A former engineer at a major logistics company in Australia who has started a new venture to help build truck-hauling companies in South Africa is struggling to build a business model, with a huge price tag.
“We’re not even in the business yet,” says Daniel Bous, who was once the executive director of logistics giant Propak.
He says it’s “crazy” to charge $100k a year for a business that can be started with just a $1,000 seed capital injection.
The cost of a truck-by-truck service is expected to reach $4.5 billion in 2020, according to estimates by the Australian Government’s National Roads and Transport Agency.
“I’d say the biggest risk is you end up with a bunch of truck drivers getting stuck,” says Bous.
He has spent the past two years trying to raise $10 million for his company, which hopes to start in South Australia by the end of 2020.
Bous is not alone.
There are a number of small, niche companies trying to do something similar.
For example, there is the Trucksy, which is an online platform that lets you connect with truck drivers in a timely way.
It’s a free service, and Bous says he’s been trying to make a few trips a week, which would be cheaper than a lot of the other services he’s tried.
Trucksysy is already accepting funding.
“Our funding will be used to develop our technology, to create a marketing platform and to help drive our business,” he says.
“The rest will be invested into building our business and growing our staff.”
Bous has raised about $10,000 from investors, who are paying a per-trip fee of $10.
He’s also been able to borrow money from his family and friends to help him get started.
The Trucksydosy is still in beta, but there’s already been a handful of people signing up to take on the work, with plans to hire around 50 by the middle of 2020, with an initial workforce of 10.
The startup’s founders, Alex, who has since left the company, and Sam, who runs the company from home, are both experienced truckers, with years of experience.
But the company is still small and Boulton says it is currently a small, first-of-its-kind venture.
“It’s just not going to be a mass-market business,” says his brother.
“You’re going to have a handful in each market and you’ll be doing a small number of people.”
Boulthorne has been trying out a few other startup ventures to see what they’re doing, but has not had much luck.
“What’s different about this one is that it’s a company that’s going to go in a different direction and they’re not trying to reinvent the wheel,” he explains.
“There’s a lot to be learned from the other companies out there, so hopefully it can serve as a model for other businesses to follow.”
In the meantime, he’s working with some friends to build his own business.
“At the moment I’m just focusing on building a platform that can help facilitate the truck-handling business, and to grow our team,” he said.
“My main goal is to help make a living, so I don’t want to make this business a side job.”
The truck-services business is not without its challenges.
Boultha says that it is difficult to find the right trucks for the job.
“Some of the companies are very, very expensive,” he points out.
“For example, some of them will pay $30 per hour for the driver, so if you want to hire a trucker for just one hour, you’ll need to pay $250,000.”
But he also says the truckers themselves are often the most expensive part of a logistics company.
“A lot of them aren’t even able to get their trucks in, so the drivers are paying for their own equipment,” he adds.
“So it’s really hard to find people with the right equipment.”
Boulos says that there are a few advantages to starting a truck services business, such as cheaper fuel costs.
“That’s one of the biggest benefits, is you can just get the fuel to where you need to be and the fuel costs are very low,” he notes.
“If you’re driving a trailer and you have a fuel cost of $40 per litre, you can get that to where it needs to be.”
But other problems include competition from cheaper services.
“Other than the obvious competition, the competition is getting worse,” says Brett Wiese, who is the chief executive officer of the Australian Trucking Association.
“Many of the trucking companies are moving from traditional to alternative fuels and there’s been a lot more competition in the last year or so.”
But Wiesen says there are many positive trends.