The transport and logistics sector is facing a tricky problem – how to balance rocketing consumer demand for goods, delivered increasingly quickly, with challenges posed by Brexit and increasing competition.
In this market, SME operators can find things particularly challenging, with what seems to be a race to the bottom for pricing putting a squeeze on margins. Whilst businesses across the board have various strategies put in place to manage this, the key element of any successful plan is creative thinking.
Price driven strategies come with a risk, as more pressure is put on the business’ cash flow, which needs to be constantly managed to ensure it does not become stretched to a critical level.
Who is your ideal customer?
Successful profiling can help to de-risk the business, allowing key customers to be identified, and strategies put in place to ensure the relationship is managed in an appropriate manner.
Business Structure
Expansion and upscaling
Looking at value added services is also another way that the SMEs have been able to compete with larger players. For example, a high-end client may be willing to pay more to a haulier whose vehicles arrive on site in exceptional condition and whose drivers are knowledgeable and well presented. Similarly, provision of superior security services can be an excellent way to differentiate if looking to work with high value cargos.
Businesses looking to carve a niche for themselves should explore the delivery of specialist goods such as hazardous chemicals, live cargo, or medicines, which also could provide them with the opportunity to demonstrate value. These operations are likely to require the use of custom transports such as refrigerated trucks and will be subject to regular temperature checks or health and safety measures during transit. Smaller firms able to demonstrate that they can provide this level of compliance and assurance have the potential to go after and capture higher-value business opportunities.
Attract and retain your T&L talent
Brexit
Acting sooner rather than later is essential and if operating within the EU forms an integral part of a business plan, SMEs should start looking to restructure now. This may take the form of opening branches or depots on the European mainland or even setting up subsidiary operations near the border to minimise disruption if customs checks become more onerous.
SME operators have some tough challenges ahead but with a bit of courage and confidence, they can find ways to compete with the dominant players. By embracing technology, exploiting advantages and thinking outside the box, scaling up and growing the business is entirely possible.
For further information, please contact Andrew Galliers on 01489 566745 or email agalliers@menzies.co.uk