How To Keep Freight Moving With Sustainable Margins in H2
Jul 14, 2020 12:57:46 PM
Many transportationand logistics providers went intosurvival modein Q2,yetdespite a global pandemic, freight continued to move.A majority ofcompanieswere forced to get many, sometimes hundreds – of office-based employees prepared for remote work in a matter of days,andleaned on fast-track initiatives focused on adapting their operations to become leaner, more agile, and more efficient.
FreightWavesMarket Analyst Zach Strickland sat down with DDC’s own Chad Crotty for insight into the surging volumeshitting the roads and to learn what LTL carriers should do effectively accommodate and maximize the benefits of the upward-trending market.
Business continuity and recovery planning areessentialtominimize disruption, safeguard data and ensure the safety of everyone involved in order to overcome the pandemic with minimal damage to operations. These willalso collectively drive the wedge to separate businesses that survive with sustainable margins, and those whose financial performance will barely get them through the holiday season.
Conduct and revisit SWOT analyses with regular cadence;they are likely evolve over time. Conduct market research to learn what actions your competitors are making, and what benefits they are advertising to your customer base.
Document every operational change that has taken place over the last few months. Store this information in an easily accessible location for future use and quick reference as needed. Any back office enhancement implemented on-the-fly needs to recorded for further review and possible standardization.
Review and amend procedures as needed, and document any future variations ofbusinessplans. The IT gap in transportation continues to widen despite the pandemic. Don't give complacency a chance to get comfortable.
Effectively communicate policy and operational changes with team members to ensure all safety and operational protocols are being upheld and executed. Tip: Bring the staff along with you on this journey. Show how vital their role in this process is to your company's success.
Train staff members on new initiatives and conduct exercises to ensure they understand what’s expected of them if a worst-case scenario were to happen. Be open and available to answer questions, address concerns and provide clarity. Let them leave the uncertainty of 2020 at the door (of their home office).
Consider extending stop-gap policies initially deployed as temporary resolutions, like working from home, into more permanent workforce planning strategies forbusiness longevity
Additionally, to protect cash balances from the growing list of retailers filing for bankruptcy,Crottyadvises LTL carriers to closely manage receivablesandtighten credit terms. Many carriers who normally allowbetween 45 to 90 daysto pay outstanding freight bills are now tightening their credit terms to 30 days.
This is a trend we will see emerge as perhaps a new standard across all modes, worldwide. For example, Nelson Sequeira, Singapore-based senior director at X-Press Feeders, recently toldJournal of Commerce,“Yes, we are tightening our credit terms especially for small or proprietorship type of set ups and are also requesting cash up front terms in some cases. NVOs are likely to come under pressure and some might disappear from the scene.”
No one has a playbook for how to navigate through a global pandemic,butcontingency planninganda tighter grip onreceivablesand credit terms is crucial tosafeguarding profitability and liquidity as the economy continues to attempt recovery before January.