2019 is being called the trucking apocalypse. We’ve seen companies’ bankruptcies and lay-off rates skyrocket, seeing some of the largest, most prominent companies close their door. New England Motor Freight, a New Jersey-based carrier, declared bankruptcy in February, terminated about 2,500 workers including 1,600 full-time drivers. Falcon Transport of Youngtown, Ohio, terminated in April, 600 employees, including 485 drivers. Pennsylvania-based Penske Logistics announced in July that they’re laying off 80 drivers and will close its terminal in Fort Wayne, Indiana. Similarly, a smaller carrier like Timmerman Starlite Trucking, Inc. of Ceres, California immediately closed it’s door this month after forty-plus years of reliable service, with the reason cited as growing costs to upgrade its equipment, and the onslaught of state and federal regulations.
From hours-of-service to E-log devices to fuel emission and drug testing requirements and changes, regulations dictate everything about trucking and its operations. With this, there’s a constant need to upgrade and modernize equipment. to say compliant. Many Companies Lack the knowledge & training needed to comply with regulations.
Trucking Companies may be required to wait as long as 60-90 days for payment from shippers. With mow marker rates, tucks are operating at losses which can exhaust a fleet’s cash flow and restrict growth. While Factoring can turn fleets’ invoices into cash in less than a day, quickly building up their working capital, this incurs an additional cost of 3% to 5% of your invoice value.
Drivers always believe that the grass is always greener at another company, with turn over rates at over one hundred percent in many companies, driver recruitment and retention is a revolving door. As such, companies are forced to recruit and retain drivers, increase salaries, improve benefits and offer performance bonuses and other attractions, even while suffering a deficit.
Because of their sedimentary lifestyle, drivers are twice as likely as other workers to be obese, have diabetes and scores of other health problems. Poor health puts drivers at risk for sleep apnea and other disorders that directly affect the day to day performance. More and More employers are seeking to add health care benefits but with rising costs, they struggle to make premium payments. While there has been moves and programs to improve driver health, this remains a significant threat to the cost of business operations.
Accidents and fatalities have increased in recent years as more trucks and other vehicles share the highways. Many fleets that had accidents would have seen insurance premium increases, with many insurance companies canceling their coverage due to safety risk or giving you a massive quote for coverage. The Federal Motor Carrier Safety Association & the Department of Transportation Regulation rules & regulations are leading to more fines and Closure as companies, smaller companies are not equipped to handle compliance, as they have limited resources and so many challenges to deal with.
Since January, freight volumes have not recovered. The market is plagued with too Much Capacity and the competition has driven the rate to an all the time low forcing carriers into Bankruptcy. The Chinese Tariff went into effect May 9, 2019, and with the USA’s high dependence on Chinese imports, this produced a drop-in freight and has done little to improve the dwindling freight prices. Trucking companies are now forced to run for rates below what it costs to operate, with many of them being forced to sell off equipment and downsize their fleet numbers.
Customer Satisfaction – review your performance and set goals for Improvements, its survival of the fittest. Increase your interaction; a few lunch meetings work great for relationship building. Focus on keeping what business you have and look for new opportunities.
Great time to evaluate your systems & processes. How efficient are my truck routes? How can we save money and be more efficient? Can Technology Help, do I need to Downsize? Can I Hire part Time employees? What are my greatest areas for improvement? How can I improve our process to make our operations hassle-free?
Understand cash is the blood of your business. You have to control cost better than your competition. Understand your company’s overhead expenses, go over each cost and set a goal for saving. Consider outsourcing tasks so you can focus on the core of your business. This can save you 30% to 50% without loss of efficiency.
It’s always best to raise capital even when you don’t need it so that when you do, it will be readily available since the market would not wait for you to do so. Consider applying for a line of credit, establishing a secondary fuel card & setting up a factoring relationship if you don’t have one.
Pay keen attention to driver turn over. There are now a lot more drivers looking for work. With limited opportunities for growth and need for outstanding customer service, focus on tweaking your hiring guidelines to ensure you hire the best possible person for the job. Better screening of a potential hire can reduce turn over and ultimately your recruitment budget. Weed and feed; do periodic score carding replace underperforming drivers with quality ones. Poor service will cripple any business. Listen to your drivers, act on what they say and the problems they have and produce results that are both beneficial to you and your drivers. Also, have driver appreciation events.
Time to Make Money! This is the Last Chance. Focus on setting your operations to take advantage of Short but more lucrative opportunities. Set your Recruitment Goal for Drivers, Secure rental Contracts for trucks, Build your owner operator Networks. It’s a buyer’s market now.