This is a contributed post by AscendTMS CEO Tim Higham
Forgive me, but I am a little sick and tired of so-called logistics experts – and the new wave of web TV and social media talking heads – all professing complete bulls**t about where we are in this economic cycle for trucking and logistics.
I have three very good reasons to think I know better than most of them; experience. actual facts, and I’m just right (said with just a hint of sarcasm).
As the CEO of AscendTMS, the world’s most widely used Transportation Management Software (TMS), with over 26,600 carriers, freight brokers, and shippers using our software every day, a degree in mathematical economics, and a lifetime of economic research (it’s a hobby – don’t judge), I can predictably tell you that it’s a s**t show out there and it’s going to get bad. Really, really, bad.
Look, I could write forever on what’s happening on the front lines, and why economic conditions will provide headwinds to our industry like we’ve never seen before. But, I won’t. What I will do is tell you – factually – the top 2 reasons why the future isn’t as rosy as many of the pseudo logistics experts you probably follow on social media. I will then tell you a few ways on how you can weather the storm and come out the other side – alive and hopeful about the profession we all chose (although, it’s still not too late to rethink that move).
COVID-19 isn’t the “cause” of this historic mess. It’s simply the catalyst that exposed it. Look at COVID-19 as “the straw that broke the camels back”, a proverbial one way ticket with no return back to the gold old days.
First, the bad news (and it’s pretty darn bad). In fact, it’s going to get about as bad as it’s going to ever get in your lifetime, your parents’ lifetime, and your grandparents lifetime. But, as I only have so many words allotted to me, let me summarize for you.
• Overall Demand For Everything Is Falling Off A Cliff. It will get worse, because the cliff is getting steeper. The general population was already completely broke before COVID-19 exposed it, and the last 30 years or so of so called “economic growth” came from everyone borrowing money. As I write this, every job created since the great recession in 2008/2009 is literally gone in just 4 weeks. Demand for everything has evaporated, and it will get worse for years to come. People without jobs don’t buy stuff. People in fear of losing their jobs don’t buy stuff. People with family or friends losing their jobs don’t buy stuff. And, the job losses will get worse. We will hit great depression levels of unemployment (let’s call it the “greater depression”) and, once again, unemployed, broke people, don’t buy hardly anything.
• Debt Debt Debt. We are so awash in debt, both public and private, that we’ve become blinded to it. There are two things you need to know about debt. First, borrowing money to buy something today (a car, for example) simply brings your purchase from the future (if had you saved up for it) to the present. So, the choice is, you can either borrow money and buy it today, or save up and buy it in the future. But you can’t do both. So, if people wrack up debt to buy all sorts of things today, then all those future purchases can never happen (unless you can get your hands on even more debt). Well, nobody lends to unemployed people or broke people. We are at the very end of borrowing from our future. Second, public debt (federal, state and local government) is off the charts and getting much worse. While I don’t have time to write a full eulogy on public debt here, rest assured that public debt also has to get paid back so that the borrowing nations currency doesn’t get literally destroyed in the process. History shows us that reserve currency empires generally last 30 to 70 years (the Romans, French, Spanish, British, and now the United States). Todays current United States reserve currency empire is now just over 74 years old today. Now, as all public debt is backed by the government, who promises to take it from their tax payers “down the road one day”, or by other countries lending us even more money – by buying our government bonds, it has its limits. This is especially true when the idiots borrowing the money spend it on unproductive (non- investment related) pursuits. In short, the problem is one of simple mathematics today; we have so much public debt on our books that, mathematically, it’s impossible (absolutely impossible), to ever pay it back to those they’ve borrowed from – which is you the future US tax payer and our foreign creditors. All that debt we’ve amassed was spent yesterday and the day before that. So, any money we would have had for future investments is gone-baby-gone. Worse, the United States can barely keep up with just the interest payments on the debt pile we’ve collectively amassed never mind the doubling of the debt we are in the process of creating.
So, overall demand will be eviscerated – for everything. And, all future money, both public and private (debt) is already spent. Not good.
