Are You Ready for a Slowdown?

Last month another USA trucking company, with a large Canadian contingent, went bankrupt. Bankruptcies are up all through our industry in 2019. Many trucking companies are finding business slow and are hiring strategically, or not hiring at all. Are we in a recession or at the very least, a slow-down?

Trucking historically has always been the first into a slow-down and often the first out of the economic downturn. I, for one, believe that we are into one now. Why? We have had a very long stretch of a good economy and the last recession was 2008-09. So, it has been a good time for many years and yet, to me, it didn’t seem so great these last ten years. Trucking has been struggling to get its rates up and other than a short period of about three months in 2017, prices didn’t favour the trucking industry. The shippers seem to have the industry’s number and if your company didn’t match the rate, then someone else would haul the freight for what many believe were break-even dollars.

So here we are at the beginning of a new year. What does my crystal ball have in it? All the signs that I see point to a tough year and not just for trucking but the economy too. In my opinion, this downturn may be a good thing for the trucking industry. Why would I say such a thing? Well, it is going to clean out some of the companies that are marginal carriers; those that keep the rates low. Between this economy and the hard insurance market, I think many trucking companies will not be here to see 2021.

There are two large forces pounding on the trucking industry’s door; the economy and the insurance market. Both will cause casualties and together, they may form one heck of a wallop for our industry. If this is true as I believe it is, then what should a company do?

For the issue of insurance, get your safety house in order. Too many times, the insurance company comes in for an inspection or review and the trucking company is not ready. You need to have your driver files up to date and your maintenance, policies and procedures ready. There is so much that you should have prepared for the insurance safety guy. After all, this is your time to brag about your company and show off how perfect you are and how you try to reduce crashes. You need to put your best foot forward because these inspections are enormous. Many trucking companies have been put out of business by a bad review. Or, it can affect your insurance rate by as much as 20%. Yup, twenty percent. I don’t know about you, but if I could avoid a significant cost item like an insurance increase of 20%, I would be doing a lot of preparation for the meeting. Ask your insurance broker how to best prepare for this meeting or, of course, you can reach out to me.

And how do you prepare for a slow-down? Watch your dollars and cents. This, of course, includes your insurance rates but many more items. Is this the correct time to be replacing your equipment? It may very well be! I say this for two reasons. First, the price may be better than before the downturn and secondly, if your older truck is having too many repairs, then it may be the right time to replace it. During a downturn, often you can get some outstanding deals. So, it may very well be the right time to upgrade some of your equipment.

How about the people working with you? If the economy does slow down, you may have some excellent people applying for work. And I’m not just talking about drivers. I’m suggesting that all types of people in the transportation sector might be available: dispatchers, managers and drivers. It may be the right time to add some terrific people to your organization.

Well, here is hoping that the downturn doesn’t happen, but if it does, be prepared to take advantage of it.

Happy New Year!

Chris Harris
Top Dawg, Safety Dawg Inc.
@safety_dawg (twitter)

About Chris Harris, Safety Dawg

Chris has been involved in trucking most of his adult life. He drove truck for and worked in various office/management positions for a major truck company. His last position of 5 years in the safety department where he was responsible for the recruiting of Owner Operators and their compliance. He joined a trucking insurance company in 2001 and has been in the insurance side of things until making Safety Dawg a full-time endeavour.