Economists are playing the role of buzz-kill once again. That’s right. They are already signaling that a potential recession is on the horizon. A recent survey of chief financial officers by Duke University suggests that most believe a downturn is likely to happen before the year is up.
One of the symptoms of the economy’s future sickness is that we’re experiencing one of longest cycles of growth recorded. Whatever the reasons for the shift, a recession will greatly impact the trucking industry. After all, there was significant downsizing the last time we endured a recession.
So what does the possibility of a dip in the economy mean exactly for trucking? In short, it means independent truckers along with big motor carriers, need to strategize on how they’ll survive this bump in the road. It’s crucial for trucking companies to bolster their balance books, keep their cash flow healthy, and of course, be vigilant with how they spend.
What Are the Challenges in this Environment?
When the economy starts to lag, it leads to reduced truckloads, lower freight rates, revenues, and profits. Consequently, businesses start to trim their employees. But, if trucking companies are smart, they can be ready for these trends.
It’s during these downturns that it’s vital for trucking companies to minimize their unnecessary costs. For instance, by doing an audit on the state of their fleet, they can conduct a cost-benefit analysis and determine what maintenance costs are worth it.
Also, trucking companies need to find a way to motivate their work-force during this time. There will be driver attrition, and it’s wise to get an idea of how many drivers are essential to tackle the company workload.
When the economic outlook gets less certain, it’s a smart play to become a more flexible structure. By being less rigid in approach, companies can take advantage of opportunities that may be develop.
This means when your company encounters other companies who are suffering from the economic downturn, perhaps there’s an opportunity to acquire more truck assets, or even dip into services that weren’t previously offered.
The bottom line is downturns are no fun, but if properly prepared for, the conditions can be overcome. Also, for the smart company this period can provide a platform for expansion unforeseen in a healthy economic environment.