After a two-year boom, the transportation industry has been hit hard by the inevitable economic correction. Spot rates have declined, the number of companies ceasing operations has reached historic highs, diesel prices have eased after sustained volatility, and equipment has become increasingly expensive. All of this is leading to what we hope is the bottoming of the market.

Transportation companies face a quite different economic climate today than they did even a year ago. Certain established companies have decided to park their trucks until demand and rates come back. Worse, some have made the decision to close operations entirely.

This is far from the first market correction to hit the trucking sector. We saw it in 2019, after another historic growth spurt. Yet the sustained demand and heightened rates that dominated much of the last two years made the effects of this latest correction far more impactful to businesses. 

It’s a tough environment, especially for smaller carriers that entered the industry when rates were at record highs. Many of the newer players haven’t experienced a recessionary climate and lack the necessary liquidity to make it through this downturn. Moreover, the prevalence of fraud continues to plague trucking companies of all sizes. The increased number of schemes such as double-brokering have an impact on speed and accuracy of payments to carriers who already struggle to get paid in a timely manner. 

So where do we go from here? With rates bottoming out, revocations at all-time highs and the supply chain normalizing, it appears that stabilization might be on the horizon. In any business environment that experiences fluctuations, it’s vital to provide consistency in everyday operations. This can be achieved through reliance on trusted partners and modern technology.

Now is an optimal time to bring the benefits of automation into the daily lives of financial services companies, brokers and carriers. Automation should supplement, not replace, the use of people in providing great customer service, especially given the high-touch nature of the industry and its heavy load of paperwork and back-office operations. Outdated and complex manual processes slow speed to payment and make all parties in the supply chain more vulnerable to fraud. The addition of automation with human oversight will allow for a more frictionless process for all parties involved in the supply chain, while also providing increased protection. 

Truckers are battling with disparate systems that require many different platforms and applications. All data and technology tools need to be aggregated to avoid application fatigue, uniting everything from services such as factoring and payment processes to route efficiency and fuel-buying optimization.

The trucker’s lifestyle revolves around early mornings and late nights, whether driving or managing the business, so it’s important to meet them where they’re at. Tools such as Zelle and similar services can help drivers manage paperwork and payments, and exchange money during off hours and weekends, rather than depending on the industry standard of wires, an automated clearinghouse (ACH) and fuel cards. The use of modern methods that aren’t bank-dependent will only become more prevalent in future.

It's important to acknowledge that not all trucking businesses want or need the same things. Some just want quick payment at a competitive price. But the vast majority are looking for a consultative business partner that can proactively work with them to offer value at all stages of their business growth. In today’s uncertain environment, business owners need to minimize expenses, and if partners can’t justify the value added for the cost, they could be on the receiving end of some tough decisions as well.

Providing capital is fundamental, but it’s also necessary to cater to the areas that all truckers need, such as credit checks, predictable capital, back-office services, transparency in the funding process and deep knowledge of the space. In the current economic environment, it’s more important than ever to support financial predictability. Factoring companies must examine the total relationship, including understanding volumes and aging, and ultimately serving as a proactive partner to address the challenges truckers are facing.

In today’s transportation industry, there’s a need for striking a balance between reliance on automation and empowering team members to place more emphasis on delivering a consistent customer experience. Increasingly, factoring companies and other financial services providers will look like technology companies. They’ll be aiming to deliver a total experience that feels designed specifically for modern truckers, regardless of their size or time in business.

The transportation industry has reached a pivotal point in its history. The bottoming of the market has created a window of opportunity to revolutionize the business. It’s time we harnessed the right technologies to automate, and begin to exercise nimbleness and flexibility. Most importantly, it’s time that we met truckers where they’re at. 

Tim Valdez is president of the Factoring Division of Triumph.