After a difficult stretch during the recent economic downturn, the transportation industry has made a comeback, entering into what many are calling, “the best market ever.”
Factors providing capital to the transportation industry can capitalize on the growth and stability of this sector by leveraging current market conditions and understanding the industry specific needs of their transportation clients.
A Golden Era in Transportation?
Many variables affect the stability of the transportation industry. The overall health of the economy, in combination with government regulation, fuel prices and the health of related industries (i.e. construction, manufacturing, retail), work in synergy to create a transportation market that is accelerating, decelerating or flat.
After a few unsteady years during the recession, the faltering economy, high fuel prices, tight government regulation and a host of other factors battered the transportation industry. But after this difficult period, experts now suggest the outlook for transportation is quite positive.
As is often the case, the economic downturn and its challenges paved the way for what many see as the best market in transportation since the 1980s. Better yet, economic indicators suggest this isn’t simply wishful thinking on the part of industry insiders.
Orders for heavy Class 8 trucks and tractors rose to their second highest level on record in October of 2014, and trailer orders reached a new high that same month. Fuel prices are down, and there is a shortage of drivers.
In today’s capacity strained market, transportation and trucking companies are scrambling to recruit drivers. This forces carriers to compete for drivers by paying better wages, and offering bonuses and benefits packages to attract quality drivers.
Drivers who make more money find themselves in a position to buy more commercial equipment and expand their businesses. In this way, driver shortage, which many see as a negative, feeds and further expands the stability and profitability of the transportation industry as a whole.
Demand for Factors
There’s never been a better time for factoring professionals to explore the transportation sector. Whether you’re serving large, midsize or small carriers, transportation companies who want to grow in this profitable environment need access to flexible, dependable sources of capital.
Hitachi Business Finance works side-by-side with factoring and business professionals to provide flexible lending solutions to the transportation industry, and has seen the demand for factors that fund new or small to mid –size transportation companies grow.
Economists remain optimistic that the overall market trends in transportation will make this industry a strong bet for 2015 and beyond. Production of Class 8 units in North America, an excellent measure of the health of the transportation industry, is projected to rise through 2015. These numbers are forecasted to remain strong well into 2016 and beyond.
Despite these encouraging numbers, transportation companies seeking capital are still struggling to secure flexible, dependable funding from traditional lenders. Even as the overall outlook for transportation improves, banks have not responded by loosening their loan requirements.
This makes transportation an excellent fit for factoring professionals who are ready and willing to provide loans for start-ups and transportation businesses of all sizes, giving them access to the flexible capital higher lines of credit they need to grow. Hitachi Business Finance partners with wholesale lenders to provide factors a complete tool kit of solutions, all designed with you and your clients specific needs in mind.
Beyond Cash Flow: Marketing to the Transportation Industry
As carriers profit, they increasingly turn to factoring to grow their businesses. This is great news for factors, but also means many more factors have joined the industry, all looking to serve the needs of transportation clients.
So how can a factor stand out and effectively market to transportation professionals seeking financing? The foundation of a solid lender relationship begins with trust. To develop that trust, start by providing the best education on factoring, specifically aimed at your transportation clients. To develop trust, your clients should understand the fundamentals of factoring, and know you’ll be transparent, trustworthy and ready to answer any question they might have.
Studies show that consumers use the Internet to self-educate. This is true whether the consumer is researching cars, houses or potential factoring relationships. Rather than contacting a broker or factoring professional to ask questions directly, count on potential clients to research your services online, then compare you to the competition, all without a face-to-face interaction.
In order to stay ahead of your competitors, you’ll need to provide excellent online education so that your firm appears trustworthy, credible and customer service focused. But you’ll also need to demonstrate a deep understanding of your clients needs, and offer unique services that complement your financial offerings. To stay ahead of the pack, you’ve got to go above and beyond what everyone else is offering.
When a fleet manager or anyone in the transportation industry searches your company online, they should be met immediately with an easy to navigate, professional website. The content should be well organized, easy to understand and provide a wealth of useful information. Your website should focus not just on factoring, but on issues relating to the transportation industry as a whole.
When designing your factoring website and creating content for blogs, eBooks, podcasts, etc., begin by thinking about what headaches your transportation clients face on a daily, weekly or monthly basis. How can your financial products and services solve these problems better or faster than your competitors? How you demonstrate the answers to those questions online will help you grow your client base exponentially.
Begin using your online presence, across all social channels (Facebook, LinkedIn, Twitter, etc.), to educate and engage with your transportation clients on issues they care about. Show them you are a company who understands the issues they face, and who wants to help them grow and prosper.
Industry Specific Trends
On a the most basic level, your website and all marketing materials should show your clients that you understand their financial needs, but are intimately aware of industry specific trends that affect their bottom line.
You can accomplish this by addressing the specific challenges of professionals in the transportation industry with unique offerings. Fleet managers care about securing lines of credit and finding factors that will provide fast, reliable cash flow. But they are also deeply concerned about day-to-day business challenges that go beyond the basics of factoring. Having a factoring website that provides an all around, easy to understand education on transportation factoring is just the first step in building a relationship with your transportation client.
The factoring company who goes above and beyond the financial side of transportation sets themselves apart. For example, transportation companies need up-to-the-minute information on fuel prices, cash flow management, driver retention, invoicing and collection, credit checks, maintenance and repair and route planning. Create an industry specific blog and address some of these issues with current research.
Successful transportation factoring businesses have also experimented with offering services that compliment factoring, including: back office processing, collection services, online credit history checks, free credit checks on brokers and shippers, fuel cards with discounts on fuel and services at truck stops, online account management portals with 24/7 access, mobile factoring apps and more.
Providing capital is only the first step in creating a lasting relationship with your transportation industry client. The more value you offer in terms of education and services, the more likely your client will trust, refer and continue to do business with you in the future.
Hitachi Business Finance builds relationships based on mutual trust, helping clients find working capital solutions to meet their specific needs. We look forward to helping your company grow, giving you access to our full complement of financial solutions.