Diversification: A COVID-19 survival tactic for transportation companies
Skip Wombolt
Trucking companies in the energy sector are directly feeling the effects of the ongoing oil war and the COVID-19 pandemic. Businesses are being forced to park their trucks and face potential closure, or to consider diversifying their businesses overnight. Switching the primary function of a trucking business, for example from the energy world into the dry freight world, can be very challenging. Without the proper training and technology, diversification can be very difficult to achieve on your own. Many trucking companies are asking, “What do we do?” our MMA teams have been working to find solutions to help clients keep their doors open and their drivers working. Below are several options to take into consideration if your business is looking into new ventures.
Consider Diversifying
“Diversification. It is a tactic trucking companies have been embracing for a while now, as less-than-truckload companies get into truckload, truckload companies get into intermodal or warehousing, and everyone, it seems, is getting into logistics. Dry van fleets launch or buy flatbed or refrigerated divisions and vice-versa. Some companies are even branching out into real estate and solar power. MMA has seen it on a smaller scale, as well. A livestock hauler, for instance, who branched out into selling trailers. On the other hand, there is also the need to diversify the types of customers you have, as many flatbed companies learned the hard way when the housing and auto manufacturing markets both tanked. A headlong rush into diversification may not be the right move for every company, remember to "look deeply" at new ideas, to "do a deep dive" on an exciting new trend. In other words, don't get so excited about new diversification opportunities that you forget to do your homework.”¹
For motor carriers entering sectors involved in the transportation of food, human or animal, or hazardous materials, there are additional regulatory requirements. Food transportation requires additional training for drivers as mandated by the Food and Drug Administration (FDA). Hazardous materials transportation involves significant increases in registrations, insurance and training requirements. To learn more about hazardous materials and food transportation diversification specifics, click HERE. Your MMA Risk Consultant can guide you through these regulatory requirements if you pursue such new business.
Reach out
Leverage your network of trucking industry coaches and specialists to help guide you. Work closely with your brokers, counsel and other advisors to work through the impacts of this crisis. Recently, MMA Insurance Consultant Skip Wombolt, reached out to longtime client, Artur Express, who specializes in dry van freight, hauling clothing, groceries and other essential goods for recommendations and assistance based on their experience. For this sector, business is booming, the demand is high and drivers with power units are needed. Artur welcomed the idea of picking up drivers and trucks to help haul the abundance of loads they are receiving. Sharing this collaboration as an option was an effective solution for keeping trucks and drivers productive. MMA was able to collaborate and assist over 13 trucking companies and keep 200+ trucks and drivers on the road. Through a simple client-to-client introduction, MMA has helped trucking clients stay in business and profitable during this challenging time. The collaboration facilitated by MMA, has allowed trucking companies work together instead of competing against each other. MMA was available in the moments that matter and has enjoyed being able to help them succeed as a true business partner, not just their insurance agent. By working together, building partnerships, building trust and building confidence, we can create a more perfectly balanced transportation network. One that will be better able to handle the ups and downs and the ins and outs of our industry.
