OUR SAY: How to weather a passing economic storm

You need to batten down the hatches for a worsening economic storm. But there are still opportunities out there

By Jason Whittaker

The thing about an economic downturn — whether you call it a recession or otherwise — is it’s rarely ever as bad as economists and the economic commentariat make out. Bad, yes, but for how many in the Australian market has the phrase ’economic crisis’ substantially hit home?

The rickety old businesses which fail to weather this passing economic storm were probably never built to withstand any sort of gale. Smart operators have been preparing for this for some time, or are at least now consolidating nuts through a particularly bitter winter.

Broadly, unkindly perhaps, the decline in freight volumes really is the recession the industry had to have. Australia’s flat-out economy has driven demand for freight services faster than supply chain networks could keep up.

Our roads have deteoriated, rail lines have buckled under extra services, ports are bottlenecked, good truck drivers have been increasingly hard to find. This economic breather gives everyone a chance to take stock and plan for the future.

Operators must have confidence in their business model. A good structure, good planning, good staff, a good, diversified client pool will see most come out the other side stronger and able to exploit the inevitable upturn.

But it’s not too late to take a good, hard look at the business; a line-by-line audit of the books to ensure everything you do, everything you invest in, is for the greater good.

Is every customer, every contract, every route, every truck, every driver paying its way? You can’t afford freeloaders — now more than ever. Better to park a truck than run it on an unprofitable job.

Do you have the best people in the right positions? Laying-off drivers or staff might be traumatic, but running a leaner (but still safe and effective) operation makes sense regardless of the economic times.

What’s more, the pool of drivers is deeper than ever as more company steerers are laid-off, more sub-contractors are looking for work and more industries like mining and construction are letting people go. The driver shortage is likely to ease significantly, giving operators more choice in who they hire. Better quality drivers will save you money in the longer term.

Is the fleet up to scratch? You may have to delay new vehicle purchases, but ensuring your existing fleet is well maintained and running as efficiently as possible is more important than ever. (There are plenty of bargains on new and used equipment, too, as dealers and manufacturers try desperately to move stock. Now, in fact, may be the very best time to upgrade an ageing fleet.)

Fuel costs have eased considerably, but if anything initiatives to save fuel should be ramped up. When times are tough, every litre counts.

There is still work out there. McDonalds says its sales are booming as families look for cheaper culinary outings. Chocolate maker Lindt is reporting huge growth — comfort food in times of economic crisis, economists apparently predict of the nation’s eating habits. Certainly, most of the FMCG space is moving as fast as ever. People will always eat.

Other sectors of the market have inevitably slowed. The current mining bubble, at least, has probably burst as insatiable demand from China and other rampant Asian markets eases (which has also helped drive down diesel costs); construction figures have declined for the last few months and business is reporting little uplift in housing activity despite bigger first-buyer grants; local manufacturing volumes were already falling dramatically before the credit crunch really took hold; sales on consumer electronics and other imports will inevitably slow, particularly as retailers hike up costs to recoup losses from the everything-must-go stock clearance sales pre and post-Christmas.

But all these sectors will come back. The storm WILL pass. Those who remember recessions past will recall transport volumes returned quicker than many had feared. And have boomed ever since.

If road transport is the economic barometer of Australia, it certainly spells short-term pain for consumers and carriers. But transport, as it always does, will underpin the comeback. The smartest will survive, and be the first to thrive under sunnier economic skies.

Have you been impacted by the economic situation? Have freight volumes fallen; is there less work out there? What are you doing to reduce costs and restructure your business to cope? Leave your feedback below, or comment off-the-record via e-mail.

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