How to start an air cargo business?
It is a daunting task to start an air cargo business in the United States. Simply knowing the basics is not sufficient; you have to be proactive and knowledgeable about every aspect that goes on. Air cargo businesses are not limited to the conventional air-freight traffic; it extends to the latest trends that are coming up, such as digital record-maintenance and others.
You could be planning to emerge as a giant in the air freight business, or you expect yourself to be an entrepreneur only. It doesn’t matter; you ought to have the financial cushion and technology to crack into this business.
Apart from finances and technology, you are supposed to have an in-depth understanding of the local and global market, even if you want to restrict your business to the country. Niching down is another advantage, and you can stand out in the market. For instance, you deal only with medical supplies or essentials; then you can beat the terrible competition around you.
We will elaborate on the entire process and provide you with a sample business plan in this article. But before that, let us skim through the benefits of starting an air cargo business and the challenges involved in it.
Also Read: 10 Aviation Related Business Ideas you can Start Now
Benefits of starting an air cargo business:
1. Creates value for customers and yourself
Air cargo is a service that very few people provide. When you help out a customer to move his goods and resolve a related issue, you work on something different, and that adds value to your life. The more customer satisfaction, the better you feel about yourself.
2. Better client retention
When a client is satisfied and happy with the services you provide, there are no chances that they will shift to another service provider. So, your services are distinguishable, and your clients will stick to your services for an extended time.
3. Provides an interesting outlet:
You learn more about other businesses and serve plenty of clients. As a result, there is something new to look for every day, and you don’t feel bored with the things you do at your workplace.
4. Provides an active workstyle
Air cargo business is not a desk job. It requires frequent movement of goods as well as requires you to move away from the desk. You feel energetic.
5. An interpersonal way of working
Air cargo business requires you to interact with clients and staff on a regular basis. If you are into meeting and talking to people, then this business idea is for you.
6. Continuous business
Even in low economic times, air cargo businesses never go without work.
Challenges involved in an air cargo business
It is wrong to predict that everything will be fine and there will be no obstacles when you set up a business. Problems will crop up, challenges will arise, and you will have to be ready for it and face them boldly. Following are a few challenges you will have to face, but you can surely overcome them through careful business planning and building a strong mindset.
With new trends coming up, it could happen that the systems you use become obsolete. Installation of new systems, training staff to utilize them well, and getting acquainted with the new way of work could be a severe challenge.
Data security issues may also arise, and it could be hampering your business. It is always important to protect client-specific data as any leakage can cause serious issues to your company image.
Difficulty to maintain standard revenue system:
Let us tell you the margins in an air cargo business are around 10 percent, and it could be a hurdle to maintain the profits. The key is to avoid any negligence and be proactive enough to retain your existing profits.
Staff turnover issues:
The air cargo industry is huge, but employees come, and go the place and you have to accept the fact. It is expensive to recruit, train, and re-train employees, and so, you have to set up relevant systems for them. Moreover, you can set up a rewarding system to appreciate the work of your employees.
Steps to run an air cargo business:
1. Collect maximum information about air cargo businesses and regulations
Air cargo is a dynamic industry, and it is better if you acquaint yourself with it before entering into the same. You need to have comprehensive knowledge of the industry, the overall market, the rivals, and the audience you will be serving. Spend time researching on the internet and talking to mentors and experienced persons in the industry.
Remember that you won’t be competing only against the global airlines but also with domestic airlines and maritime transportation services. So, it is better if you do not under-estimate any of them and be prepared financially and technically to compete with them.
Note which products can be transported through the air and which cannot. We suggest picking up a niche in this business as you can’t ‘do it all.’ Hence, it is advisable if you stick to a particular kind of goods that most others do not deal, and specialize in the same. You will have a set of clients sticking to your services and not bothering about others.
2. Think about the money matters
It is better if you understand beforehand that air cargo businesses require a great deal of money. Hence, there is no issue in setting up this business if you have a financial cushion and are really interested in entering this industry.
You need to spend on employee recruitment, training, website creation, retail business and inventory expenses, office space expenses, equipment, vehicles, and others.
Ensure that you have a systematic funding plan to enable the above tasks to happen. Also, note that the time taken to build this business is longer than the others. Hence, do not think that you can set up this business overnight; it might take around 1 to 2 years to build this business.
3. Write a business plan
A business plan is critical for every business that takes place. And when it comes to air cargo, you have to be diligent and specific while writing a business plan. Mentor consultation and seeking expert advice are must for preparing a realistic and effective business plan.
Following are the components of a business plan:
- Industry Overview – Since the air cargo industry is for both large-scaled investors and small business owners, you have potential in the same.
- Executive Summary – Write about your company, vision, and mission and more about details such as license, names of founders and financers, and other details.
- Products and services – What are your service offerings? Find out an appropriate niche you are interested in.
- Staff employed – Write about the employees, managers, and workers you will need for the organization. Allocate jobs and responsibilities to each member in this stage itself to avoid further confusion.
- Challenges in the industry – The analysis of possible changes in the air cargo industry should be done by you and not through generic research. When you do the market analysis, you will figure out what kind of challenges you will be facing in the future.
- Market analysis – A significant activity, market analysis is a must-do thing for every budding entrepreneur. You not only study the market trends but seek an idea with whom you will be competing in the future.
- Target audience – If you choose a niche, you can find out your target audience immediately. Specify a target audience, or you will not know whom you are selling your services to.
