Various things can pose financial challenges for trucking companies. One is low demand for shipping.
Tepid demand is something the trucking industry has been facing this year. Lack of robust demand for shipping is thought to be one of the significant contributors to the drops in shipping prices that have been occurring. Lowered shipping prices can pose difficulties for trucking companies in connection to their bottom line.
One strategy that some trucking companies have been taking in response to these market conditions in hopes of bettering their overall financial position in the future is cutting down the size of their fleets. The thought is that the weak demand for shipping is creating an overcapacity problem, and that reducing this overcapacity might help drive shipping prices back up.
One wonders what effects this strategy will end up having, both on shipping prices and on the industry in general.
Another thing that can cause great financial harm to a trucking company is their vehicles getting into accidents. Such crashes could tarnish a company’s reputation and potentially expose them to significant legal liability. These are among the many reasons why safety can be such a critical thing for trucking companies to focus on. How much in effort a trucking company puts into keeping their operations safe cannot only impact how likely their vehicles are to be involved in accidents but also what sort of legal situation the company would be in in the event that one of their vehicles did end up involved in a crash.
So, when responding to things like weak shipping demand, it can be important for a trucking company’s well-being for the company to not lose sight of the importance of safety issues.
Source: The Wall Street Journal, “Trucking Companies Pare Down Their Fleets Amid Tepid Shipping Demand,” Erica E. Phillips and Paul Page, Oct. 29, 2016