Updated:
10/30/2009 7:00:00 AM
Opinion: LTLs Can Profit Even in a Poor Economy
By Doug Sartain
President
Shipmate Logistics
This Opinion piece appears in the Oct. 26 print edition of Transport Topics. Click here to subscribe today.
I agree — the economy is bad. Now let’s go out there and make some profit. As excess capacity continues to plague the less-than-truckload segment of the trucking industry with reduced revenues and profits, transportation executives are increasingly frustrated.
By now, most fleets have implemented traditional cost-cutting strategies such as layoffs, furloughs without pay, reduced fixed costs, “deadlined” equipment and wage reductions, all with less than stellar results. They have tried sales rate increases and offers of even deeper discounts in an effort to bolster market share and top-line revenues. Tactics that were effective in prior years are no longer enough to sustain profitability in the present market.
Is the LTL segment of the trucking industry doomed? Of course not. Contrary to popular belief, market conditions are ripe for LTLs to position themselves as “elite” carriers in a very competitive and cutthroat marketplace. And because conventional wisdom has failed to restore profitability, we must look instead to unconventional wisdom, which suggests embracing the current economy instead of competing with it.
For example:
e=4>• Avoid wasting cash flow, time and resources battling variables out of your direct control.
• Abstain from conventional business practices and take an innovative approach that creates profitable opportunities.
• Learn how to maximize your operating strengths to gain an advantage on your industry rivals.
• Challenge your leadership team to develop new business concepts that operate within the framework of your model.
• Streamline your operation’s efficiencies by eliminating discretionary and nonproductive spending.
• Tear down the departmental “silos” that promote contradictory corporate goals.
Following are five specific programs and opportunities available within your LTL operations, sales and finance departments that will improve bottom-line profits immediately. The execution plan for each program goes well beyond the obvious implementation process you already may have tried.
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