucker would have to return his trailer back. A complete TT Set is what will give you the edge.
  9. Along the same lines, if I were to not operate the truck myself but just provide it to another operator, what kind of monthly return can I expect for a typical multi axle 25 ton GVW truck with a rated 16 ton payload ? Many factors go into deciding the payment. Who bears Fuel, Who bears driver cost and many factors. Major factor is "Load Gaurantee" per pay period. This is mainly decided when you strike a deal with the person who would rent your truck. If you finalize this i will let you know more details.
Hope this helps. Once you decide on the mode of operation, do post here and i will get deeper into the aspects of the same

Last edited by scopriobharath : 10th January 2012 at 23:22.
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