While we adjust a little bit more each day to our new normal during this unprecedented pandemic, there are ever-present signs of the critical role of the trucking industry.
With the uncertainty of what each day is going to bring and the important role, trucking plays in delivering food, medical supplies, and other goods. Having the funds available to haul those loads can be a big concern.
To learn more about how the pandemic is impacting the financing available to trucking owner-operators and small fleets, we talked with Jeremy Robison, President at Tetra Capital, a trucking invoice factoring company, to get his thoughts.
Q: How is the COVID-19 pandemic impacting Tetra Capital and your ability to offer financing to trucking companies and owner-operators?
A: “Right now, it is business as usual for us. We are still able to get our clients paid within hours of delivering their loads and financing new clients. However, we are being extra careful with checking the credit of our client’s brokers and shippers during these tough times. We anticipate many brokers and shippers (large and small) could have financial problems in the coming days, weeks and months. We expect this will increase their average days to pay by a couple of weeks. This means everyone will have less money coming in during these tough times.”
Q: How does the increase in average days to pay impact the trucking industry as a whole, and what impact does it have on your clients?
A: “The bottom line is that payment terms are going to be extended. This means most companies will have less cash flow to pay their bills, and money will not be coming in as quickly as we are used to. This has a significant impact on trucking. Especially since most of our costs are paid upfront and during the actual transportation. This includes fuel, permits, driver pay, equipment maintenance, etc.”
Q: Is there anything different you have seen over the past few weeks due to the pandemic?
A: “Yes! At first, we saw a spike in demand. Last week we saw a significant weakening in demand and opportunities for freight. We also expect equipment prices will continue to soften. When times get tough, we have seen many companies “sell-off” excess equipment to help with cash flow. When this happens, there becomes a high supply, and prices soften.”
Q: What obstacles are you seeing or anticipating will impact the trucking industry?
A: “Honestly, the COVID-19 virus has made everything a total mess, and I’m not sure we really know how bad it might get. However, from everyone I talk with and everything I read, it is safe to say there has been and will continue to be contraction and slowing in freight. In fact, today I read an article that said spot freight loads decreased 39% from last week. That is not good for the small carriers. Fewer loads and more people fighting over the same freight drives down pricing. Although to counter that a bit, we have seen fuel prices drop significantly, and they seem to be continuing to drop.”