Effective cost-reduction is a strategic card you always need to be ready to pull out of your proverbial business pocket.
If you work in transportation, you know the reasons why businesses must sometimes tighten purse strings. The currency fluctuates, fuel costs rise, and suddenly regular routes are putting you in the red. Vehicle maintenance can be reasonable one day and frustrating the next, and new markets appear to create both opportunity and competition.
However haulage companies envision business strategy, many tend to lean toward a network of regular routes as a useful summary of operations. New clients can be pursued but are less able to be controlled in terms of expenditure. Regular routes offer a greater range of flexibility. Investing time into a plan that maps out the logistics of your regular routes, then evaluating this data in terms of options for consolidation pays dividends in leaner times. If you are able to shorten routes, focus on certain clients, or utilise back-up routes you’ll have options to manage rises in fuel costs or sudden drops in net revenue.
Track Return Loads
The business of dead mileage and its mitigation lies at the core of much of the strategising undertaken by haulage companies. Time spent on the road that is not accounted for by clients and their cargo is an out of pocket expense that cannot be sustained beyond a certain point of excess. It is therefore vital that you consider how return loads can be won or lost. Simply increasing prices to mitigate the impact of dead mileage is not enough. Return loads offer an opportunity to not only tighten your belt in meagre times, but also to leverage some advantage when it is more vital than ever.
The psychology of cutting down on expenditure can be stressful. Counting the pennies can be wearying to even the most optimistic of haulage companies. That’s why having a strategy to deal with a narrower market should not just rely on securing revenue by cutting down on investment in business operations. Many small businesses seek to save on that bugbear of cost reduction, staff expenditure, when there is often good reason to restructure costs rather than merely alleviate them. Investment in upskilling when the economy and market are in the doldrums is a smart way to make sure you get the most of your workforce when opportunities again present themselves; this can make up for the losses of costly periods.
Spending money on the ‘back-end’ of the company is a necessity that can become a burden to haulage companies when clients start to dissipate in a slow market. Yet any transportation expert will know that logistics – of both cargo and personnel – makes the difference between a lucky business and a competent one. Rather than cutting investment of time and money into this area altogether, you can explore options for cheaper, yet still effective, logistics systems. Many small businesses are investing in online tools and systems for this very purpose.