YOUNGSTOWN, Ohio — The coronavirus pandemic has forced essential businesses to make difficult decisions to keep things moving. For businesses involved in the supply chain, “business as usual” might look completely different in a post-COVID-19 environment – and getting there might take a while.
Since states started issuing restrictions amid the outbreak of COVID-19, the disease spread by the coronavirus, Aim Transportation Solutions, a Girard-based truck leasing/rental and logistics company, has worked to adapt. Co-presidents Scott and Geoffrey Fleming saw changes in their customers’ businesses almost immediately, although things have begun to level out, they say.
Aim works with many essential vendors, including Giant Eagle and GetGo convenience stores. At the onset of the pandemic, customers rushing to stock up on supplies led to an initial surge in volume. It’s since gotten to a manageable level as products stay on store shelves longer, Scott Fleming says.
But Aim is unsure if those levels will become “the new normal,” or if they will be reduced further as industries experience more downturns, adds Geoffrey Fleming.
While grocery and convenience stores keep a majority of Aim drivers on the road, customers who handle food service and restaurants are seeing “a significant downturn,” and have had to do temporary layoffs and reductions in hours, he says. “The big question is how much, how long and how severe is this going to be?”
Aim has laid off about 10% of its 1,200-person workforce and taken other measures to reduce costs, Fleming says, including wage reductions for upper management. The company operates 120 sites in 20 states.
The company continues to review its monthly spending and “what can be discounted, deferred, terminated, so that we can almost look at what are the nonessential costs that we have that we can try to eliminate or mitigate” to prepare for the revenue reduction and conserve cash flow.
“We have a lot of customers still operating; but how many are dealing with issues and may not be able to pay us on time like they have in the past,” Geoffrey Fleming says. “That’s a big concern, I think, for all companies right now.”
“We’re just trying to keep communication open with all of our employees as we can,” Scott Fleming adds. “We’re holding their health care while they’re on layoff. We want to make sure they have health care through this time.”
On the leasing side of the business, Aim has seen about 15% to 20% of its customers affected.
“About 10% are at levels where they’re almost totally idled or temporarily shut down” because they are in nonessential industries, such as trade shows and concerts, Geoffrey Fleming says.
The biggest impact on Aim so far has been its short-term truck rental business, he continues. Of those customers, 60% are existing customers who “up their fleet a little bit” throughout the year, he says. It’s left a lot of equipment underused and Aim is working to quantify how much that business is down and its overall effect on revenue.
“On the rental side, we’re seeing that 10% reduction of where we were year-to-date last year,” Fleming says. “But that continues to increase almost on a daily basis. It’s not dropping off.”
Some 50 nonessential customers have contacted Aim to say they’ve shut down. Aim is working with each to figure out ways to help them weather the storm, including reducing some payments in certain situations.
“A lot of them, they’re stuck and they’re trying to find ways to keep people employed, keep their business operational so that they’re able to survive,” Geoffrey Fleming says. “So it’s a challenge for sure.”
Because Aim serves markets that have been hit by COVID-19 to varying degrees, including New York, the company has begun preventive measures to maintain social distancing.
The measures aren’t cookie-cutter and depend on the customer, the driver and the facilities to which he’s delivering, “and making sure everybody’s just on the same page,” Scott Fleming says.
Drivers typically go to the same locations daily, sometimes several locations, he says. When drivers arrive at a stop, they either stay in the truck while someone else unloads the haul, or if he gets out of the truck to unload “nobody comes around them,” he says. And drivers delivering to hard-hit New York don’t get out of the truck, he adds.
Regional drivers also take care when filling up their gas tanks or using public restrooms while on the road. So far, no Aim drivers have tested positive for COVID-19, he says.
“We try to isolate those drivers as much as we can with gloves and all the PPE gear that we can provide,” Fleming says.
Aim and its drivers are doing what they can to source things locally, including gloves, masks – not the N95 masks health care workers and first responders use – and even scarves and turtlenecks, for which the company reimburses.
Social distancing measures put into place by Aim – about 75% of its corporate office staff is working from home and those remaining are divided between its two office buildings – are forcing the company to consider how to become more prepared.
“It’s put a new focus and emphasis on the technology that we have,” Geoffrey Fleming says. “I’ve been proud and fortunate of how our employees have stepped up in the face of this adversity and these challenges to do their job and to serve our company, really our country, and keeping the supply chain rolling.”
How the supply chain will look in the coming months after COVID-19 runs its course, “I don’t think anybody really has a true idea,” Scott Fleming answers. In an unprecedented pandemic, there is no path for the company to follow. “Overall, it’s going to change the way we do business,” he says, but doesn’t know to what degree or how fast.
One change some supply chain experts are predicting is improved supply chain visibility to help mitigate future risk and disruption. Recent articles distributed by Deloitte and PricewaterhouseCoopers advocate for improved end-to-end supply chain visibility to give manufacturers a more complete look of where components come from.
In one article, “COVID-19: Managing supply chain risk and disruption,” Deloitte says new supply chain technologies are making that possible.
“The traditional linear supply chain model is transforming into digital supply networks (DSNs), where functional silos are broken down and organizations become connected to their complete supply network to enable end-to-end visibility, collaboration, agility, and optimization,” Deloitte states.
While Aim doesn’t map its customers’ supply chain networks, Scott Fleming sees that as a possible opportunity to expand its services. He also thinks this virus will force businesses to look at opportunities on how to make more products domestically rather than sourcing them from other countries.
“I think the tariffs have set us up to be a bit more self-sufficient than we would be, say a year ago,” he says. “And hopefully it will drive some more commerce in manufacturing in the United States.”
Before that happens, the economy needs to get going again. How quickly that happens depends on public perceptions after COVID-19 – perceptions about the world, spending money and interacting with each other.
“All these people who are laid off, when the switch gets turned back on, they might not go back to the same company they were at,” Scott Fleming says. “You’re looking at retraining. There’s a lot of things involved to get that engine roaring again.”
While Aim will likely continue to implement some of the tools it’s used during the pandemic, including video conferencing and telecommuting, Scott Fleming says the experience won’t change the way the trucking industry moves freight.
“Everything you have comes from a truck,” he says. “And it takes somebody to drive that truck. It takes somebody to fix that truck. It takes somebody to fuel that truck. The basics that we do are always going to be there.”
Pictured: Tom Fleming, CEO of AIM Transportation Solutions, with co-presidents Scott and Geoffrey Fleming.
Copyright 2020 The Business Journal, Youngstown, Ohio.
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