The current crisis has brought forward many challenges for transport firms, as an essential service provider, the question is, can they maintain a safe working environment for their staff? Can its administrative function operate remotely? If possible, can some of the processes be further automated? Has the long term relationships with customers been tested, especially those who are extending credit terms and seeking cost reductions, even though in some cases this is being used to maintain or improve their bottom lines and liquidity?
As a rule this crisis will provide enough Government and Bank support to see transport firms through that have a firm operational and financial footing. High margin firms by their very nature will avail of all supports and retain margin the best, regardless of niche market they operate in. They will begin to swallow up supports and cut costs as their ethos has always been to maximise profit, it’s a business not a pastime.
This Coronavirus crisis will highlight the huge demands running a transport business has on its owners. It’s a business that has shown time upon time that if the owner is not at the helm and keeping the business efficient and competitive, it’s difficult to make a margin and so very easy to lose significant amounts of money in a very short time.
In the short-to-medium term, disposal of assets is not an option or if undertaken will incur significant costs, unless the fleet was at overcapacity pre-crisis. The best advice at present is hold assets, reduce insurance and holding cost by way of asset finance interest and view how the sector of industry will bounce back and when.
Certain elements of retail will not return, consumer spending on large ticket items such as cars and household appliances will remain to be weak, even when this crisis lifts. Indigenous Irish agricultural products may be stronger than ever but a weak tourism sector (coach tourism may be hit for many years) and depending on the Government focus, a strong building industry may all be realities post-crisis.
What is crucial to business decisions now is in the belief that the business can survive this crisis. Gather all the help and assistance to work on this, then see at what point, that it might be better off shutting shop, retaining some of the hard earned wealth generated and move on. Long delays in proper decision making or inability to adjust to the new norms means a lot of money wasted. Donal Dempsey