How to Start Logistics Business in Nigeria

How to Start Logistics Business in Nigeria: A Complete Guide

How to Start Logistics Business in Nigeria

Logistics Business in Nigeria became one of the most demanded businesses to venture into since the 2020 pandemic (covid 19) happened.

Before the inception of covid, Logistics services has been one of the most unpopular businesses in the Nigerian business sector.

The reason is that; “nobody ever predicted the day or year when e-commerce will be more demanding than going to the physical market”.

According to statistics by International Trade Administration, The current spending via e-commerce in Nigeria is $12 billion and it is expected to hit $75billion per annum in 2025,

So as it stands now, even after the pandemic, the logistics business has remained to be one of the most lucrative businesses in Nigeria. Because the logistics business is the transportation mechanism between e-commerce sellers and buyers.

Meaning, when you buy from an e-commerce shop like Jumia or Ali Express, the seller on that platform gets the goods to you through an independent transportation system.

That independent transportation system is called Logistics which is also referred to as delivery business or courier services.

Because the logistics business is an independent transportation system, it is open to anyone who desires to own a logistics company.

That being said, what then is Logistics Services all about?

What are Logistics Services really about?

Imagine a world where goods, services, and information flow seamlessly from their point of origin to their final destination.

At the heart of this efficient movement stands a remarkable entity known as a logistics company.

With expertise in planning, implementing, and controlling the intricate dance of supply chains, logistics companies play a pivotal role in ensuring the smooth transit and storage of goods, services, and information.

The roots of logistics can be traced back to its military origins. During the tumultuous periods of World War I and II, logistics proved to be a lifeline, facilitating the swift transportation of essential supplies such as food, weaponry, and critical resources.

As the echoes of war faded, logistics emerged as a distinct and thriving field.

It embraced the challenges and opportunities of the business world, evolving into a dynamic industry that continues to shape our modern landscape.

Today, a multitude of companies has risen to prominence, transforming into giants within the logistics sector not just in Nigeria but around the globe.

If you’re embarking on a journey into the world of logistics in Nigeria, there are several noteworthy companies worth studying.

Among them are Courier Plus Services Limited, GIG Logistics, Creseada International Limited, Ocenj Logistics, AGS Movers Lagos, AXPD Resources Ltd, to name a few.

These industry leaders serve as beacons of inspiration, showcasing the immense potential and success that can be achieved within the logistics realm.

The scope of logistics extends beyond the transportation of goods. It encompasses various crucial aspects within the business sector, including warehousing, inventory management, packaging, material handling, secure disposal, and safeguarding assets.

It’s an all-encompassing ecosystem dedicated to optimizing efficiency, minimizing risks, and enhancing overall productivity.

How profitable is the Logistics business?

When venturing into the world of business, one question looms large: Will my endeavor be profitable?

This concern holds true for all aspiring entrepreneurs, and those entering the logistics industry are no exception.

The profitability of a logistics business in Nigeria hinges on several key factors: acquiring a steady stream of customers, implementing an effective pricing strategy, and ensuring efficient and timely deliveries.

Success lies in crafting a robust market penetration plan and fostering strong customer retention.

As the e-commerce sector continues to thrive and evolve, the relevance and profitability of the logistics business remain steadfast. With a deep understanding of the industry and its fine distinction, immense financial gains can be achieved.

So, Yes, the Logistics business in Nigeria is very profitable and you can earn millions from this business but you must be ready to put in the effort and time.

Consider this scenario: Imagine your logistics service is utilized by 20 businesses, each of which sends out 100 items per month. By the end of the month, you would have successfully completed a staggering 2,000 deliveries.

And if a delivery cost an average of N2,000. That mathematically means; 2,000 deliveries X N2,000 = N4,000,000.

It becomes evident that the key lies in cultivating lasting relationships with customers, nurturing loyalty, and securing repeat business.

