Coping with Seasonal Fluctuations in the Freight Industry Using Freight Factoring

The freight market tends to be a precursor to consumer sales cycles. Before big buying seasons, the freight market sees a boost as wholesalers and then retailers must get products in stock. During times of the year when consumer spending drops off, there tends to be less freight.

For trucking companies, these highs and lows can be difficult to deal with. Busy seasons can make it difficult to keep up with demand and slow seasons can be difficult to weather financially. Freight factoring can help in both of these instances.

Understanding Seasonal Fluctuations

Freight, just like the industries trucking companies serve, is seasonal. It naturally ebbs and flows throughout the year. Even from one type of freight to the next, peak seasons may vary.Check out Express Freight Finance’s MarketFit updates to stay on top of the latest happenings in the freight market.

Peak Seasons

Peak seasons are when there is more available freight. Thanks to fewer trucks to go around compared to the number of loads available, peak times often mean higher spot rates and therefore more lucrative loads for trucking companies.

Peak seasons tend to fall before major holidays and after harvest times for crops or produce. Late summer and early fall tend to be some of the busiest seasons for supply chains and therefore trucking operations. However, there are smaller peaks throughout the year that correspond with less dramatic retail peaks or regional

Off-Peak Seasons

Off-peak seasons tend to have less freight to go around. With plenty of available trucking capacity to manage the available loads, spot rates tend to creep downwards, leaving less room for trucking companies to turn a profit.

January through March tend to be some of the slowest months in the trucking industry thanks to a traditional slump in consumer sales after the holidays along with the winter months being slower for agricultural freight.

The Role of Freight Factoring in Managing the Highs and Lows

Steady Cash Flow

Improving cash flow is one of the most valuable things that freight factoring can do for a trucking company when it comes to ebbs and flows in the market. A slow season doesn’t empty the bank accounts if money is always coming in rather than waiting 30, 60, or even 90 days for invoices to be paid.

With freight factoring programs like Express Freight Finance’s DropPay, trucking companies can get paid for loads 24/7 – 365. Seriously. Receive payment INSTANTLY once you drop off your load, and click submit. Call 855.DROP.PAY to learn more.

When cash flow is good, whether the freight market is up or down, a trucking company has the security of knowing they can move on to the next load without worrying about covering fuel costs, repairs, or maintenance.

Stability

By smoothing out cash flow and keeping money coming into a trucking company consistently, freight factoring can help bring a much-needed dose of stability. That stability means a trucking company doesn’t need to worry about having the capital to run lucrative loads, they can stay up to date on their bills, and ensure employees are paid on time. Stability can also allow room for small business growth.

Adding to the stability factoring can help establish, technologies and additional services offered by freight factoring companies like Express Freight Finance’s load board access can help trucking companies maintain steady business.

Avoid True Debt

While freight factoring is a form of financing, it’s a form of financing backed by the money a company is already going to be paid. By having cash in hand when they need it, factoring can help trucking companies of all sizes avoid taking on true debt in the form of loans or credit card debt. With no debt payments to make during slower times of the year, it’s easier to stay in the black as overall expenses are reduced.

Conclusion

By improving cash flow, adding stability, and helping stay out of debt, freight factoring can help trucking companies, whether they’re a single truck owner-operator or a much larger operation, navigate the seasonal nature of the freight market.

Interested in learning how freight factoring can help your trucking business weather seasonal peaks and valleys? Call 877.697.0605 to learn more.