Profit Margin in Transport Business in India

The profit margin in transport business in India is 10% - 25%. However, that differs with types of transport business in India.

 

Overview of Transport Business in India

 

• Investment: Rs. 70 Lacs - Rs. 80 Lacs (minimum)
• Area Required: 1000 sq ft. - 2500 sq ft. (minimum)
• Human Resource: 20 - 40 people (including drivers)
• Transport Business Profit Margin: 10% - 25%
• Estimated Earnings: Rs. 50,000 - Rs. 80,000 per month per truck

 

Types of Transport Business in India

 

Courier and Freight Transport Service

 

Profit Margin - 8% - 9%

 

Generally, couriers are small time-sensitive shipments. Moreover, they focus on fast and door-to-door delivery. 

 

For this purpose, they may use either self-owned, privately shared or public transport.

 

On the other hand, freight trucks are usually high volume and provide large shipment services. Thus, they may use road, rail, ocean or air for this purpose. 

 

Besides, they are mainly used for commercials within the country and globally as well.

 

Air Transport Service 

 

Profit Margin - 12% - 13%

 

The air transport service is a commercial service that transports persons, personal belongings, luggage, goods and cargo from one place to another by aircraft.

 

Besides, the air transport in India is managed by Air India and Indian Airlines. Also, to provide air transport service in India, you must get approval from The Airport Authority in India.

 

Car Rental Service

 

Profit Margin - 35% - 40%

 

It is one of the most in-demand transport businesses in India as well as globally. 

 

Most importantly, it has a better profit margin in transport business in India, than any other.

 

Further, there are many ways in which you can provide this service:

 

Such as, 

• Shared cab connecting 2 cities.
• Renting out an SUV on a per kilometer basis.
• Cab service. 
• Outstation Car Rental.
• Renting out Luxury Vehicles for special events.
• Airport Taxi Service.
• Railway Station pickup and drop service.
• Local cab service for tourists with a guide.
• Cab service to hotels.

 

Companies like Zingbus have gotten into the shared cab system.

 

For example : They run daily cab services between Alwar and Delhi.

 

Expected Gross Profit in Transport Business

 

The profit margin in transport business in India is 10% - 25% on average.

 

But, you will have to work wisely and keep monitoring your employees regularly to get the actual profits.

 

Suppose, you provide truck service to a company on a monthly basis.

 

• Expected Income per Truck: Rs. 60,000 to Rs. 1 Lac per month
• Capacity - 25,000 Kgs.
• Maintenance Cost per Truck: Rs. 15,000 - Rs. 20,000
• Driver Salary: Rs. 12,000 - Rs.16,000 (for 16 hours per day)
• Helpers Salary: Rs. 6,000 - Rs. 8,000

 

After deducting all the expenses, maintenance and fuel cost, your estimated earning will be around Rs. 40,000 to Rs. 85,000 per truck monthly.

 

Generally, the companies sign an annual contract with the transport companies to hire their service for the full year.

 

For this purpose, you can either rent a truck and keep the commission. Or, you can invest in good trucks and recover the cost with profits.

 

List of Best Trucks for Transport Business

TRUCK	PRICE	LOAD CAPACITY	FUEL TANK CAPACITY
Mahindra Truxo 31-202 HP	Starting from Rs. 21.8 Lacs	25,000 Kgs	350 Ltr
Tata LPT 3723	Starting from Rs. 25 Lacs	27,000 Kgs	400 Ltr
Eicher Pro 6000	Starting from Rs. 19 Lacs	20,000 Kgs	220 Ltr
Ashok Leyland U 3718	Starting from Rs. 33 Lacs	31,000 Kgs	400 Ltr
Isuzu IS12TE	Starting from Rs. 12.5 Lacs	7700 Kgs	180 Ltr

 

Investment 

 

The investment to start a transport business in India will depend on the following factors:

 

• Type of Transport Business.
• Scale of Business.
• Choice of Vehicle.

 

However, you will need a minimum investment of Rs. 20 Lacs to start a transport business.

 

Here is a list of the main costs to start a transport business:

 

• Purchasing vehicles and trucking equipment.
• Licenses and Permits.
• Business Registration Cost
• Renting, leasing or buying the premises for office, parking and storage.
• Salary and Wages
• Trucking-related costs.
• Maintenance costs.
• Fuel costs.
• Insurance.

 

With this in mind, the following are some sources of investments for a transport business in India:

 

• Self-Funding.
• Loan on Property.
• Business Bank Loans.
• Angel Investors.
• Venture Capitalist.
• Meger Capital.
• Partnering Investment.
• Business Incubation Funds.

 

Area

 

The minimum area required to start a transport business in India is 1000 sq ft.

 

You will need approx 80-100 sq ft. to set up an office for meetings and monitoring. After that, the remaining area can be used for storage, processing and parking.

 

Moreover, you will have to avoid crowded places for storage and parking. 

 

But, you will have to set up an office in a visible area to let people know about your presence.

 

Also, you can rent the office initially. 

 

The rent may be approx Rs. 6,000 - Rs. 20,000 (depends on area and city).

 

You can hire a broker for this purpose. Besides, it will help you to identify the response and visibility you are getting in that area.

 

If the results are unfavorable, you can easily change your office.

 

Human Resource

 

In a transport business, if you are starting with 2 - 3 trucks, you will need around 20 people initially.

 

• 4 - 5 Drivers.
• 1 Helper per truck.
• Mechanics for truck maintenance.
• 4-5 People for loading and unloading.
• Team Manager and Leader for Coordinating.
• Accountant
• Computer operator to keep track of everything.
• A trustworthy person to manage the money.

 

With this in mind, your monthly expense on the following could be anywhere between Rs. 1 Lac to Rs. 2 Lac. 

 

The transport sector in India contributes 6% to the country's GDP. In fact, it has the second-largest road network globally. 

 

Besides, the transport industry is full of small players.

 

Thus, it does not have a very high profit and even requires a huge investment, but it will help you generate a regular income.