Steps to Starting a Logistics Company in Nigeria

There are 10 steps that every entrepreneur must take before starting a logistics business. Here is the list of the 10 steps that must be taken to start a Logistics service company in Nigeria;

  1. Business Name
  2. Register Your Business with CAC
  3. Business Plan
  4. Capital
  5. Equipment
  6. Hire Staff
  7. Build a Brand
  8. Insurance
  9. Management
  10. Promote Your Logistics Company

Business Name

Having a business name is as important as having business capital.

Giving your business a name is a way of showing to the public the credibility of your company.

Nobody wants to deal with a company without a name. They will rather engage with a fraudulent company with a name than a legit business without a name.

And when it comes to giving your Logistics company a name, let it be a name that the public can easily relate to eg; Cargo to Nigeria, Fando Freight, Confidence Cargo, Airex Logistics, etc.

But if you are finding it challenging to come up with a name that is relatable, you can also choose a name that is not difficult to remember like; Fortune Global, Loriku Logistics & Procurement, Bowagate Global Services, Chibyke Global, etc. or use an online business name generator tool.

The most important thing is to have a business name.

Register Your Business with CAC

To establish your logistic business in Nigeria, the first and foremost step is registering it with the Corporate Affairs Commission (CAC), the authorized body for business registration.

Registering your business with CAC not only instills trust but also enhances your business’s credibility in the eyes of customers.

When it comes to registration of your logistics company, you have two options: registering as a Business Name or as a Limited Liability Company.

The choice depends on factors such as ownership, structure, and funding capabilities. But in terms of the registration cost, Business Name is cheaper than Limited liability.

Obtaining your registration certificate is crucial as it serves as a prerequisite for opening a corporate account.

Begin the process by conducting a name availability search on the CAC portal. Once your proposed name receives approval, you can proceed with the registration process.

In addition to CAC registration, it is essential to obtain any other relevant licenses and permits from the government.

Business Plan

Starting a logistics business without a business plan is like driving without direction and destination.

I know some people will say you really don’t need a business plan if you know what you are doing.

But how can you know what you are doing when you don’t know where you are going?

A business plan goes beyond convincing investors to invest in your business or convincing a loan officer to approve your loan request.

It gives you the projection of the company and also prepares you for strategic times that might either take your business high or bring it down, in either way it helps to keep you inform ahead of time.

It also helps you to maintain a good cash flow. Whereby preventing you from spending more than your monthly budget.

The advantages of having a business plan before starting a business are way more than you think.

And if you still haven’t been convinced enough about having one, then I advise you to do proper research on; “why you should get a business plan”. As you can’t start this business without a business plan, I assure you of that!

Capital

Capital is the core part of every business. Without capital, a well-written business plan is just a mere paper.

In starting this logistics business, it is advised that you start with nothing less than N250,000 naira.

With 250k you can be assured of covering both the registration fee and a bike. And that is enough to start the logistics business on a small scale.

Equipment

What is the essence of having a good business name, a business plan, and reasonable startup capital and not having a single piece of equipment?

It means you must be checked mentally if you are ok.

Equipment is as important as the capital itself as nobody will order your services if you don’t have what it takes to deliver their orders.

The list of equipment needed to run a logistics company comprises;

  1. Cargo Bike or Van
  2. Mobile Phone
  3. Office Space ( which you can start from your apartment)
  4. Computers
  5. Dispatch Box
  6. Stationeries

1. Cargo Bike or Van

Logistics cargo bike

As a starter, it is advised you start with a cargo bike first. As the money and demand keep coming in, a van will be needed.

When getting your bikes it is recommended you go enquire about the types of bikes that are acceptable to run the logistics services in the state where you intend to start your logistics business.

The essence of enquiring about the acceptable bike model is because of the laws in the state (mostly states that have banned the use of bikes).

Please don’t overlook and think it is not necessary, because it is necessary.

And if by any chance you violate the standard bike model for the state be assured that the police will be the regular benefactor of your business.

And lastly, get your bike tracked because some riders could be funny.

2. Mobile Phone

Of course, a mobile phone is essential in the logistics business, not just for you but also for your riders.