Hopefully that helps summarize the dire position we are all in. When people stop spending and they can’t borrow more from tomorrow to keep the game going, a series of dominoes drops at an unprecedented rate. Mortgages and loans don’t get paid, so lenders fail (and they stop lending even to their best customers). Renters for homes, apartments, mall stores, and offices stop paying. So, landlords stop paying their mortgages. Again, lenders (i.e. banks) fail. In fact, history shows that the speed in which things go bad accelerates as your friends and neighbors make it “ok and acceptable” to stop paying rent, mortgages, car payments, and other debt obligations (after all, why should you pay your debts if nobody else is?).
Just look at the last few weeks. Just one month ago, a logistics or trucking company announcing layoffs was shocking and good gossip. Just four weeks later it’s “ok” and normal. Four more weeks from now nobody will even notice. So, more companies do it…and with much less hesitation. It’s the spiral of economic doom for everything that we as an economy consume.
So, if you haven’t yet called your local Good Samaritans hotline, let’s look at what you can do in order to hang on to a little hope as the world around you collapses.
Remember, a person with some kind of idea on where they need to get to will always have hope. It’s the actual action of moving forward and not sitting still like a deer in the proverbial headlights of an oncoming car that keeps you going. So, with that said, here are a few seeds of advice, from a fellow human being just like you. • It’s The New Normal – So Accept It. No matter how bad it gets (and it will), complaining and reminiscing about the past isn’t going to make your job situation, business situation, or home situation better. Accept it. It’s gonna suck.
• Cut To The Bone – Now. This is pure survival of the fittest (well, the smartest). Fire unprofitable clients. Collect money owed before others get their hands on it. Cut every cost you have – from what you spend on trash bags to your employee compensation costs. If you are in current business contracts with vendors, renegotiate them today or walk away. AscendTMS business owners tell me that they are already moving to less costly vendors, products, and service providers (yes – those pain in the butt things that you’ve been meaning to do but never got around to). Automate what you can as quickly as you can. Do it today.
• Take Honest Action. If your business won’t make it. Close it. Going further into debt or begging suppliers or employees to extend the pain is fruitless – and it’s lost time you could be figuring out your next real move before everyone else does.
• The End Goal Is Survival. We are very lucky in a way. The logistics and trucking world isn’t going away like some others will. Changing? Yes. Evolving? Yes. But it will remain, and good people like you will be needed to run it and manage it. When the dust clears, you have one goal only; be one of the 10% still left standing, taking orders, providing a service everyone needs, and hopefully, making a little profit for your troubles. It won’t be like the “good old days” – but your goal is to simply survive to tell the tale.
We are in the first innings of what will likely be an extra-innings game. That means this could be a 5, 10, even 20-year exercise of creative economic destruction and the eventual rebuilding process so we can come out of the other side. It will not end quickly. There will be dark skies, then more dark skies (intermittently scattered with clouds and a little sun on occasion).
Finally, I wrote this because I think you deserve to be exposed to what I believe is the hard – and real – truth. Yes, I may be wrong. And, I will probably get panned by Internet trolls for writing or so called newly professed online experts that talk about how everything will be back to normal in just a few months, or that we are headed for a perfect “V shaped” recovery before the economy booms again. But, I fear those are just foolish lies from people with an ulterior motive or some snake oil to sell you. Yes, I may be wrong. In fact, I’d be quite happy to be wrong, but the simple facts tell me otherwise.
So, it’s time to prepare your business, your employees, and your family for the long hard road ahead. Nobody will look after you as well as you can. Nobody.
Look, we were all crazy enough to choose trucking and logistics as our profession, so we already know we have enough heart and soul to not back down when faced with adversity. After all, trucking and logistics was never a profession for the weak. It’s an industry destined for those that take affirmative action when it’s needed and make their own path no matter what obstacles are placed in their way.
Tim Higham is the CEO of AscendTMS (www.TheFreeTMS.com). He can be reached at thigham@InMotionGlobal.com.