In today’s rapidly changing transportation industry, consumers have an increasing number of options for getting from point A to point B. The rise of mobility as a service (MaaS) solutions and ride- or car-sharing applications has changed the market. Competition is intense and recent advances in technology have placed pressure on transportation companies to develop innovative service models that are customer-focused and flexible. Successfully adapting to this new industry landscape will require a higher level of operational and financial analysis as the basis for identifying opportunities and rising to challenges. Start by asking the below questions about the quality of your transportation company’s data and the impact of growth strategies on your bottom line. A trusted advisor like RKL can help you contextualize the answers and use them to develop a proactive plan for your company’s sustained success.
Is the data reliable?
For many transportation companies, different data is managed in different systems and by different parties. For instance, trip booking may be done through scheduling software but expenses may be tracked using Excel and physical receipts. The company’s key decision makers need real-time, reliable data reporting on cost per trip, which is nearly impossible with a fragmented approach. Consider transitioning to more centralized process or system for data collection and reporting. Your accounting firm should be able to highlight the best options for your transportation company’s unique needs.
Are overhead costs allocated correctly?
When determining an accurate cost per trip, company leaders likely have a good sense of the direct expenses involved, like vehicle rent or driver salaries, but they often leave out overhead costs of running the operation. These ongoing expenses, such as utilities and insurance, need to be accounted for and allocated properly into the cost per trip.
What are the financial projections?
Every new idea to position your transportation company for sustained success must start with consideration of your financial future. What will your costs look like in five years? What will your operations look like? How will inflation affect certain costs like insurance or fuel? Asking questions like these and developing realistic financial projections will strengthen your long-term business objectives.
How will expanding service options affect the bottom line?
Regional consolidation and privatization of public transportation services offer new opportunities for companies to expand their service offerings. In this era of rapid change, however, it is essential that management teams and key decision-makers invest the time to analyze how additional routes and more drivers could impact the bottom line.
How will running additional vehicles impact the system?
One specific aspect of service expansion is the size of the fleet. As new routes or services are added, should companies buy or rent more coaches? Each option presents financial and operational upsides and downsides that must be seriously considered within the context of the company’s unique business circumstances.
The team of public sector experts at RKL has decades of experience serving the assurance and advisory needs of transportation companies throughout the Mid-Atlantic. We’re ready to put our data analysis and financial modeling skills to work for you. Contact us today to learn how our collaborative approach delivers new solutions for a changing industry.