2019 had started strong and then tapered off to yet another slowdown in trucking. Trucking is one of the first indicators of a slowing economy. With a surplus of companies looking for work, weak demand, and economic factors such as a high US dollar and high oil prices, everyone in the trucking industry needs to buckle down to save some money until the industry and the economy gains momentum.
I spoke to a truck and trailer mechanic who offered some suggestions to help avoid extra repair and maintenance costs. Putting off repairs is a big one. Doing regular maintenance may be difficult when driving all day, but it may save you money in the long term by catching a minor problem while it’s still minor, instead of it becoming a major expensive problem later. Driver’s can also do minor inspections such as check for air leaks, go under the truck and check the drive shaft, and check the fifth wheel play. Doing minor inspections can save money and time by finding problems on your own. Spending a bit more on better quality parts up front can save money as well in the long time. For example, buying rubber red and blue tractor to trailer airlines; Rubber airlines rarely break, but plastic freezes and breaks in the winter. An initial higher investment at the forefront can save multiple trips to the repair or parts shop later.
When work is sluggish, taking an extended vacation of a few months is not a good strategy. I have had so many clients go off on vacation with no savings in their accounts and decide to live off credit. They request to miss payments for the sole reason of being on holiday. That’s not an excuse most banks and lenders will deem as acceptable. Not working for a few months in already tough times, and volunteer to go in to debt is not a wise decision at all. Hold on to any money you have and wait to take that vacation later when more money is being made. I had a company owner phone me and tell me that one of my client’s, who is his driver, took a month long vacation, and now doesn’t have the money to do a repair to his truck. The driver demanded the money from his boss and felt entitled it. My recommendation to the boss was let me deal with it and he should not get involved. Making a bad decision will not be looked at very nicely by the lender who gave you money to buy a work truck. You have the truck, so work. If you want to go on vacation, then save the money for several months of expenses first, and then go and enjoy yourself.
Some companies and driver’s are desperate for work. Desperation is leading to poorly made quick decisions, such as accepting a load at less than the cost to operate. Why do something at a loss? This drives rates down for everyone and sets a bad history for future rates. Only accept profitable loads and everyone in the industry can benefit. With a profit comes savings to help get you through the slowdown. Taking losses and overall slowdown is what is currently driving small inexperienced companies into bankruptcy as well as large fleets with hundreds of trucks.
While times are slow, it is not wise to do any major purchases you cannot afford. Equipment prices are sky high. It’s just not profitable to upgrade your equipment when not as much money is being made to cover your higher payment. Taking on a huge payment with low income can lead you to a bankruptcy. Many of my clients are holding on to existing equipment, doing repairs, and making the equipment they have last until the economy picks up. I tell my clients we can get them newer things later when we can be sure they can make the higher payments without stress and still earn a good living.
It’s time to hunker down and cut back on spending in these tougher economic times. You can still enjoy life, but make sure you have the proper funds to do so. If you’re unsure, you may want to see a financial planner to re-evaluate your current financial plan and make appropriate adjustments. It’s important to save some money because if trucking gets even slower, you have something to fall back on and can still pay your bills with ease. Make well thought out and planned decisions and be wary of any calls you get from people asking to do business with you. In slow times, there is a lot of fraud and desperation.
A cold call from someone asking for business that you don’t know, could be an indication that they are in need of money and will do anything to get it without regard to you. So be careful with any financial decision you make and deal with who you know and trust, and try to save those pennies until we hit with the next trucking boom, which is hopefully soon.
