Utilizing Freight Factoring to Stay Competitive in 2018

Utilizing Freight Factoring to Stay Competitive in 2018

Accutrac Capital 0 Comments

Using Freight Factoring to stay Competitive blog featured image2018 is shaping up to be another interesting year for the trucking industry. Utilizing alternative financial strategies, such as Freight Factoring to maintain positive cash flow will be a competitive advantage. Both opportunities and challenges will be abundant throughout the year. Rising freight rates juxtaposed with ever increasing industry challenges will stimulate a survival of the fittest environment. Great results can manifest with proper planning and resources to meet the oncoming trials the year ahead will bring. Trucking companies that employ financial strategies, such as Freight Factoring, to permit easy access to working capital, will have the ability to invest in the resources and support needed to meet these challenges.

The Good and the Bad

The US economy is predicted to have another healthy year according to the key economic indicators. As long as volatility in the stock markets, NAFTA negotiations, pending interest rate hikes and inflation doesnt curb the economic growth we now enjoy, the trucking industry has good reason to feel optimistic. GDP growth is expected to remain in the ideal growth rate between 2 to 3 percent, and rising freight rates fueled by tightening capacity is setting the stage for improved revenues - good news for a struggling industry that faces further challenges. Cost pressures, particularly around driver related issues, technology requirements and regulatory compliance, will continue to impose difficult conditions threatening profits and sustainability.

Managing the Driver Shortage

The number one concern for motor carriers remains the lack of qualified drivers coming into the industry. Transportation leaders agree that significantly increasing driver pay and providing bonuses are necessary to entice workers who otherwise will explore construction and other trades. Maintaining positive cash flow is essential to have the financial resources to recruit and retain truck drivers.

The Supply Chain is Speeding Up

Speed-to-market has become the top service demand by retailers and manufacturers. Walmart, the largest discount retailer in the world, is implementing aggressive product availability and supply chain efficiencies to combat powerhouse rival Amazon.com Inc. On-Time, In-Full is a program mandating full-truckload suppliers of fast turning retail items to deliver 100 per cent in full on the must arrive date. Items delivered late or are missing will incur a fine of 3 per cent of their value. Early shipments, goods not packed properly and items damaged will also be fined. Disputes will not be tolerated, even extreme weather conditions might not absolve suppliers from this ultimatum. Other major retailers, such as Target Corp. are adopting similar policies. The supply chain as a whole is speeding up as consumer based businesses move to an on-demand model.

Digital Transformation

Freight carriers that do not efficiently track and manage supply chain data will fail to optimize performance and will ultimately lose competitive edge. Cloud-based technology, IoT, and predictive analytics are just a few examples of the innovative technologies that are reshaping the distribution of goods. Investment in technology is an absolute necessity in order to manage the digital transformation of the supply chain.

Regulatory Requirements

Complying with federal regulatory requirements has always been a drain on financial resources and operational efficiencies. The implementation of electronic logging devises (ELDs) is one such example. The cost of equipment procurement, integration and data management is just the beginning. Reduction in driver HOS will have a serious impact on not only freight movement, but will also increase the already severe state of the driver shortage crisis. Having access to the working capital needed to procure technologies, maintain the policy and procedures to stay compliant and grow your driver pool to maximize equipment utilization is essential.

The Big Challenge

The good news is that trucking is an essential service that will always be in demand. The capacity crunch and rising freight rates are a definite advantage to the trucking industry providing a suitable environment to sustain profitability. The big challenge is to maintain positive cash flow to fund operations and fuel growth. Freight factoring is a mainstream financial strategy employed by a growing number of trucking companies to ensure steady, reliable and immediate access to working capital. Unlike a traditional operating line of credit from the bank, factoring for trucking provides the unique ability to increase your access to funds as your business grows. The more invoices you produce, the more working capital you can promptly obtain. With the ability to drop shipment and receive same day funding, trucking companies have the financial resources to meet daily expenses and invest in the resources needed to stay competitive.

For more information about freight factoring, a specialized form of invoice factoring for the trucking industry, visit www.AccutacCapital.com or call: 866-531-2615.

 

 

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