Trucking and logistics companies play an extremely significant role in running the economy of the country. By transporting freight from one end of the country to the other, trucking and logistics companies handle almost seventy percent of the cargo in the US. As the market becomes more competitive and fuel prices continue to rise, the financial challenges for trucking and logistics companies have increased exponentially over time. In order to be sustainable and augment their bottom lines, trucking companies need to plan ahead and stay abreast of looming challenges and threats.
Over the years, trucking and logistics companies have faced and overcome a wide range of financial challenges. Every year, new challenges are posed to these companies. Therefore, it is imperative that the companies continue to identify challenges beforehand and deal with them in an effective manner. Similarly, in 2018, trucking and logistics companies face the following financial challenges discussed below.
The Expected Increase in Fuel Prices
According to the forecast by bookkeeping experts who keep a keen eye on the global market, oil prices are expected to increase in 2018. The heightened tensions within the Middle East, particularly Saudi Arabia, and the increasing conflict between Russia and the United States in Syria have been identified as a catalysts for a spike in fuel prices. The reason why political crisis leads to an increase in oil prices is the uncertainty regarding the supply of oil. If the oil supply or production is adversely affected by any event, it has a direct impact on the oil prices in the global market. Therefore, considering the recent events in the oil-rich middle-eastern region, a significant increase in oil prices is imminent.
As trucking and logistics companies rely heavily on fuel to carry out their daily operations, even a slight spike in the diesel prices can pose a significant financial challenge. Therefore, fuel prices pose a potent financial threat to trucking companies in 2018.
Increase in Trucking Charges
Due to the increased costs of fuel, fleet maintenance, and driver wages, trucking companies are forced to change the rates they charge their customers for transporting their freight. An increase in prices can potentially drive away customers, forcing them to look for cheaper options. Holding onto their current market share can be a real financial challenge for trucking and logistics companies.
Cutting down costs in order to keep the freight charges is also quite impossible. The companies cannot control the fuel prices or maintenance costs. Cutting down the wages of drivers is not feasible as drivers expect to be paid a fair wage for the services they render to the company. In 2018, it will be a great financial challenge for trucking companies to sustain their market share while changing the rates they charge their clients. Fortunately, with effective bookkeeping decisions, trucking and logistics companies can easily overcome this challenge.
Dearth of Workforce
A lack of a qualified and trained workforce is one of the most potent challenges faced by trucking companies. Without an adequate number of drivers to operate their fleet, trucking companies will not be able to meet their deadlines and serve the ever-increasing number of clients.
According to experts who keep track of the industry’s trends, the trucking industry currently requires at least 30,000 more drivers in order to be sustainable. The lack of drivers is predicted to get worse with time. Acquiring such a significant number of drivers in a limited timescale is a serious challenge. If trucking and logistics companies fail to address this issue, it could potentially hamper their operations and ultimately affect the bottom line adversely.
Apart from the aforementioned three financial challenges, there are several other challenges such as a capacity and trend shift towards less than truckload freight which trucking companies have to deal with in 2018. In order to maintain a sustainable business model and continue to make profits, trucking and logistics companies need to take the forecasts into account and make smart decisions to overcome these financial challenges in 2018.
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