What's your strategy for a deep recession/depression?
 

Maybe you don't like to think about it, maybe you think that is too much negativity.

I've been hearing a lot about a serious downturn looming, the lastest is Kevin Rutherford talking about economic projections for the industry.

In America, because some freight has to move, or people die, there is sure to be at least some trucking even in the worst of times. Long gone are the days when the whole nation can live off the land and hunt and fish if they need to. Trucks move or people die, pure and simple.

But, in very bad economic conditions, which trucks move? I'd think owner operators have to be most vulnerable, since no one has a commitment to us. A company can cut owner operators and it costs them nothing.

I'm also thinking that the largest carriers with the most accounts will still be moving some freight even after many others have closed there doors. And, what trucks will they be using? Not owner operators. If the freight is really limited, they'll keep the company trucks moving and cut the O/Os first.

How reasonable does all of this sound? I just had the thought today, I wouldn't mind taking a company job with a major carrier. I'm thinking we're approaching a time when it's important to have the most reliable income possible, let someone else worry about cheap freight and a lack of freight, and even be eligible for unemployment if things really tank.

Sorry if this sounds too pessimistic, that's not my intention. I do think there is a potential for things to get worse than it's been since the Great Depression- I'm not crying, just thinking. I'm not giving up, I'm considering strategy.

Thoughts?

The high-cost producer sets the price during boom times, and most competitors make money. In difficult times, the low-cost producer sets the price, thereby controlling the level of competitors' profit margins.

What if prices keep dropping precipitously?

Strengthen the bonds of loyalty
To help customers get back on their feet after the terrorist attacks, hundreds of companies, offered price breaks, from automotive services to advertising, even though it meant taking a financial loss.

Pay special attention to your employees. As the downturn becomes more severe, employees will feel added stress. Your efforts to support them will reap benefits for the company—friends in a foxhole often become friends for life.

Be a good vendor. Get close to customers; unless you're looking to exit your business, now is not the time for running short-term profit schemes. Clear-eyed expectations and strategic contingency planning will reassure them that your company can be counted on in a recession.




from automotive services to advertising

I'm looking for a big co. job. I thought about my own truck again, but it's just too scary right now. Lay low & wait for the winds to shift.

But then I got a really weird call from the recruiter where I'm supposed to be starting work this morning. At lunch I was reading the WSJ and there it is, a story about how bad the transportation industry is right now, complete with a quote from the CEO of my supposed new co. saying how they are laying people off, when they are usually hiring at this time of year.

Maybe I don't have a job.

You need to put a driver on that step-deck Mike, & go sailing for few months......lol

Some good economics talk, here. I thought about your first statement and it does seem true about the high cost and low cost producers. Of course, all the high cost producers are out of business when the low cost ones are setting the rates.

Now, that makes me think. I'm a relatively low cost producer stuck in a not so great contract. Maybe I could hold fast where I am while others are coming down, I might even still be around when many others are gone...the wheels in my head are spinning. Seriously- no truck payment; lower expectations than the guys with the plum jobs right now; and I sit better than most, as long as I can wander off into the cyber world- the politically conspiratorial youtube videos I've yet to get to!

The rest of that mostly applies to employers which I am not. There are quite a few on the board like that, though.

Isn't that interesting! You still hear companies advertising for drivers. I've been filling out applications for tanker jobs but I guess I'm not good enough for most of those &%#*ers! :moon:

I don't know how many people realize it, but within a matter of months there could be almost no one advertising driving jobs! Advertisements for jobs could be a memory, a thing of the past. I'm not saying it'll happen a couple of months from now, only that if a sharp downturn does come, things could change very rapidly.

Interesting article on Traffic World the other day - logistics managers are concerned about what happens when the economy eventually does come back around. Large companies are chopping their fleets (JB cut ~1300 road tractors recently) so when things do come back around there is going to be a sudden lack of capacity. Some logistics managers are actually aware they could negotiate cheaper rates than they are getting right now but have instead chosen to maintain the rate they are paying in order to build loyalty from their transportation vendors. The idea is that if they take care of the transportation companies right now, when capacity is short after the economy turns the transportation companies they have contracted with will then return the favor and take care of their most loyal and trustworthy customers (and also not jack the rates TOO much on them).

Fascinating! That's an optimist, anyone already looking at the other side of the downturn. I'm preparing for a mulitple year malaise, the depths I have no idea.

Not much, from my point of view....
O/O, cost nothing to company, if he is not running. Well, almost nothing, at least compare to the company trucks.
..As of to my "strategy"... To be honest, it didn't changed much, from a "good times";- Run profitable, keep your expenses as low as possible,(doesn't mean skip on a maintenance), maintain a sizeable reserve...

The only difference is, that i could except a bit lower profit margin, in exchange for a bigger gross. In another words, I'm trying to work a little harder, but still within the reasons....

My wife and I ditched the huge mortgage, new cars in the driveway and name brand clothes for a simpler life eight years ago. My current financial situation can be done on one income provided the costs are kept down which being in this industry for twenty four years has taught me well.

If I do have to circle the wagons I'm fairly confident that I will make it.

I always thought it was cheaper for a company to have O/O's than company drivers. If that's the case, then I would think a company driver can be replaced by an O/O.