Transportation and Logistics: How Are You Responding to COVID-19?
Panic buying — and the resulting need to restock shelves — is causing a short-term surge in domestic freight. In response, the Federal Motor Carrier Safety Administration (FMCSA) is waiving the hours of service (HOS) rule through mid-April. In addition, various media outlets report Asian factories are running at 40% to 70% of capacity, which means prices could increase by 15% or more. Companies without a backup plan are more likely to feel the effects of the coronavirus for the rest of 2020.
How are you doing?
Would you like to talk with an advisor?
The freight market was already stuck in a rut before the coronavirus hit, and this situation will delay its rebound even longer. The best approach is to remain steadfast with a calm and positive outlook. Review your current state and look at the big picture so you can approach the situation strategically and keep your business moving forward. Keep in mind that spot market activity has increased and rates are going up along with margins.
Take these steps to get started
- Align your leadership team — Begin by working through economic and operational scenarios you could encounter. Review the possible outcomes. Then define 48-hour and one-week goals based on the scenarios.
- Help protect your workforce — Initiate call trees and take preventive actions. Support affected employees per the health guidelines provided by the Centers for Disease Control and Prevention and communicate this information frequently. Review employee policies surrounding paid time off and sick time.
- Evaluate dispatch and administration offices — Evaluate and discuss ways to improve productivity in the face of such COVID-19 disruptions as work from home policies, social distancing, and staggering work times to accommodate family conflicts.
- Review route optimization and capacity planning — These are critical for your team and customers. Focus on critical operations and lanes traveled; and be disciplined in the execution.
- Get up to speed on temporary regulation updates — The waiver on hours of service (HOS) nationwide will last until the end of the day on April 12 or until the end of the national emergency declared by President Trump, whichever is sooner. Although the HOS for driving a truck has been temporarily lifted, a driver who has completed a delivery must receive 10 hours off duty if delivering goods and eight hours if transporting passengers. One other provision: a driver who is returning with an empty truck to base after completing COVID-19 relief work can do so without violating federal law.
- Consider your drivers’ health — Drivers who are in poor health could be at greater risk of contracting the coronavirus. If a great number of drivers are affected, it could impact our nation’s trucking capacity. Monitor the health of your employees, drivers, and contractors and consider implementing regular body temperature checks (subject to privacy and screening precautions). Review how labor and employment laws impact the workplace during a pandemic. Then, get familiar with the Families First Coronavirus Response Act.
- Be thoughtful about communication — Customer outreach must be fact-based. Communicate often and let customers know about situations that will impact their business.
- Review working capital requirements daily — Model cash flow, profits and losses, and balance sheet scenarios. Stabilize accounts payable and accounts receivable, and implement cost-reduction measures. Communicate with your bank and keep them informed, knowing earlier is better — get ahead of the situation. Talk to your insurance carrier regarding business interruption insurance.
How we can help
At CLA, our experienced transportation and logistics professionals can help you navigate this disruption, from reviewing your operational challenges to understanding the financial impact so you can make a data-driven, informed business decision.