Industry Spotlight - Logistics - How Does The “State Of Flux” Affect Your Business?
Transportation, Trucking and the 2021 “state of flux”
During election years, we tend to hear the phrase “state of flux” used as economy and market sentiments ebb and flow. Yet, in the transportation and logistics sector, “flux” is a term we have grown accustomed to each and every year, and it’s easy to understand why. Thus the question now is : “How does the rapidly changing political landscape affect the transportation economy?”
Because of the constant flux in the demand for various goods and services, the trucking industry must always respond, whether it be to the pickup and delivery of seasonal produce, the yearly holiday retail rush, or the delivery of highly sensitive, critical products such as the COVID vaccine. As Shannon Newton, President of the Arkansas Trucking Association states, “Trucking is tangible, real, and it’s everywhere.”
As we move into 2021, not only is our country in the midst of a global pandemic with the vaccine rollout and delivery expected to last throughout the year and beyond, but the incoming administration is making large infrastructure changes a top priority. With a democratic majority in both houses of Congress, a large project of this type does seem very possible. What would this mean for the trucking industry? How could a project of this size impact the value of a trucking/logistics company?
As Newton points out, “90 percent of all trucking companies in the US have 6 or fewer trucks in their fleet.” This means that the trucking industry is itself highly fragmented. With a potentially massive infrastructure project on the horizon, how would these small trucking companies respond? Perhaps some owners would be fearful of increased government regulation, and of the exponential growth in technology leading us towards autonomous vehicles. For these owners, the risk of holding onto their business with may outweigh the potential payoff from a big government award. They may decide to sell their business and free themselves from the constant state of flux. Others, however, may view the next few years as a time of extremely high demand for their company’s services, as well as of massive competition for these government contracts. Needless to say, a trucking company with the ability to successfully execute a portion of an infrastructure project of this size, along with a sound financial and operational backbone, would appear extremely attractive to prospective buyers.
As we enter 2021 amidst this familiar “state of flux,” Resolution Equity Partners is ready to partner with you, helping you navigate your business through this ever-changing environment.
Contact us today to learn more.
Mark Burnett spent nearly two decades in the Transportation industry. He now utilizes his expertise to assist business owners in achieving their goals.