NZ TRUCKING ASSOCIATION - Coming out the other side of Covid-19

Tuesday, August 18, 2020

So, how long before things settle down and we see the ‘new normal’, whatever that may be?

New Zealand has always depended on the trucking industry to deliver its essential supplies, food, medical supplies, hand sanitiser, beverages, and household goods (including toilet paper) and a whole range of consumer goods. It is just that for many people they did not realise how important the trucking industry was to their daily lives until the Covid-19 pandemic came along. This has been the trucking industry’s time to shine, and shine it has thanks in no uncertain terms to the men and women behind the wheel of many trucks across the country who have kept New Zealand moving through this crisis. The effect of the Covid-19 pandemic on trucking operators has varied across the sectors. Those who had been carrying freight for supermarkets and essential services businesses had never been busier, putting extra trucks, trailers, and drivers on the road, and were well placed to come out the other side of this crisis. Then there has been the other extreme, the trucking operators servicing the hospitality, tourism, retail, and logging sectors (to name a few) who had been basically parked up during the level 4 lockdown. Many had been struggling to keep staff employed, put food on the table, and meet their financial commitments, and had fast used up what little cash reserves they had in this traditionally low margin industry. Even now that the country has moved to reduced level restrictions, some of these trucking operators are going to struggle for a long time yet. If they are one of the lucky ones whose customers are back up and fully trading, they will still have to carry themselves financially, covering the cost of wages, fuel, RUC and other business expenses until they get paid, which could still be some time yet.

Then there are the trucking operators whose customers are casualties of the Covid-19 pandemic, who will never reopen again. These trucking operators may have stranded assets that were set up for specific customer requirements. They will have some stark choices to make – can they find alternative work for this capital equipment? Can they reinvent their business into a different sector? Do they try and sell this capital equipment at a substantial loss? Or will they also become a casualty of the Covid-19 pandemic? So, how long before things settle down and we see the ‘new normal’, whatever that may be? That is certainly the milliondollar question that everyone in the trucking industry is asking. The economy is heading into uncertain times, that is for certain, we just do not know what the effect is going to be on the trucking industry. Some are predicting that unemployment is going to increase dramatically and that some businesses will close permanently. If people do not have a job, they are not going to spend money, so this could mean that less freight will be moved. Now is the time to protect your cash for the long road ahead, so that you can come out the other side of these uncertain times. The old saying ‘Cash is King’ has never been truer than it is now. This is a time to do what the trucking industry does best, rolling up its sleeves, being innovative, and getting on with the
challenge at hand.

This is the time to look at your business models and see if they are structurally sound. It is time to rewrite your business plan and reinvent your business to suit the ‘new normal’. This is the time to readjust your rates to a more sustainable level, as the trucking industry low margin model is no longer sustainable. The days of cutting a competitor’s rate just to get the work are long gone and are a fast race to the bottom. But first you need to truly understand all your business costs. If you need help with this, the New Zealand Trucking Association can assist. Association members enjoy free access to the association’s industry-respected business cost modelling service. This will accurately detail your actual costs so that you fully understand the rates you need to be charging to be financially viable. Now more than ever is the time to belong to the New Zealand Trucking Association, as we are well placed to help you navigate your way through these challenging times, with sound industry-based advice, cost modelling, significant industry experience, compliance, advocacy, tools and resources, networking opportunities and substantial cost savings.