How New Trucking Businesses Can Overcome Common Challenges
Establishing a business in the trucking sector all but guarantees demand for your services. There will always be products that need shipping, and if you position yourself correctly, your drivers could be the go-to guys for the job. The trucking industry is highly lucrative—which makes starting a business in this sector a very tempting prospect for many.
Of course, like with most industries, operating in the trucking sector doesn’t come without its challenges. You need to carefully review all the most common obstacles relating to workflow, logistics, freight, and shipment that lie ahead before taking the plunge and opening your business. If you do things this way, the difficulties that lie ahead won’t sweep you off your feet. You’ll have already learned about them in-depth, and will be prepared to implement effective and viable solutions to combat them.
Here are five of the most common challenges that trucking businesses face, and how you can overcome them to ensure success in this competitive sector.
1. Long Turnaround Times
Most businesses pay you immediately after completing a job. Some sectors have even normalized paying a portion of the contractors’ fees up front. However, the trucking industry operates differently. The sector offers its clients a credit system instead, allowing them to pay 30, or even 60, days after they have received their freight.
As you may already know, this is a rather long turnaround time by any industry’s standards. It can be tricky to manage the timeframe between delivering products and receiving payment for your services, especially if your company is relatively young. As a business owner in the trucking sector, you essentially have to fund the delivery, pay the driver, fuel costs, and other charges a month or two in advance before receiving payment from your clients.
So—how do you go about addressing this challenge? It might seem like taking out a loan is the easiest solution, but most experts actually advise against it for three key reasons:
- You may struggle to get a loan approved in such a short time. Instead of waiting until the loan is approved, most customers will approach other trucking businesses and take their money elsewhere.
- If you receive a loan, the high interest on it will most likely take a hefty chunk of your profit.
- Your bank may not be willing to loan you enough money to fund all of your clients. This is especially true if clever marketing campaigns have attracted numerous new customers who all want to hire your services in the same month. Even if your fleet is large enough to service them, you may not be able to cover the upfront costs of all of these orders, even with the assistance of a financial service provider.
Consider invoice factoring as a more effective solution. Reputable financing companies will buy your invoices directly, then wait for them to become due before collecting the money from your customers.
2. Heavy Industry Regulation
Government and regional watchdogs have dozens of strict laws and regulations to keep trucking companies in line. It’s in your best interests to follow these regulations closely, as they help make the industry safer. Plus, you could face monumental fines if you don’t!
Solution-wise, there isn’t much you can do to minimize the paperwork, additional expenses, or time expenditure needed to license your drivers and fleet properly. However, what you should do is make it as clear as possible that you understand all applicable laws, and that you’re complying with every one of them.
You won’t need to pay violation fines if you keep within the confines of the law, and you’ll also significantly reduce your legal liability should an accident happen that involves one of your trucks.
3. Sluggish, Outdated Workflow Approaches
Trucking companies that aren’t using automation software to handle their workflow could face a myriad of avoidable challenges in their day-to-day operations. Workflow automation and document management software are the keys to streamlining paperwork and keeping your business running smoothly behind the scenes.
Using a document management system allows you to capture and securely store important data like shipping documents, invoices, proofs of delivery, bills of lading, and customs documentation. You can also search for these documents based on index values and keywords, and your software can extract information from scanned documents to assist with the proper routing of crucial files.
Better still, the robotic process automation (RPA) modules built into modern document management systems boost your business’s efficiency by automating numerous repetitive, rule-based, and time-consuming tasks. This innovative approach will keep your company from falling behind the competition and bring it in line with the approaching future of the trucking sector.
4. Hefty Fuel Costs
The cost of fuel has a tendency to vacillate regularly. This means that when fuel prices are low, your bottom lines will be higher—but the road can get rough when facing unanticipated fuel price hikes.
You need to implement a fuel efficiency plan for your business to address this common challenge and ensure your drivers adhere closely to its guidelines. You can also apply for fuel card programs to take advantage of diesel discounts and other cash-sparing services.
5. Finding Enough Drivers
It might come as a surprise, but many trucking businesses struggle to find enough skilled and trustworthy drivers to keep their fleets active. There’s actually a notable shortage of truck drivers in the United States, which further exacerbates the issue.
Turnover rates are also exceptionally high in this sector for several reasons. Even if you have enough drivers, many will call in sick often, particularly if they don’t take good care of their health. The most common health disorders that affect truckers include obesity, diabetes, heart disease, and sleep apnea. Mental health issues are also common, as stress, long hours alone, and time away from family can take their toll.
When you’re looking to hire reliable drivers, the best way to go about it is to offer an appealing salary with bonuses and benefits. You can retain your trusted drivers by rewarding them with working conditions that will make them want to stay with your business. Their health should be your top priority, too. Consider enrolling your driver team into a program that promotes better fitness, nutrition, and health for truck drivers.
A Profitable Road Ahead
The trucking industry has its challenges, but none are impossible to overcome.
This can be a highly rewarding and lucrative sector to establish a business in, as long as you do it the smart way and stay aware of the potential challenges that you will most likely encounter. Act proactively to address them, and your business is more likely to thrive, come rain or shine.