Some trucking business owners long for the old days, before stringent hours-of-service restrictions, environmental regulations, and skyrocketing diesel prices interfered with life on the road. But are today’s challenges preventing opportunities for trucking companies? It depends on whom you ask.
There’s no question that trucking is evolving. Yet at the core of the industry is a steady demand for the movement of most U.S. goods. In 2011, the trucking industry hauled $603.9 billion worth of freight, according to American Trucking Associations data released this April. While the trucking business isn’t for everyone, those who overcome initial barriers through the right innovations and investments can enjoy healthy growth – and gains.
Rising Costs and Increasing Regulations
Gone are the days when starting a small trucking business was as simple as leasing a rig and heading out on the open road. Diesel prices are rising, scheduling drivers is more complex due to rest regulations, and the government is requiring new trucks to be fitted with high-tech (read: expensive) emissions-reducing engines. Not only does keeping up with increased regulations raise costs for operators, but it also limits opportunities by reducing the pool of qualified drivers. The trucking industry is notorious for a high rate of turnover. However, motivated transportation business owners are still enjoying opportunities for growth.
Strength in Numbers
Companies of all sizes have suffered through – and survived – the sluggish economy. But the majority of trucking companies that ended up throwing in the towel are small fleets and owner-operators. By growing just a small amount, many trucking and logistics companies can reduce costs and remove burdensome barriers. While most industries saw a reduction in mergers and acquisitions during the recession, transportation business M&A activity has remained surprisingly steady. Most trucking transactions are strategic rather than financial. By joining forces with existing companies, fleet owners are spreading out costs and increasing capital – resulting in better insulation against inevitably rising prices and frustrating regulations. In addition to protecting against industry changes, business expansion has the potential to increase business value should you decide to put your trucking company up for sale later down the road.
Selecting a Growth Strategy
Strengthening a company through trucking acquisitions isn’t reserved for big businesses with large budgets. With the right strategies and funding sources, trucking companies of all sizes have the ability to grow. If you’re thinking of pursuing an acquisition, experienced truck business brokers can help bridge valuation gaps and smoothly negotiate a sale, resulting in a speedier and more cost-effective deal. With a faster deal comes faster trucking cash flow, so your transportation business can begin reaping the benefits of growth sooner rather than later.