Posts

Trucking and Logistics Companies - Complete Controller

In the current globalized business environment, logistics plays a vital role in trade facilitating and has become a key element in business operations’ success. However, due to volatile customer demands and complex business models, it is tough to streamline logistics management.

According to a logistics study conducted in Capgemini, cutting transportation costs tops the list of the most challenging issues faced by logistics companies. Some other historical points make the list, but perhaps the biggest concern is the need for more significant technology advancements and innovation without exceeding the budget. Check out America's Best Bookkeepers

Top 6 Challenges Facing Trucking and Logistics Companies

Fuel Costs

Unsurprisingly, fuel costs pose a significant challenge to logistics companies. The industry is unable to keep up due to the recent rise in fuel costs, especially diesel. These high fuel prices are likely to affect transportation costs in the U.S. in the form of increased fuel surcharges.

After ranking 1st in 2005, 2nd in 2006, and 3rd in 2007, fuel once again attained the top ranking. Though motor carriers in 2008 aggressively sought to recoup fuel cost increases with fuel surcharges, the industry could not keep pace with the unprecedented rise in diesel fuel costs.

Economy

Along with the revolutionary increase in fuel prices, other issues such as the credit crisis and rising inflation are harming the U.S. economy.

This crisis has resulted in increased regulations, stringent compliance laws, decreases in demand, and, most importantly, the increase in marginal and fixed costs, further reducing the logistics industry’s profitability. Check out America's Best Bookkeepers

Improved Customer Service

Gone are the days when people used to wait weeks for their shipment without making any inquiries. Customers now want real-time transparency on their delivery, such as the exact location of the shipment.

Courtesy of the advanced technology available, the location of shipments is as linked as social networks. Therefore, trucking and logistics companies must also bear the expense to facilitate these online services, which can be very expensive and time-consuming, especially for small and mid-sized companies.

In addition to that, surveys show that most customers are not interested in paying for services like express delivery, further hampering profitability.

Environmental Issues

The majority of average corporate CO2 emissions occur in the supply chain, which has increased the requirement for more transparent and accountable practices from logistics companies. Furthermore, anti-idling laws and other environmental-related initiatives taken by the local and state government poses the threat that compliance will exceed their benefits.

Onboard Truck Technology

The rapid advancement in technology, as we previously discussed, has created many challenges for trucking and logistics companies to stay up-to-date with upcoming promotions. Though these latest technologies seem attractive, their implementation can be quite challenging.

Additionally, the costs related to the ELD (Electronic Logging Device) Mandate is also a significant cause of concern for the industry. It is not clear how productivity will be affected by ELD’s deployment and how the collected data will be used. Check out America's Best Bookkeepers

Driver Shortage

Until trucking companies implement tesla’s automated truck, the requirement of quality truck drivers remains a perennial top issue of the logistics industry.

The recent optimistic prediction of the trucking industry shows that truck drivers’ demand is going to surpass the supply by around 50,000 drivers. This figure can rise to 175,000 in the next five to seven years.

Conclusion

These are only some of the challenges faced by trucking and logistics companies. Issues like driver retention, HOS (Hour of Service) regulations, and growing scarcity of truck parking further increase problems faced by the already competitive and rapidly changing industry.

In light of these issues, cutting a few corners will not help much for logistics companies. They will need to adopt a strategic approach to eliminate the bottlenecks and improve their business processes, which will consequently reduce transportation costs. They may outsource their essential functions (like bookkeeping, payroll, etc.) to focus more on strategic decisions.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
Trucking and Logistics Companies - Complete Controller

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 another, 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. To be sustainable and augment their bottom lines, trucking companies need to plan 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, companies must continue to identify problems beforehand and effectively deal with them. Similarly, in 2018, trucking and logistics companies face the following financial challenges discussed below. Check out America's Best Bookkeepers

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 catalyst for a spike in fuel prices. The political crisis leads to an increase in oil prices due to the uncertainty regarding the supply of oil. If the oil supply or production is adversely affected by any event, it directly impacts the oil prices in the global market. Therefore, considering the recent developments 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 diesel prices can pose a significant financial challenge. Therefore, fuel prices pose a potent economic threat to trucking companies in 2018. Check out America's Best Bookkeepers

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 to keep the freight charges is also quite impossible. The companies cannot control 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. In 2018, it will be a tremendous 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. Check out America's Best Bookkeepers

Death 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 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 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 severe challenge. If trucking and logistics companies fail to address this issue, it could potentially hamper their operations and ultimately affect the bottom line adversely.

Conclusion

Apart from those above three financial challenges, several other challenges, such as a capacity and trend shift towards less than truckload freight, which trucking companies had to deal with within 2018. 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.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers