A container shipping business requires in-depth knowledge of the shipping, container and logistics industries. Your containers are your business, hence, you need to know the logistics associated with efficient utilization. Your shipping business can encompass the continental United States or reach internationally. If you are shipping containers internationally, you will need a sophisticated logistical tracking and management software in order to maximize profits.
Structuring the Container Shipping Business
Begin by establishing the company name, developing the logo and setting up the legal business structure. Your attorney and financial advisor can assist in determining whether you should be a C or S corporation or a limited liability company (LLC) and in drafting your articles of incorporation and bylaws. Obtain your business address and apply for your EIN. With this information, open your bank account, which is necessary for accepting wires. Also set up a merchant account to allow the processing of debit and credit cards.
Draft your business plan and develop your financial projections. This requires a great deal of research into the various elements of your business, such as -- shipping, pricing, logistics, laws and container requirements. Develop pricing for shipping and container leasing. Identify competitors, market size, marketing and sales strategies and also indicate the amount of funding you will be seeking from investors. Develop your financial projections to determine gross and net profit margins, burn rate (amount of cash spent per month), operating capital and the use of funds.
Purchase shipping logistics and tracking management software. This is a must in order to track the location of your containers and keep customers updated as to where their shipments are in the pipeline as well as track payments. Logistics and containers are two most important elements of your business.
Purchase containers, equipment, trucks and a warehouse site with plenty of open land for container storage. This site should have direct rail access. If your site does not have rail spurs (a rail line directly onto your property), contact the railroad or your local economic development authority and it will assist in bulidng a rail spur onto the property. The warehouse will house equipment and provide a place to do repairs on containers and equipment. You will need high-lifts and a loading crane to load semi-trucks and railroad cars.
Obtain shipping contracts or "letters of intent." Try to establish a long-term contract with a few companies. You can then use the contract(s) to raise capital. The shipping and container business is a capital-intensive business and will require raising outside capital. Banks do not invest in start-up companies. Develop your two-page executive summary and 20-page Power Point presentation for investors. Present the amount of capital needed, a detailed use of funds, consolidated financial projections, exit strategy and your management team.
- Look at leasing equipment and land, and writing the lease payments off for income tax purposes. This will lower your start-up capital requirements. Also, buy used containers. This will indicate to investors that you are conscious of capital expenditures.
- Raising capital from investors will require special securities documents and you can only solicit capital from "accredited investors" -- investors earning $200,000 per year with one million dollars in assets excluding their home. You must also comply with state "blue sky" laws and the Securities Act of 1933 and 1934, as well as regulation D. Use a qualified business and securities attorney.