How small hauliers can stay in the game during tough times
Rob Hollyman, director at Youngs Transportation and Logistics, shares his thoughts on what subcontractors can do to make sure their operations stay afloat despite tough times.
Navigating a successful path in an industry where profit margins are notoriously slim, and where high demand seldom leads to higher prices paid to hauliers, can be a challenge for even the most established haulier business. Add current market conditions and it could well lead to the demise of many a haulier who doesn’t have generous cash reserves or solid contracts in place.
This is why there has probably never been a better time for smaller hauliers to partner with established, national hauliers who rely on their trusted subcontractors to help them service their existing customers across regions in a profitable manner.
We caught up with Rob Hollyman, director at Youngs Transportation and Logistics, to hear first-hand from one of the country’s largest road hauliers what smaller hauliers should look out for when considering a partnership. Because when these symbiotic relationships work well, they often continue for decades. On the importance of these relationships, Rob comments, “We will stand our own trucks before we stand our subbies because if we stand them for three days, they don’t put food on the table as they don’t earn anything. They will go somewhere else and won’t come back. Hauliers need subcontractors for the peaks and troughs, and the way you treat your subbies needs to reflect that.”
So what should subcontractors look out for before signing up for a contract? Rob highlights the following:
- Seek out a haulage partner that pays a fuel surcharge to their suppliers. Many smaller hauliers have gone to the wall because they were not getting that adjustment for the cost of fuel allocated to them.
- Ask about the payment terms as some pay far better than others, and cash flow is the name of the game.
- Make sure you know what the rate is that you sign up for. It may sound obvious, but make sure you’re not agreeing to anything before you’re aware of what you’ll get paid, as every job has a minimum threshold to be profitable. Sometimes it really is a better option to not take a job.
Of course, in tough times there could be higher availability of smaller hauliers searching for these contracts than there is demand. So how do you make sure that your haulage business will get favoured by the large players? Rob says:
- “They need to be reliable. In our business we won’t tolerate a subcontractor who is not consistently available, because it directly impacts our ability to deliver on our contracts. The best subbies take the long game view and see this as the partnership that it is.
- They need to be straight, meaning everything must be above board, and that includes having the following in place:
- The right insurance. There can be no cutting corners.
- The right systems. Customers want to see exactly where their cargo is, and get delivery progress updates, as well as real-time proof of delivery (POD). Without investing in software, we couldn’t do that, and as our subbies are an extension of our business promises, their systems should support this level of customer service. That’s not just for us. Most of the large hauliers have the same requirements from their customers, so subbies who align to this will naturally be more attractive partners for large hauliers.
- The right processes. This is especially important for prompt turnaround of documentation.”
Other than considering subcontracting as a way of securing a continuous income stream, Rob also highlights several practices that help to keep a lid on costs. Whether you’re a big or a small haulier, you will be burning the cost candle on both sides: on the one hand making sure you’re getting rate increases (not as a means to increase margins but simply to maintain them in these economic times), and on the other hand by cutting costs internally wherever possible. Here are Rob’s top three recommendations:
- “Review fuel prices daily. Having fuel in your own bulk tanks in the yard is not always the cheapest option. Sometimes it’s cheaper to buy it on the fuel card. And remember, the price will differ from one supplier to the next. Make sure you review prices daily, because it really is a case of taking care of the pennies – even just 2p a litre can make a massive difference overall.
- Have a micro focus on costs. In other words, do not take anything for granted – shop around for everything, whether that is fuel, insurance, AdBlue, or any other expenses that are chipping away at your margins. Also be very aware of hidden costs such as debit orders that have been around forever and are potentially slipping under the radar, or processes that can be done cheaper. In this day and age, not everything has to be printed anymore.
- Get the most out of every hour. Anything that shores up processes, saves money. And ultimately, time is money. As a smaller operator, you might have to service your truck overnight, with no time left to sort out PODs. The right software will save you time and money.”
Of course, it never is all doom and gloom. Rob concludes, “I’ve been in this industry for 39 years and I’ve seen it all before. Economies are cyclical and where we are now will change too. The important thing in this industry is to be forward thinking. By consistently following these straightforward tips, you can put your small transport business on a path of sustainability, get ahead of the curve (even if by the slightest margin), and keep your eye on better times when growth might even be possible.
The Future of Road Haulage Report
This article is part of our recently published report, The Future of Road Haulage. Offering a comprehensive industry trends analysis, insights, and advice from industry thought leaders, The Future of Road Haulage equips businesses with the knowledge to make informed decisions and stay ahead in a rapidly evolving landscape.