Survive to Thrive CCJ Article

Following is a recent Article in CCJ magazine in which Richard Bell was quoted. We found the article very interesting and wanted to post for all to read.

January 2009

Survive to thrive

It appears that 2009 will be an ugly year for trucking companies – and pretty much everyone else for that matter. But the continuing and potentially deepening pain may lead to a severe capacity crunch once the recovery materializes. That’s great news – provided you are one of the lucky survivors. If times are tough or look like they will be, take steps now to improve your odds of being around to reap the rewards.

Maximize cash flow. Work to speed your accounts receivable, and employ every responsible and ethical tactic to push debt and vendor payments to the last possible moment. For specific steps you can take, consult the “How to Manage Cash Flow” manual at www.commercialcarrieruniversity.com.

Tap existing credit lines – immediately. In the current credit environment, some lenders are capping lines of credit at the current balance without cause, says Jay Taylor, managing director of Capital Resource Partners. Consider drawing the maximum availability on any existing credit lines as quickly as possible to create a cash reserve.

Try to work with lenders. Because lenders also are hurting, you may have limited or no success, but it’s worth a try. Taylor recommends asking for considerations such as interest-only for a time, skipping payments or moving payments to the end of the finance contract.

Pare your fleet. “The big issue is utilization – excess capacity, in the form of trucks on the fence,” says Richard Bell, chief executive officer of accounting and business advising firm Bell & Co. “Pay the note payment, or sell the truck at a lower price. In today’s market, a 50-unit fleet may need to be a 25- to 30-unit fleet based on freight.”

Increase freight network density. “Nothing will improve short-term performance more than reducing the scope of a small company’s freight network,” Taylor says. Focus on core customers and lanes that have repetitive shipments. Eliminate shipments to destinations that are infrequent and where there are no core customers.

Hedge fuel. Based on today’s pricing, fleets probably should cap prices on at least 15 percent of their fuel volume for all of 2009, says Brad Simons, president of Simons Petroleum’s Pathway Network. If the price of a barrel of oil drops to $40 or below, fleets should look to cap at least 30 to 40 percent.

Eliminate noncritical expenses. Focus on each dollar spent on items that do not keep the company running, Taylor advises. Eliminate exceptions – even if they affect owners.

Slash overhead. Most carriers could reduce overhead by 30 to 40 percent for a year or two without destroying core capabilities, Taylor says. He suggests offering furloughs without pay, cutting hours for hourly employees, having employees share shifts, leaving all vacancies in place and, ultimately, instituting a reduction in force if necessary. And Bell suggests looking at situations where technology can take over. “Instead of five trucks per one support person, shoot for eight trucks to one support person.”

Watch customers very closely. Don’t forget that the recession may be hurting your customers more than you. Stay on top of accounts receivable and any other indicators of financial health. If you aren’t careful, bankruptcy could not only wipe out receivables but also even require you to return recent freight payments to the trustee. For more on dealing with bankrupt customers, see “Become a critical vendor,” Law, November 2008.

Reduce management compensation. In a crisis, Taylor recommends imposing “voluntary” 25 percent pay cut on the management team to show leadership. At a minimum, shareholders should reduce their own compensation.

Look within the business for solutions. “If your company turns south, fix the problem, but do not throw all your personal funds into the company,” Bell says. “The ship is sinking for some reason, and 90 percent of the time, it is revenue-driven.”

These are tough tactics, but more profitable days lie ahead if you manage to stick around for them.


This article was written by:

AVERY VISE is editorial director of Commercial Carrier Journal · E-mail avise@ccjmagazine.com

Retirement Age Considerations - Social Security Update

Below please find a link which is an informative social security bulletin on the merits of delaying your social security benefits from age 66 to age 70. The benefit will increase 8% if you were born after 1943, each year. With the loss in 2008 of an average 30 to 40% of balances in our respective retirement accounts, the strategy may be to work till age 70 and take advantage of the social security increase by waiting, and use the additional four years to build your retirement back.

http://www.socialsecurity.gov/mystatement/insert2.htm

2008 Bell and Company - Race for The Cure

Here is a picture of Team Bell before the 2008 Susan G. Komen Race for the Cure. At Bell & Company we have all been touched by this disease, we have clients, friends and family that have suffered from this disease. We walk and the guys cheer each year to support that one day they will have the cure for this disease. This is an event that we look forward to each year and allways have a wonderful experience.

Fuel Hedge Strategy

Comments from Richard Bell, CPA/Attorney at Law

Is it time to pull a Southwest Airline hedge strategy? With a barrel of oil ranging between $115 to $120 a barrel, I would advise consideration of using options to protect the possible price upside on barrel of oil priced thru the winter, while leaving the ability to share in the gain, if oil falls below the $115 mark.

In the alternative, discuss with your fuel vendor, purchasing fuel on a forward contract basis, normally done in 42,000 gallon increments.

Whether you hedge or not, you should be on a fuel program with your vendors, at the lower of retail minus rebates, or cost plus.

If questions, or discussion points, let Jeff or I know. You can call 501.753.9700 or e-mail me at richard.bell@bellandcompany.net

Steve Williams - Congress Trip

Steve Williams of Maverick USA, Inc. wrote the following about a recent trip to Congress. He was representing the trucking companies. He also is a local. We wanted to pass this important information.

Steve writes the following:

"Monday I had the opportunity to address Congress on the impact to fuel prices...related to the impact of speculation in the market. There have been several good stories on the subject and one AP story that was misleading for sure. My comments are well documented in the link that the Trucker issued yesterday...which also included a document that I authored titled U.S. Freight and Transportation Sustainability Initiative. My comments to the Sub Committee was that I didn't know what impact that speculation was having on the price of fuel...a previous panel of experts had already attested to that...but I wanted them to know the impact that it was having on my company, the industry and all of the citizens' lives that were being impacted by high fuel prices. I offered statistics about
anticipated failures....Tom Albrecht, etc. I am confident that there
will be additional oversights of the futures trading market....and that is a good thing. Let me know if you folks have any questions."

Below are some links to various news websites on the topic.

USA Today - http://www.usatoday.com/travel/flights/item.aspx?type=photo&photo_id=0bj3eDU0c3ccL&tid=000000000&pn=7


CBS News - http://www.cbsnews.com/stories/2008/06/23/national/main4203863.shtml

Yahoo News -http://news.yahoo.com/nphotos/slideshow/photo//080623/480/188c2320085e4cd7bffbf17f4681a8b5/


Freight Teamsters Blog - http://freightteamsters.blogspot.com/2008/06/trucking-company-ceo-tells-of-diesel.html