Mark Oakeshott offers his thoughts on the direction of the relocation industry and what you should be doing about it.

So, it turns out that this whole globalisation thing is not quite going to work as we had hoped. In fact, it becomes clear that more people are feeling increasingly threatened by the whole thought of it. By ‘people’, I don’t mean you and me, who have made a living out of moving folk around the world over many decades and perhaps have a vested interest. I mean the silent majority that elect governments.

In response, those politicians, who have more than a passing interest in staying in power, are increasingly introducing policies that put the interests of their citizens first. Setting aside the potential American election prospects later this year, even Joe Biden is planning to pull down Chinese cranes at US ports and seemingly liberal countries like Canada have just extended the ban on foreigners buying homes.

Whilst there is clearly a hypocrisy in cheering for an overseas player banging in goals for your favourite team on a Saturday afternoon, then voting for policies that restrict immigration, we must respect those voices and deal with the consequences of a potentially smaller international consumer moving market. In the corporate arena, businesses have learned to be nimbler in their relocation policies, more skittish about the geopolitical situation, and more inclined to mitigate those risks. As a result, along with a meaningful threat to their profitable home sale commissions, relocation management companies are also seeing the economics of their business model begin to unravel.

If that was not enough, the domestic moving market in many major economies continues to face the headwind of higher interest rates, and in both the consumer and corporate market, shipment size continues to erode.

My intention is not to scare you into believing that this is the end of the world. Local and long-distance moving services will bounce back in due course and there will always be demand for international moving services. However, while some may try to make you believe that this is simply a ‘bump in the road’, I hold the opinion that the international market will not, and perhaps will never return to its previous size. Given the number of companies serving the segment, competition will be fierce, and consolidation will continue.

In this environment, cash is no longer king. It has been elevated to a much higher status than royalty. My sense is that there are too many moving companies that are hanging in there by little more than a thread, where any further body blow could tip them over the edge. As we have seen, the cash crunch does not distinguish between large, medium, or small companies. It doesn’t care if you have been in business for one year or one hundred years or if you have a well-known brand or not.

My advice is to avoid the obvious temptation to chase revenue at any cost in this environment. Don’t drop your guard on who you offer credit to, set tighter total credit amounts, and don’t deviate from them. Right-size your business - you really can’t afford to support an organization, structure nor occupy office or warehouse space, that was established for a larger market.

Diversify your business and your customer base. Some companies remain overly reliant upon a specific market segment or too few major clients. As we have seen, through merger and acquisitions, any one of those big trade customers can be gone in a heartbeat. Build a customer base that you control and make sure you have a competitive and reliable small shipment solution. Finally, embrace technology - it’s not expensive or complex. Invest in driving efficiency and the customer experience.

It’s really time to get back to basics. The simple disciplines and sales energy that either helped you or your predecessors get you to where you are today. You don’t have time to be drawn into any of the currents that may try to pull you away from your business priorities. Swim past the others treading water and waiting for things to get better. Even if they are right and I am wrong, you will still be further ahead. It’s time to swim hard and swim smart.

Photo: Mark Oakeshott (right).