Truck drivers are keeping America running, delivering essential goods to the places and people who need them most. From hospitals to grocery stores, US citizens everywhere owe a debt of gratitude to truckers.
But that doesn’t mean everything is going well for drivers. There’s tremendous downward pricing pressure coming from a wide range of sources. This is not an article about who’s at fault for the pricing headwinds. Nor is it about how to more effectively social distance (something most drivers would agree that truckers invented). Instead, it will focus on how independent drivers and small fleet owners can keep their businesses in survival mode.
There’s plenty of doom and gloom in the industry; click here for a recent example. However, there’s also opportunity.
While the COVID-19 pandemic has created a tremendously volatile market for truckers, the initial outpouring of panic-buying led to a surprisingly busy few weeks to end the first quarter. Ideally, carriers have managed to put some money into their piggy banks, since the initial rush was short-lived. Many shippers are currently holding back loads of non-essential goods, creating pricing pressure that limits a trucking company’s opportunity to make a profit. In other words, there is too much supply of capacity (too many trucks available to move goods) at the same time there is dire need for specific routes and goods to be carried (too much demand).
This is leading to driver protests. In Houston, 75 drivers staged a sit-in, using their trucks to stop traffic along one of the city’s busiest highways. More recently, on May 1st, protests took place all over the US, with “MayDay” slow downs. It is also leading to brokers and BCOs each taking a stab at claiming the financial hardship isn’t their fault. Logistics hasn’t seen a catastrophe like COVID-19 before, not in a global setting that’s built on just-in-time supply chains. While it’s fair for drivers to look for a place to assign the blame, it’s often not the brokers (who are seeing their own revenues fall at the same time they’re looking to keep food on the tables of their employees), or the BCOs (many of which are paying rent on storefronts and real estate that are forbidden from being open).
The short version is that there is a lot of blame to go around, but in many cases, there isn’t a bad actor in the mix. We’re in uncharted territory. That doesn’t, however, mean that truck companies can’t find ways to weather the storm.
Rely on trusted advisors
Many companies get off the ground with the help of a business advisor (or a few of them) that assist with paperwork, insurance, and other basic requirements. These same folks, many of whom have a finger on the pulse of what’s happening across the business world, can be incredibly helpful in finding creative solutions for financial relief. There is a cyclical component to trucking: when prices dip, many of the smaller companies suffer immensely (often closing their doors). Larger companies with deep pockets can dip into savings to weather the storm, and then start to increase pricing once smaller companies are out of the way.
In the last year, this issue has been exacerbated by a freakishly high peak season in 2018. Many small fleets over-invested in new equipment and employees due to a banner year; many of those companies have already shuttered as a downturn hit, and the coronavirus is making things worse. Because of these cascading effects, many small fleets are in dire straits financially.
However, all doesn’t have to be lost. While trucking was largely left out of the $2 trillion stimulus package, there remains a wide range of SMB loans, some of which are forgivable, that can help to keep the wheels turning.
Expand your resources digitally
There are dozens of resources online that can help a small fleet operator gather more information to refine their decision-making process. On LinkedIn, some of the top transportation lawyers are hosting seminars to break down what they see in the industry. Many of the trucking associations are offering advice and resources that range from quickly finding restrooms that are open to updates on when personal protective equipment is available. It’s never been easier for fleet owners to access critical information.
Diversify revenue streams
We’re living in an incredibly challenging environment, and the adage about desperate times calling for desperate measures is appropriate. For fleet owners, there is a very real chance of being forced into layoffs, while OOs risk losing the ability to pay for their truck and insurance.
It’s critical to think outside the box, identifying potential new revenue opportunities. In some cases, this might mean experimenting with a wider range of load boards, including those that are mobile-app based. In some cases, it might mean electing to place ads on the side of a trailer (some companies sell the ad space and handle all of the logistics).
COVID-19 has created tremendous stress on the entire supply chain. While truckers have been available to answer the call so far, there are many business-critical decisions that fleet owners and OO’s need to make to keep their company operating. By relying on business advisors, expanding knowledge via online resources, and diversifying revenue streams, those choices can become a little easier.
About the Author:
Chris North is a development specialist at NEXT Trucking, bridging the gaps between the company’s technology and feedback from its marketplace of drivers. He has nearly 10 years of experience in freight and logistics. Visit NEXT Trucking