It’s not often that one opens a newspaper and sees nothing but good news. In fact, most of the time, you can count on being depressed at the headlines and their seemingly endless record of doom, gloom and despair. But not this month! Looking at several recent issues of the venerable weekly newspaper of trucking and freight transportation, Transport Topics, this blogger was struck by the fact that most of the headline news lately has been exceedingly good for the transportation industry. What does this mean and how should shippers react?
Truck Sales Surge 24.5%! Trailer Orders Soar 86.2%!
Diesel Average Drops 2.1¢ to Lowest Level Since February 2011!
Strong On-Highway Markets Boost Suppliers’ Third-Quarter Earnings!
Rush Revenue Surges in 3Q on Robust Sales! Fleets to Post Higher 3Q Earnings on Rising Rates, Strong Economy!
These actual headlines, taken from the last two issues of TT are peppered with unmistakably bullish terms like “soaring”, “surging”, “robust”, and “strong”. Clearly, these trends and indicators all point to solid growth and the continued expectation thereof. So what should we take away from this preponderance of good shipping industry news? Surprising no one, we suggest that this groundswell of good news portends the perfect time to engage a new transportation management system or to revisit your existing logistics IT solutions with an eye toward improvement.
In the years following the great recession of 2008/2009, organizations of all types battened down the hatches, cut spending to the bone and hunkered down to ride out the long hangover of economic collapse. This certainly was not a time most companies felt comfortable about new projects requiring any capital outlays. Between 2010 and 2013, recovery felt unreliable with growth coming only in fits and starts and gains being quickly given back. In sum, seven years have passed during which it seemed imprudent to implement new transportation management and optimization tools.
Now that things are on the undeniable upswing, organizations may be tempted to forgo a new TMS implementation, rationalizing the decision by noting that they’re too busy to focus on such things at the moment. This is a bad plan. Here are three reasons why the current environment virtually demands taking on a new logistics IT solution project now:
- With business booming, the cash flow more likely exists to do this now. Whereas during the slump there simply wasn’t enough business volume to justify the project (let alone the cash to do it), today, you may be much better situated to absorb the costs. The savings captured from the drop in diesel prices alone is sufficient in many cases to cover the modest cost of a new solution.
- About said costs, it is important to note that the SaaS or cloud-based delivery model for TMS and optimization tools drastically lowers the cost of implementation and thus, the barrier to entry. In fact, some logistics IT providers even offer the option to amortize implementation costs over the first year of the contract (or even longer in some cases).
- More tractors, more trailers, more freight, fewer drivers. With growth happening in all the right areas the lack of growth in the numbers of new drivers entering the industry becomes an even more dire problem. While companies cannot force drivers to materialize, they can be more efficient and effective in their load building and shipment planning so as to reduce the numbers of drivers needed – whether within their private fleets or via common carriers.
The sun is shining, so now is the time to make hay according to the old proverb. Taking steps to improve business processes and practices during good times prepares companies to sustain themselves during the inevitable return of hard times.