The haulage business crisis (and some ways to survive it...)
Over the recent months the number of contacts I receive containing the words ‘help’ and ‘crisis management’ has increased and looking at the number of haulage, transportation and freight forwarding companies going out of business that is probably not a surprise.
Someone wrote to me: “We’re missing your analytical presence…” we need help fast.
CNBC reported (at the end of 2023) that “the global freight recession will continue in 2024” and one shipping and logistics blog called 2024 a “trucking bloodbath” 1). As if we needed more proof, hardly a week goes by where there isn’t another LinkedIn post mourning a transportation company going out of business.
The reasons for the very challenging transportation market are, by now, well known so, I will not go into re-capping those here but; how is it that some companies manage through a crisis and others don’t survive?
To put that at the beginning: There is no “silver bullet” here. If there was, then this blog would be called “how to avoid a crisis” but that is exactly the nature of it: Crises just happen and hardly ever can they be “managed away.”
Crisis Management versus Disaster Recovery
The internet is full of crisis management plans however, in my opinion, they are mostly disaster recovery plans and fail to differentiate between crisis and disaster and that’s why they don’t work here.
What’s the difference?
Whilst disasters happen unexpected and create a state of emergency, the nature of possible disasters is usually limited. For e.g. flooding, severe storms, power cuts, even war; a business can prepare a set of guidelines, a plan, and preventative actions how to safeguard lives and continue the business albeit in a restricted fashion because it is known what impact the disaster is likely to have. The only thing not know is the if and the when.
In a crisis the usual coping mechanisms (early warning; preparation and prevention; damaged containment; recovery) fail because both the nature and the impact of the crisis are not known.
Therefore, there isn’t an awful lot that one can plan per se, but there is a set of actions though that can help to manage through a crisis (not manage it). I have had to put those into practise on several occasions over the years and successfully so.
The ‘Set of Actions’
There are three key words that will recur in the actions below: ‘Fast’; ‘afloat’ and ‘sink’.
Be very, very fast.
A business needs people to manage in crisis – I’m deliberately not saying ‘manage the crisis’ because if it could actually be managed it then we’d be back to disaster recovery… - and these people cannot be involved / no longer be involved in “day-to-day” management of the business. They need to focus on the crisis. Choosing them in advance will save vital time and help to be very, very fast. This will be easier for large businesses than small and medium ones but it needs to be done nevertheless. Not knowing who to turn to in a time of crisis is one of THE key reasons why especially smaller businesses fail in times of crisis. If there is no resource for crisis management in the business then go external (I know – a lot easier said than done not knowing what the crisis could be and you don’t want to go public about this; but a short list of trusted people suited to manage different situations will already gives a head start.)
Short decision processes (the fast theme continues…) are vital for both, large and small organisations. In a large organisation it is likely you can no longer afford the usual process of sign-offs in multiple layered decision bodies. In a smaller business the 1 or 2 key decision makers are likely to be overloaded so, to at least have an outline of who can make what kind of decision either on their own or in conjunction with someone else will help to be fast and effective. Practical example: I once worked with an organisation that, due to a regulatory change, now required a new operating license to perform a vital part of its business and changes to the operating platform were necessary to fulfil the obligations of the regulatory change. The IT team had been working on this for a while but had, so far, been unable to deliver. Time was running out very fast and there was no time to come up with, yet another, plan. So, I did 3 things: 1) I got onboard a former colleague who I knew to be an absolute IT expert and who, crucially, was not involved in the day-to-day running of the business. 2) I replaced the lengthy weekly updates involving lots of people and many pages of powerpoint by a daily 30-minute stand-up meeting requiring just a few key people and no documentation. 3) Decisions were made right there and then and the effectiveness of those was checked the next day (the latest). Not all decisions were the right ones but, at least, that was then known 24 hours later and not a week later. This rhythm was new to the people and it was daunting for some to be held to account on a 24-hour time table. There was the occasional emotional outburst and that’s when leaders need to demonstrate that they have empathy. After a week of, at times, tense stand-ups the first success and progress became apparent and what started as being daunting became actually motivating. The changes to the operating platform got done, the operating license was granted. We got there because of the right people and because we moved fast.
Every business has customers & suppliers. So, who will help you to stay afloat and who might sink your boat? Every business has at least two types of customers and suppliers; the ones that have an interest to keep your business going (for whatever reason) and the ones who just don’t need your business (also for whatever reason). Categorising them and making a communication plan for both categories will not only save time (you’ve guessed it – be very, very fast…) but it will inject some much needed support in times of crisis on the one hand and it will reduce the risk of the crisis being emphasised on the other. Another real life example: A business had to suspend part of it’s operation that many customers, large and small, relied on to be provided on a daily basis. There were not many alternatives for the customers so, not being operational actually put considerable strain on their businesses. Their reaction ranged from being very concerned to outright anger. We either called or met with as many customers as we could not only to explain the situation in more detail but also to find out if the customers would return, once we were operational again, or not. That then gave us our ‘afloat’ and ‘sink’ lists and we deployed different communication and information strategies for both and the net result was that the ‘afloat’ customers returned the minute we were operational again.
A bank is, technically at least, a supplier but the relationship here might well be different from that a business has with suppliers of fuels, equipment or materials. Hopefully, the bank of the business in crisis will belong to the ‘afloat’ category of suppliers but even if that that is the case; the “terms of engagement” are not quite the same as with other suppliers. Banks need (and they like) plans even in a crisis situation where there is only a set of actions. Thinking ahead here might be very difficult but having categorised ‘afloat’ and ‘sink’ customers and being able to produce a decision(maker) matrix will be helpful.
The business in question may already have a set of good KPIs but the crisis may well require some different, or additional, KPIs and some of those may have to be produced with a high frequency – hourly is not uncommon. Visibility is key!
As with customers, suppliers and banks there will also be ‘afloat’ and ‘sink’ staff. Staff adds another dimension though: There are likely to be employees that the business needs to stay afloat but some of those employees could be the first ones to leave the business in a time of crisis and, as a consequence, ‘afloat’ then can turn to ‘sink’. Thinking of ways how to address this can also be done before a crisis occurs. I would recommend to be honest with the employees. Most, if not all, will know that the business is in trouble anyway and not communicating anything about the situation (and the steps that are being undertaken to deal with it!) will just introduce uncertainty which almost always results in staff resigning – and, usually, that’s the most valuable people first…
Finally: “Never let a crisis go to waste.” (Winston Churchill). If the crisis is not entirely a result of the business’ own doing then there are other businesses experiencing the same situation. So, is there anything the business can do to convert the crisis into an opportunity?
All easier said than done?
Yes, of course it is. But it can be done!
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