How can people reach you when they want to place an order? How can you reach your riders when there is a need to?

So the essence of a mobile phone is not something that can be substituted as it is very needed to run this business successfully.

In addition, you can also use your mobile phone to track your bikes or vehicles in place of not being able to access or afford a computer.

A good Android or iOS phone will be a good edge to start with.

3. Office Space

If there is anything that can easily be substituted, is the office space.

If you know your capital isn’t enough, you can make your home your office space for the time being and as time goes on (alongside an increase in revenue and customer base), you must get your office space.

But I recommend as a starter, if you can’t get a very cheap and secure office space, please use your home.

4. Computers

Like I said on the mobile phone; “if you can’t get a computer please get a Mobile phone (make sure it is a good mobile phone)”

The main purpose of having computers is to keep track of records which can be substituted with a book (in the case where you can’t afford a computer).

With a computer, you find it easy to track your bikes in real time because of its capacity to perform various functions at the same time without slowing down or closing other programs.

That’s why I said; “if by any chance you what to substitute a computer for a mobile phone, try as much as possible to get a good mobile phone that can serve the same purpose easily.

Lastly, please don’t waste your money getting a second-hand or third-hand computer as it will affect your business either from the overused software or dead batteries. So please get a good computer.

5. Dispatch Box

Delivery Dispatch box

Dispatch Box is what is normally seen at the back of bikes owned by other courier firms.

The purpose of the dispatch box is to enable the riders to take bulk items from the office along with them while making deliveries.

Meaning, It prevents the scenario where the riders will have to pick up an item from the office, go to deliver it, and still come back to pick another for another delivery.

This dispatch box helps the logistics company and the riders to save both resources and time while carrying out their services to customers,

And finally, it is also advised you design the outer part of your dispatch boxes with your company’s logo and contact for more publicity.

6. Stationery

This comprises items that make the logistics service run efficiently.

This includes; Biros, books, tables, chairs, cartons/store boxes, rulers, etc.

Without these items, you might find it difficult to run your business efficiently.

Hire Staff

If there is anything in this logistics business that you must be sensitive to, it is the process of recruiting your staff.

It takes just one bad staff to bring a great company down.

But the amazing thing is; before that staff takes your business down, there must have been signs to show that, that particular staff is beginning to go rogue.

Immediately you notice such attitude I advised you fire that particular staff immediately without wasting time.

If you delay you can be putting the existence of your logistics company at risk.

The question now is; how can I get good staff for my Logistics company?

When recruiting your staff these are the things you must put into consideration:

  1. Put your emotion aside
  2. Only consider those with working experience (Even if it s a month of working experience in a different industry or business).
  3. At least one guarantor is needed (Mostly with logistics business that involved other peoples’ items)
  4. Conduct eye test for positions that has to do recording of transactions. (the test can be in the form of reading letters)
  5. Confirm their addresses (critical)

After they’ve passed that test, these are what you must put in place to checkmate their activities.

  1. Make up your rules and regulations with a notice that the day they start breaking the rules it means they are saying they don’t desire to work in the establishment anymore.
  2. When you notice a thief among them, don’t hesitate to fire immediately.
  3. Anyone who lies unnecessarily is likely a thief and should be fired.
  4. Always watch out for your staff as a good one today can become bad tomorrow.
  5. Never re-employ anyone you fired because he stole or wasn’t honest.
  6. And always reward Good and honest workers (nothing is too small)

If you carefully follow the listed procedures above there is a 99% chance of having the best team to work within your logistics business.

But for starters on a small scale in the logistics business, you can decide to be your own dispatch rider for the time being until you get enough customer base and high cash flow to recruit another person to assist you.

Last and most important piece of advice; “Never mix work with pleasure, and Never delay in paying your workers their salaries”.

The categories of Staff for Logistic Business

These are the categories of staff that are essential in running a logistics business successfully.

  • A Driver or A Motorcyclist
  • A Store Supervisor
  • A Computer and Phone Operator

With those important positions occupied by qualified personnel in your logistics firm, you can rest assured that, your logistics business in Nigeria won’t only be lucrative but one of the best in the country.

