Q Although I have no personal experience
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of road transport, four friends with experience of the industry and I plan to buy five Transit vans to undertake a parcels collection and delivery service in London, and perhaps between London and South Wales. Our thinking is that this may not be too speculative a venture as the Transits should be readily saleable if the business does not succeed. Could you please give us your opinion of this project in the light of the current market situation?
AA number of operators with small
resources have established express parcels services in Greater London and in other parts of the country. Some of these firms, set up in the past two years. have expanded greatly. This suggests that the commercial prospects may be favourable, but the market is competitive and you would need to researbh the demand before committing yourselves. Quite apart from the State-owned carriers, BRS Parcels Ltd and National Carriers Ltd, a number of large independent carriers offer virtually nationwide services. In Greater London you would find considerable competition, so that unless you could obtain contracts at rates which would yield an adequate return on capital you might find when faced with maintenance and fleet renewal costs that you could not continue the business.
Although it may sound an attractive formula for five friends to operate a business you would have to decide the type of organization. If a partnership, you would not get limited liability status and all the partners would be responsible for the debts incurred by the business. In any business, whether a private company or operating under a trading name, someone must take responsibility for its management. There would be times when you and your friends might not see eye to eye.
You must weigh up the merits of using under-30cwt vehicles as compared with 4or 5-ton capacity vans. Although some long-distance runs are done with Transit type vans, your trunk movement costs would be lower using a heavier vehicle with two or three times the cubic capacity of a small van.
Another consideration you must not fail to take into account is the provision of adequate premises for housing and servicing the vehicles. It is no longer acceptable to operate a transport business from the street.