There is a lot to learn, but you do not need official qualifications to start a shipping business and it’s not very capital intensive. You’ll need a phone, good people skills and a tremendous amount of energy. It’s exciting and you’ll feel like a trader from the 90’s juggling between suppliers, shippers and clients. It can also be quite stressful. Organisation is a key part of building a successful shipping company.
The easiest way to launch is creating an office based freight forwarder. In this type of shipping business you will not touch the product. You will act as a broker that helps businesses ship goods from A to B.
Step 1 – Set up your shipping business as a limited company
In theory you don’t have to create a limited company to launch a shipping business. You could just be a sole trader. However, although you will not be touching the product, you will become the first point of contact with your clients. Setting up a limited company is the 1st step in protecting yourself in case of issues with shipments.
Step 2 – Get Shipping Insurance
As a shipping company, you will need to look at 2 types of insurance:
Freight liability insurance
Ultimately, the company doing the moving of the cargo will be responsible if anything goes wrong. And as you’re simply acting as a broker, it should not be your fault. That’s the theory.
3 reasons to get public liability insurance:
- You will be the 1st point of contact
- It’s reassuring for your clients
- It’s required to become a member of Bifa (British International Freight Association)
You’ll find a list of insurance brokers that will help you with shipping public liability insurance here: https://www.bifa.org/contacts/useful-links/insurance-brokers
You’ll need to give information such as the value of your shipments per year, the type of cargo, and the countries you will be shipping to and from. As you’re starting off, this will be a guessing game. But you can always update your cover at a later stage.
Marine insurance is extra insurance that you can offer your clients if they require more cover for their cargo. By working closely with an insurance broker, you can use marine insurance as a great upsell to generate extra margin on your shipping services.
Step 3 – Open a business bank account
Opening a bank account is the same step for most businesses. You’ll need a bank to start accepting payments. We highly recommend Tide.co that was launched in 2015 to simplify banking for small businesses. Tide.co does not have physical branches and that cost is passed onto its clients.
You will not be able to do any complicated financial structuring (yet), but StartupMag has been with this bank from the start and we’re very happy. And their app is really smooth and automatically connects to accounting software such as Xero.
Step 4 – Become a member of BIFA
We briefly talked about BIFA when we were discussing freight insurance. BIFA is the main UK freight association. It provides training and is a great support when you’re in the early days of setting up a shipping business.
Becoming a member will help you meet other freight forwarders and adding a BIFA badge to you website is also very reassuring for your clients.
Step 5 – Build strong partner relationships
Acting as a middle man, your business will rely on your partners to do the shipping for you. You’ll need to build at least one strong relationship with a freight forwarder to start.
As a startup business, you will not be able target all routes and all cargo types. You need to find out where you have an advantage or where you feel there is the most potential. You may discover the market strengths when you start your marketing in Step 7.
Routes and cargo examples:
Shipping China to UK
The volume of shipments coming out of China is mind blowing and constantly growing. It’s also the obvious route to target for freight forwarders so there is a lot of competition. One option is to contact early stage importers (Amazon sellers) and help them grow. Most bigger shipping companies are not interested in dealing with samples. If you jump in at that time offering low cost transit, you can become their main shipping contact once business takes off and cargo sizes improve.
Shipping USA to UK
This route is good for margins. Importers are more focused on quality than price. You’ll need to brush up on your admin as anything going in and out of the US has become sensitive.
There is strong demand for shipping cars and motorcycles around the world. You will however be faced with a lot of private individuals that can make customer support time consuming. This is probably the most direct route if you’re interested in doing physical transport ie renting a van and doing some of the work your self.
Individuals wanting to ship paintings or expensive books just want their items to arrive without any problems. Packing becomes a part of your shipping service and it’s a great way to extend your margins. Generally, these shipments are all sent express so you don’t need to worry too much about long transit times. However, high value items do attract customs and delays can make your clients unhappy.
BIFA offers a great database of vetted shipping businesses. Make sure your partner offers competitive wholesale prices and that they are quick to respond with quotes. The internet has given a lot of comparison options to clients. Don’t give them too much time to shop around by being slow at quoting.
Step 6 – Build your shipping business website
Even if you have a few contacts to kick off your activity, you will definitely need an online presence for your shipping business. You don’t need a complicated website, 6 simple pages will be enough:
- Homepage: reassure your clients
- Landing page: add a form to start collecting leads
- About us: explain who you are, why you?
- Contact us: make sure you’re reachable
- Terms and conditions: mandatory hygiene page
You can pay a web agency £1000 to build a website for you. Or, you can follow our step by step “make a website” guide here. You’ll learn how to build a website without any knowledge of coding. It’s a lot easier than you think, it’s quite fun and it’s free!
Step 7 – Getting leads and clients
Having a website is great, but once it’s setup you need get traffic. There are hundreds of ways to start marketing your website. We love Google Ads as it gives you full control on targeting clients by keyword and location.
Once you get enough leads with Google Ads, you’ll have enough data to start Facebook Ads with a Lookalike audience.
Step 8 – Manage your clients with Customer Relationship Management software (CRM)
There is a lot of chasing and updating clients involved in a shipping business. You can always use paper, however managing your leads and clients with a CRM will put your business on steroids from day 1.
You can compare CRMs here: https://www.startupmag.co.uk/crm-software/
Step 9 – Quoting and invoicing your clients
For your shipping business to succeed, you need to get paid. Quoting and invoicing is a key part of any sales process. By choosing a cloud accounting software such as Xero, you’ll be able to automate quoting. Your clients will be able to pay directly on the invoice by bank transfer or online payment. And if you’ve followed our advice with opening a Tide.co bank account, you’ll receive a notification of the payment on your phone.
There are so many things to deal with when you start a shipping company. Quoting and invoicing is a headache that you do not need to have.
Step 10 – Make clients happy
Your goal should be to help clients with their shipping. Clients are not your enemy, you need to make sure they are happy. And if they’re happy they will come back again.
A lot of new businesses stumble at this stage. It may not feel productive or money making, but excellent customer service will make or break your shipping business.
Step 11 – Collect shipping reviews
When a client is happy, make sure that you ask them to add a review on your Google business page. You will rarely be meeting clients face to face, so reviews will become part of your image. Your reviews will also become a unique selling point to show on your landing page and get even more leads.
Once you’ve got your website up and running, make sure you get that landing page right!