Transportation Companies and Today's Economy

Uncertainty should not be used as an excuse not to plan.  Company management must still develop short-term and long-term strategic plans for their business.  These plans may need to be revised as events unfold, but having an initial structure in place to work off of is critical.  Opportunities exist during an economic slow-down to emerge better positioned and stronger than the competition.

Some things for transportation to consider when developing strategic plans include:

1.  Focus on the balance sheet

• Set benchmarks and financial goals to improve key financial ratios and measurements such as Debt to Equity and Working Capital.
• Manage accounts receivables – immediately address any billing or collection issues.
• Incorporate the capital expenditures budget into your balance sheet model.

2.  Keep fixed costs in check

• Prepare a budget and monitor regularly.
• Determine that no variable costs are buried in with fixed costs.
• Be prepared to take quick action to reduce and keep costs in line with revenue.

3.  Monitor variable costs  

• Address any fluctuations in cost per mile.
• Drill down cost per mile into manageable segments; labor, equipment, fuel, etc.

4.  Driver retention

• Outlook in to early 2013 indicate the driver shortage will remain near the 100k level.  HOS pressures come into play during 2013 and could push the shortage near 250k by the end of the year (source: www.TruckGauge.com).
• Assess driver recruitment, retention, and compensation policies.

5.  Keep succession in mind

• Identify key employees and individuals being developed to fill those key positions.
• Identify merger or acquisition opportunities.

6.  Review internal controls

• Ensure proper checks and balances are in place in the office and field to safeguard cash and other company assets.

For more information or to discuss strategic planning for your business, contact Bergan Paulsen.