Build a Brand

It is important that customers have a way of differentiating your courier business from others.

Branding gives you a big edge over your competitors. Branding has the power to make customers prefer you over another competitor that is their next-door neighbor.

In creating a great business brand these are the things you put in place

  • Honesty
  • Exceptional customer care service
  • Fast delivery
  • Online presence (An App or Web page or both)

In addition; “As a starter, it is advised that you be specific on the category of item to deliver; either perishable or non-perishable, lightweight items or heavy items.

But as time goes on and business continues to show positive results, you can incorporate other additional categories to your services.

Insurance

It is important for your logistic business to be covered by insurance in other to prevent losses from either damage on delivery or theft.

Insurance service is not a new word in the business sector in Nigeria, but it is mostly overlooked by most business starters.

But I must tell you; “if you really have the intention of having a logistic business where you can be at peace, even if, you hear some of the goods got burnt or got stolen, then you must get your business covered by a reputable insurance company in full”.

Management

No business survives outside management.

And for your logistics business to even survive, it must be under a good management.

I know as a starter you might think this doesn’t apply to you. In reality, it does.

Even if you have one staff or 10 staff, you must learn the management skills to bring the best out of them and that is why I have taken my time to write well-written articles that will assist you in becoming the best boss.

Promote Your Logistics Company

Advertising your logistics company is crucial if you want to gain visibility. Whether you choose to operate online or offline, or both, it’s essential to promote your logistics company, especially reaching out to e-commerce business owners.

Fortunately, promoting your business has become easier due to the advancements in the internet. There are several popular methods and marketing channels you can utilize:

  1. Social media advertising: This includes platforms like Instagram, Twitter, Facebook, LinkedIn, and Snapchat, where you can run targeted ads.
  2. Word of mouth: People’s recommendations and referrals can greatly boost your business by spreading positive word-of-mouth.
  3. Radio and television advertisements: Utilizing these traditional media channels can reach a wide audience and create brand awareness.
  4. Newspaper publications: Placing ads in newspapers can target specific regions or demographics.
  5. Collaborations and partnerships: Partnering with complementary businesses or influencers can expand your reach and attract new customers.
  6. Google Ads: Running online advertisements through Google’s advertising platform can help you reach potential customers actively searching for logistics services.

Cost and Profit of Starting a Logistics Business in Nigeria

Before I start breaking down the cost and profit of logistics services in Nigeria, you must understand that Nigeria is the highest internet user in Africa.

And almost half of the population that uses the internet engages in either purchasing or selling in an e-commerce store. -What a potential market!

But the shortage in delivery companies has made it possible for many people to venture into this business even to this day and still make it in a huge way.

The cost of starting a logistics company comprises of;

  1. Business Registration: N10,000 naira
  2. Motorcycle driver’s License ( normally called a drivers card): N55,250 naira.
  3. Purchase a good bike 150,000 (secondhand cargo bike) or 350,000 (new cargo bike)
  4. Office space: you can use your home
  5. Stationeries cost should not be more than N10,000 naira

Total = N225,250 Naira (With secondhand Cargo bike)
Total = N425,250 Naira (with new Cargo bike)

Minimum Profit from Monthly Deliveries

A typical Lagos delivery costs an average of N2,000 naira and sometimes more if the distance is really far.

So using the minimum cost of N2,000 and 1,000 monthly deliveries as a start ( 35 deliveries daily)

N2,000 X 1,000 = N2,000,000 naira monthly revenue.

Note: The probability of doing more deliveries daily and monthly will always continue to go up as long as you keep building your brand.

But of course, there will be recurrent expenses like; bike maintenance, riders’ salary, and miscellaneous expenses.

So roughly, you can always have a net profit of N1,500,000 naira monthly. I don’t think that any regional bank managers in Nigeria earn such an amount monthly.

