Staying Ahead of the Curve: How to Maximize Competitiveness by Investing in Transportation Resources
Never before has the transportation and logistics category seen so much change as it has in the past two years. From the way people work and go to school to the way they shop, travel and spend leisure time, the face of transportation been drastically reshaped based on how people and industries do business. And in addition to navigating these external pressures, many transportation and logistics providers have been challenged to redefine their day-to-day operations.
With extraordinary pressure to meet the needs of businesses and consumers as they become more demanding in their expectations, the industry has been rapidly expanding, while also being challenged to remain competitive and profitable. Typically, competitiveness has come down to cost and reliability, but with new headwinds at play, companies are finding that profits can quickly diminish if strategic investments are not made.
From the equipment finance perspective, ensuring competitiveness begins with three main steps every company can take to ensure they stay at the top of their game, while also ensuring maximum profitability.
Smart Expansion to Prevent Shrinking Capital
Historically, the transportation industry has been unlikely to invest in newer fleets. But with an influx of upward demand and the critical need for fleet expansion, businesses can be tempted to look at the latest and greatest equipment available and dedicate large swathes of capital resources to the cause. Forward-thinking asset management is key and that begins by taking stock of resources to help maintain that upward trajectory.
Solid banking relationships with experienced equipment finance teams can help educate borrowers on the many different and flexible structures available. From leases and loans to setting longer loan terms to save liquidity and even leveraging OEM opportunities that facilitate future trade-ins, lenders have become a critical resource in helping protect and boost revenue potential within the transportation and logistics field.
Reinvesting in Existing Fleets
When looking at competitiveness, many businesses worry about needing new inventory to expand their service capabilities without understanding the versatility of their existing fleets. Investing in maintenance and refurbishment can not only extend the life of a fleet, but also increase productivity, better liquidity and allow capital resources to be deployed in other critical areas. Keeping vehicles in good working order will keep maintenance costs down and reduce the likelihood of what can become costly breakdowns. Fewer breakdowns mean fewer late pickups and delayed deliveries.
Plan for the Future
Plan, plan, plan! It is more important than ever to understand at what age on average equipment begins to cost more in maintenance and down time than is economical over both the short- and long-term. This is when a banking relationship can come in most handy. Savvy equipment finance groups, whose members have decades of experience, can help gauge both functional use and profitability of an existing fleet, as well as help businesses plan how to use various financial resources, such as leasing and or guaranteed trade-ins to manage and plan fleet replacement cycle.
For more information about how Western Alliance Bank’s Equipment Finance Group can help you plan ways to maximize your competitiveness by investing in your business, connect with Brian Scott, Managing Director; or Lance Waller, Vice President:
Brian Scott: [email protected], (602) 296-6649
Lance Waller: [email protected], (615) 337-0650