In Times of Adversity

Ordinarily I write about lease operator tax issues, but this year deserves at least one column about industry survival. Our firm supplies lease/owner operator consulting in tax and operator related issues. Talking to drivers and accountants coast to coast I get a wide range of views and positions, especially during controversial times. I’d like to supply a word of encouragement.

The trucking industry, as with all industries, goes through business cycles. As entire economies fluctuate from hot to cold and then back to hot again every seven to ten years, so individual industries have good times and bad. The last major trucking bust was in 2001 (give or take). Some drivers may remember both the hiring frenzy boom in the 2005 as well as the fields of parked trucks in 2001. When we’re in times of adversity it’s hard to imagine pulling through even if we consciously realize its all within the “normal cycle of business”.

Seasoned veterans almost instinctively know when to jump in the fox hole and wait out the blasting. Too many rookie operators start pointing fingers and jumping ship, sometimes just over a cup of coffee. In tough periods, the move from one trucking company to another often times is “out of the perceived frying pan and into the confirmed fire”. The grass is usually not greener on the other side of the fence, especially in a drought. Stepping back and evaluating your prospects is the first and most critical of business decisions.

In an economic downturn virtually every company is affected in some way so “looks” can be very deceiving. Owners and managers react to challenging situations based on their internal values and priorities. Crunch time exposes true ethics.

If your considering a change, the first question to ask yourself is “do you trust the owners?”. Placed in a controversy and a squeeze, will the owners act justly and with integrity or will they twist the words and situation to cut people out. These are hard questions to answer fairly because they reflect on our own personal values as well. When we are squeezed are we just looking for someone to blame? Sometimes judging integrity is as difficult as nailing jello to a tree. Don’t be discouraged, but make sure the values you hold are the values the company holds as well.

We’ve heard it said the best offense is a good defense. In a free market service economy those who do the service get the economy. Now is not the time to be picky. Two or three years ago load refusal and personal restrictions may have been tolerated, but today companies may not be able to tolerate that “luxury”. Nobody is talking absorbing abuse, just making smarter choices in a time when good choices are few. Increasing service and performance may be the difference between survival and death. This may not be popular with some operators but the seasoned veterans understand.

Let’s remember, we’re still operating a business. It requires keeping strong customer relationships intact and a lease/owner operator’s primary customer is the trucking company. In a service industry that’s being strangled, surviving operators must demonstrate exceptional service. Trucking companies cannot survive with drivers or operators that don’t produce service. Create your own demand by providing the service that keeps your customer alive.

Some analysts are saying 10% of trucking companies won’t make it till next summer. The best way to keep from trying to collect from a receiver is contribute to the success of your customer. Keep your customer in the top 90%. This may seem like common sense but, like my professor used to say: “common sense is not that common”.