- Sales, marketing, advertising plans – All these are necessary if you want to step into the market and get new clients. Remember that there is no perfect strategy, and trial-and-error is an essential thing to do.
- Pricing strategy and business revenue model – Pricing strategy can be fixed, but you might have to upgrade it later. So, don’t worry whether your pricing strategy is right or wrong. Choose a business revenue model that suits your requirements and not because it is trending in the market.
- Funding – You have to be stringent when it comes to funding, as procrastination can tamper with your business.
- Projections – Set milestones so that you know where you and your business are heading. It doesn’t mean you have to aim tremendously big, but you have to improve with the previous version of yours.
4. Set up the corporation
When you are done with the planning, it is time to take action by setting up the corporation or partnership, depending upon your choice of personal liability. Ensure that you choose a unique business name and reflect enough on your brand image you want to project for future clients.
While setting up the corporation, take care of opening your business account and seeking requisite licenses and permits.
If your state wants you to take additional certifications or licenses, go for it. Always be vigilant while following rules and regulations governing the state.
In conclusion, setting up an air cargo business requires you to be financially and knowledge-wise strong beforehand. But we suggest going for this lucrative opportunity.
To start an air cargo business you need to have a solid understanding of the logistics and regulations involved in the industry. You should have experience in the freight and transportation sector, as well as knowledge of relevant international standards, such as IATA regulations, Dangerous Goods regulations (where applicable), customs and excise regulations and any other applicable laws. Additionally, you should be well-acquainted with the market and know what services are offered by your competitors.
Depending on the country you are in and the services you are providing, you may require a variety of permits and licenses. Some of the most common include an Air Operator’s Certificate (AOC), which is issued by the relevant aviation authority (for example, the US Federal Aviation Administration) and enables an airline to operate. You may also need a freight forwarder license, a security clearance certificate and/or duty drawback accounts. In addition to these, depending on the goods being shipped, you may also require specific customs clearance certificates.
Winning customers for your business involves both proactive and reactive marketing. For example, you may wish to leverage social media platforms such as LinkedIn, Instagram and/or Twitter to reach potential customers, or use search engine optimization (SEO) to help customers find your website. You should also make an effort to build relationships with existing customers, by delivering a reliable and professional service that instils trust. Additionally, it can be beneficial to join an association or network of like-minded professionals in order to expand your reach and learn from the experience of others.
Starting an air cargo business is a complex undertaking that involves a range of challenges. Firstly, you will need to work hard and overcome various legal and regulatory requirements. Additionally, depending on the type of goods being shipped, you may need to identify potential customs and security issues that could hamper your operations. Further challenges include the need to build a reliable and reputable network of industry contacts, and the requirement for a robust financial system that can be trusted by clients and ensure that payments are processed quickly and efficiently. Lastly, it is important to remember that the air cargo market is highly competitive and requires constant innovation to ensure you remain ahead of your competitors.
From a financial perspective, costs will vary greatly depending on the size and scope of your business. However, some of the most common costs associated with starting an air cargo business include obtaining the necessary permits and licenses, covering aircraft, facility and equipment costs, appointing staff, and investing in software or other systems. In addition, you may need to budget for insurance, marketing, customer service, warehousing and distribution costs, taxes, and regulatory compliance.
Developing an efficient operational process should focus on creating an optimized work flow that is tailored to the size and scope of your business. This should include everything from customer onboarding, to cargo processing, transport and delivery. To ensure that all processes are efficient, it is important to develop good data and tracking processes and to employ a customer relationship management (CRM) system that tracks customer interactions throughout the entire supply chain. Additionally, the use of software for automation and analytics can help you better understand and streamline your processes, enabling you to reduce costs and increase efficiency.
A customer-oriented approach is essential for success in the air cargo industry. Taking a customer-centric approach means understanding and being responsive to the customer’s needs and striving to exceed expectations. This should include proactively addressing any customer complaints and issues quickly and effectively, and providing services that fulfil customer requirements and keep them coming back. Additionally, ensuring that the customer experience is consistent, easy to use and tailored to their individual needs helps to build customer loyalty and trust.
Ensuring the safety of shipments is of paramount importance in the air cargo industry. This should start with ensuring that all staff members involved in the shipment process receive the appropriate training and certification, including training in safe handling and loading of cargo. Additionally, all cargo should be packed, handled and secured securely and in accordance with relevant regulations, and routed in a way that minimizes the risk of damage or loss. It is also important to maintain comprehensive policies and procedures for inspecting, securing and protecting cargo, and to make sure that stability control systems, smoke and fire detection systems and other safety protocols are in place in all areas where cargo is stored or handled.
An effective communication system is essential for any air cargo business. This should include an effective way of communicating with customers, stakeholders and other external parties, as well as internal communication within the team. For example, you may need to use an automated system for tracking and tracing shipments, as well as sending automated messages to customers regarding flight delays or changes. Building a strong communication system starts by clearly documenting all processes, developing clear roles and responsibilities within the team and establishing systems for tracking, measuring and analysing performance. Additionally, having good customer service practices in place helps to ensure that customers can easily get in touch and receive a prompt response to any queries.
Several key factors that can determine success or failure when starting an air cargo business include developing an effective operational process, implementing efficient communication protocols, staying up to date with the latest industry trends and employing a customer-oriented approach. Additionally, you need to build a strong financial system, invest in robust infrastructure and technology, create a sustainable logistics network and maintain partnerships with reliable vendors and suppliers. Lastly, it is important to be agile and innovate where necessary, so that your business is in the best position to respond to the ever-changing air cargo industry.