The Nigeria Laws governing the Logistics Business

A new era dawns for the logistics business in Nigeria as the Courier and Logistics Services (Operations) Regulations 2020 (referred to as the “Regulations”) takes center stage.

Aligned with Section 62 of the NIPOST Act, these regulations aim to establish a comprehensive framework for the licensing, procedures, and efficient operation of courier and logistics services in the country.

Delving into the specifics, the Regulations provide a clear definition of “Courier.” This encompasses a door-to-door, time-sensitive, and secure service that encompasses the delivery of documents, parcels, merchandise, and cargo weighing between 0.5 KG and 50 KG.

On the other hand, “Logistics” is defined as a range of services that encompass haulage, conveyance, dispatch, or delivery of items or goods weighing not less than 50 kg.

To ensure seamless implementation, the Regulations reinforce the pivotal role of the Courier and Logistics Regulatory Department under NIPOST.

This department will play a vital role in overseeing compliance and enforcing the provisions set forth in the Regulations.

As the industry embarks on this new regulatory journey, courier and logistics services must adhere to the benchmark standards defined by the Regulations to operate effectively within the revamped regime.

The introduction of these Regulations signifies a significant step forward for the logistics sector in Nigeria.

By establishing a robust regulatory framework, the aim is to enhance the quality, reliability, and accountability of courier and logistics services across the nation.

This, in turn, will foster trust among customers and drive the growth and professionalism of the industry as a whole.

Categories of Logistics Licenses

To achieve this objective, the new regulation provides for the following categories of licenses:

CategoryLicense Fee (N)Renewal Fee (N)Scope of License
International Courier License20,000,0008,000,000Logistics services across international borders
National Courier License10,000,0004,000,000Logistics services nationwide
Regional Courier License5,000,0002,000,000Logistics services within a geo-political zone in Nigeria e.g. south-west geo-political zone
State Courier License2,000,000800,000Logistics services within a State
Municipal Courier License1,000,000400,000Logistics services within a particular city
Special SME Courier License250,000100,000For Logistics services that operate within a particular city and having not more than 5 motorbikes/motorcycles

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Conclusion

Now that you have understood how the logistics transportation business in Nigeria works and how to become the best, I hope you venture into it “if it is your desired business”

If you have any contributions or questions leave them in the comment section below.

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31 Comments

  1. Great. But you didn’t include the cost of obtaining a license for the logistics company. Or isn’t it necessary?

    1. License is necessary of course you can get that with the CAC.
      And I did mention it under the sub-heading : Cost and Profit of Starting a Logistics Business in Nigeria

    2. License is necessary of course you can get that with the CAC.
      And I did mention it under the sub-heading: Cost and Profit of Starting a Logistics Business in Nigeria

  2. Are there companies one can just buy the bikes for and allow them run and remit a percentage to me?
    If yes, please share.

  3. Good day, nice piece.
    I actually started the logistics business but for not taking cognizance some factor’s you highlighted pushed me out.
    But I will give it another try.

  4. Good day all, can I know all cost attributable to starting up a logistics business. Thanks

    1. I am sorry, with the constant fluctuation of prices these days, that info can only be gotten based on assumption which I have stated already in the article

    2. I am sorry, with the constant fluctuation of prices these days, that info can only be gotten based on assumptions which I have stated already in the article

  5. Nice article and it’s motivating.,Can we possibly chat on WhatsApp? It’s very important I need more enlightenment, would appreciate that

  6. Okay,this is cool,but how do someone get order,in other to make profits,or is their a platform one will be into after registration to get order,
    How can one get started, which way should some one meet and where to start,

  7. Okay,this is cool,but how do someone get order,in other to make profits,or is their a platform one will be into after registration to get order,
    How can one get started, which way should some one meet and where to start, not how to start as you just state

  8. What are the papper work and need to do?
    How do I prevent the rider not to use the bike for his own business

    1. CAC and state tax are the most important. As for the riders, you can implement a tracker on the bikes, or get that knowledge from someone in the logistics business already.

    1. If you have all the requirements I Mentioned in this article. Then Start immediately

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