It seems like every day there is more and more talk about a second shutdown. From news stories to a recent article by the American Trucking Association’s top economist that “a second shutdown is the worst economic scenario.” So what does that mean for trucking owner-operators and small fleet owners? How can you financially prepare for a second shutdown?
With a second shutdown looming but with no crystal ball to tell us when and if it will happen, carriers should consider taking every opportunity to work now while the work is there since you don’t know when things will change. That might mean skipping holidays and other days off. However, it could give you some extra funds to put away just in case you need it.
The more funds you have saved away for a rainy day, the better off you will be if we experience another shutdown. In addition to taking every opportunity to work, you can also make sure you are taking every opportunity to save money. This includes ensuring that you are taking advantage of all the discounts and services available to you. This is especially true when it comes to fuel discounts and fuel planning. By planning routes (where to fuel) and using discounts available on fuel and fuel cards, you can save thousands each year. For example, we offer a free fuel card to all our carriers. However, very few take advantage of the discounts and use the card. We know that some have a better option with a larger fuel discount, but I know the majority do not use any type of fuel card and do not get discounts. By not using these discounts, in good times and bad, carriers are just throwing money away.
Taking the time to ensure you have good relationships with lenders and other service providers is also very important. Bob Costello, chief economist and senior vice president of the American Trucking Associations (ATA), specifically mentions how lenders can be the difference between success and failure if a second shutdown happens in his article Second shutdown is the worst economic scenario, says ATA’s top economist, in American Trucker. A good, established relationship can be the key to getting your lender to help you through economic challenges. This can also mean building new relationships with lenders, such as a factoring company, so you can complete the application and be approved well in advance of needing any funds. This will ensure once you need their services that you can get funding within hours instead of having to wait for the application process to be completed. If you chose to do this, it is crucial that you select a partner such as Tetra Capital, who does not charge an application fee because then you really have nothing to lose. Establishing relationships with other service providers, such as mechanics, that could close down or reduce services with a second shutdown is essential too. You need to ensure you have a good, established relationship with those who you might need assistance from in an emergency such as a mechanic. In the event that they have to reduce their hours and/or workforce, many will find time for those they know first and getting the assistance you need can be critical to your business.
With all types of businesses struggling to stay afloat through this economic crisis, it is critical to the success of your business to ensure you have a way to do effective due diligence on brokers and shippers. Having a way to know their ability to pay, on an ongoing basis, is that much more important when economic times are tough. The easiest way to do this is to partner with a trucking factoring finance company such as Tetra Capital because they will manage the due diligence for you. This due diligence will let you know if your brokers and shippers payment history is favorable and also if it is changing over time.
There is no time like now to look for ways to diversify what you haul and the industries you are hauling for. This can have a few benefits from increasing the number of loads you can haul now and in the future to not tying you into an industry that could be hit hard in case of a second shutdown. We all know that in the first shutdown, different industries were drastically impacted in different ways. For example, the restaurant industry came to a virtual standstill, but the grocery industry held steady.
While we all wish things would go back to normal and a second shutdown won’t happen, we have all seen how unpredictable this pandemic and resulting economic crisis has been. We hope that these tips for financially preparing for a second shutdown can help your business succeed in these trying times. If there is anything we can do to help, please give us a call at (801) 676-0182. Our trucking industry experts are here to help in any way we can.
