How do Supply and Demand Impact the Market?
Supply and demand is the most significant factor impacting the market. Although other forces can impact a changing market, supply and demand explain many market changes. For example, when there are more loads than trucks, freight rates will increase, but the inverse is also true. The freight rate will go down when there are fewer loads than trucks.
Supply and demand can impact more than just freight rates. Often people will join the industry when demand is high. For example, in 2021, when freight rates were high, over 100,000 new carriers jumped into the industry. This shifts the market by changing the number of trucks available, lowering the demand for carriers.
What happens to these new carriers when rates go down, and other expenses go up? Some find it difficult to stay in the industry in times like these. Here are some tips for how to stay afloat in a changing market.
Cut Costs
When freight rates decrease, you may find your operating costs overwhelming. Try to find ways to cut down on expenses. Saving money on fuel by picking the most efficient route or by finding ways to get discounts, like those through a fuel card, can help a lot. Another expense to monitor is your maintenance costs. Never skip out on regular maintenance or tire replacement in favor of saving money now. This will create more expenses down the line or could create safety concerns. Also, look at your insurance to ensure you have the best plan possible.
Overpaying on regular operating costs can make it challenging to stay afloat in a changing market, so try to stay on top of what you are paying.
Know Your Market
Put in the work to ensure you get the best rates in your lanes. Keep track of who pays the most per mile and what locations work the best for your business. It may seem like a lot of work to keep such careful track of this information, but every cent counts, and getting the best business you can is key to staying afloat in a changing market.
Avoid Debt
It may seem tempting to take on a little debt to pay operating costs, but this strategy can make it challenging to stay afloat later. Interest rates and market volatility can make it difficult to pay off that debt and add more expenses down the line. It is much better to find a good factoring company to help you pay for your expenses now with the money you are making from your loads.
Consider Your Options
If you have already spent time cutting costs, have done market research, avoided debt, and are still struggling to get by, there may be more important things to address in your business. Maybe one of your trucks often sits for long periods and isn’t as valuable an asset as it should be. You may consider selling this truck to pay for operating costs. This won’t help with expenses long-term, but it can help you get the money you need quickly in the short term.
It can be difficult to make decisions about the future of your fleet, but you may want to consider leasing on to another fleet and selling your trucks for the time being. This will lower operating costs and help you to get to a place where you can plan to start your own trucking company again when you are ready and the market shifts in your favor.
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The England Carrier Services (ECS) division offers various services for carriers ranging from maintenance to support. As ECS members, carriers have access to nationwide discounts on fuel and tires from dedicated team members committed to finding the best price. ECS also provides factoring services with benefits such as same-day funding to a bank account or fuel card. These options allow carriers the freedom to focus on growing their business while saving time and money.