From a “year over year” perspective, October 2011 was a great month for some of our
subscribers who posted record load counts and record revenue. Trip counts were up 9% while
revenues were ahead over 22%. This continues the trend where carriers are demanding
and getting a higher rate-per-mile compared to 2010.
From a “month over month” perspective, October 2011 was slightly below September 2011.
Although this slight dip is not good news, it should not be a significant red flag since the start
of September was pushed a bit higher by the effects of the Hurricane season.
Below is a table that summarizes the month-to-month changes across the
entire Sylectus customer base.
|
|
October 2011 vs.
October 2010
|
October 2011 vs.
September 2011
|
|
Business Days
|
21 vs 21 |
21 vs 21 |
|
Trip Count
|
+9% |
-4% |
|
Total Miles
|
+12% |
-2% |
|
Average Length of Haul
|
+8% |
+1% |
|
Total Revenue
|
+22% |
-2% |
|
Linehaul Revenue
|
+20% |
-1% |
|
Fuel Revenue
|
+60% |
-5% |
|
Accessorial Revenue
|
+16% |
-1% |
|
Total Revenue / Mile
|
+10% |
+1% |
|
Linehaul Revenue / Mile
|
+7% |
+1% |
My Syleconomics commentary ...
Why are Sylectus members outperforming non-Sylectus Members?
I attended the annual meeting for “Transportation Club of Detroit” a few weeks back. While
standing with a group of Sylectus members at the cocktail hour, one of the senior members of a very
large, international logistics company asked me this question:
“Why are Sylectus subscribers so much busier than non-Sylectus subscribers?”
His observation: His job is to build and nurture carrier relationships with quality carriers
around North America that haul freight for this logistics company. He noted that Sylectus member
carriers had less capacity to provide him and demanded a higher rate per mile than non-Sylectus members.
Although he preferred to deal with the Sylectus members due to the quality and customer service
offered (we have an integration between the Sylectus system and their operational system), he could not
always get the capacity needed.
Fortunately, the Sylectus subscribers standing in our little group chimed in with some of the reasons:
- Sylectus comes with a built-in base of customers. Many of the trucking companies in the network also broker their excess freight to other members in the network. The Sylectus network business relationships are so strong and the technology is so tightly integrated, that it becomes easier and more profitable to deal with the internal network.
- Belonging to the Sylectus network provides “flexible fleet” to Sylectus subscribers. They can better manage their fluctuating load demands by reaching into the Sylectus network to cover loads where they do not have their own capacity nearby. As a result, they don’t need to hire/retain excess fleet and probably don’t have as much excess fleet available as non-Sylectus subscribers.
- Belonging to the Sylectus network means that their available fleet is automatically seen by over 500 other like-minded carriers. So the logistics company is competing with many other entities for their available fleet.
- For the most part, receiving payment from other Sylectus members was faster than dealing with large logistics companies.
It’s great when our Sylectus customers answer the questions for us!
Sylectus technology is a Revenue Generator!
However, the best answer came from one of our customers later that evening. He simply said that he perceives the Sylectus technology to be a revenue generator for his business. Effectively, it makes him more money that it costs him!
To determine if other Sylectus companies thought the same way, we conducted a survey of our customers and asked them if our technology was a revenue generator or not. Here are the results:
- 86% of subscribers say the Sylectus software is a revenue generator (makes them more money than it costs them to have the technology)
- 10% of subscribers say the Sylectus software is a revenue neutral (makes them about the same money as it costs them to have the technology)
- 4% of subscribers say the Sylectus software is a cost center (costs them more money to have the technology than it makes them)
We then asked our customers to tell us what would happen if they were to un-subscribe from the Sylectus network?
Here are a few of the responses:
- Our business would suffer greatly, sales would drop and I don’t believe there is a more economical way to book track and dispatch freight and trucks.
- We would shut down.
- It would make it difficult to provide full, comprehensive logistics support to our customers.
- We would survive but it would hurt
- It would put us behind the competition.
- Very destructive results.
- Unsubscribing to Sylectus would decrease growth opportunities.
- Greatly reduce the amount of our revenue.
- Sales Revenue would drop
- Would bring us down to our competitors level.
- If we were to ever unsubscribe to Sylectus, we would be set back 10 years...Our Bottom Line would shrink, customers would revolt ... and well, let’s just say it ain't gonna happen!
- Don't plan on leaving Sylectus - it is a perfect fit for my company
- Without it, a lot of people working for us would be unemployed!
- Life in an expedite environment would be much more difficult to manage. We would see a significant loss in revenues.
- Huge step backwards
- I don't want to think about it
- Immediate slow down
- More time tracing shipments
- We wouldn't be able to cover 25% of the freight that we are covering now.
- It would hurt our expedite division substantially.
- Our company would not exist.
- We would do more work for less money.
- Revert back to a slow, almost manual carrier selection process.
- Like rolling the dice or spinning the chamber.
- We would have to work harder to stay connected to our partner carriers
- Tremendous backward move!
- Would affect business partnerships and we would lose important interfaces.
- If we were to unsubscribe to the Sylectus software would negatively impact our top line and even more so, our bottom line. Internally, our operational staff would be much less efficient. Without Sylectus we would also appear much less professional to our customers. We could not compete with the larger trucking companies.
- I think it would have a strong negative effect on our ability to transact as much and as efficiently with the other carriers using the software.
- Revenue and service to our customers would take a hit.
- It would raise our costs when trying to find an expedited carrier.
- WHAT----R----U----CRAZY??????
- Loss of business.
- We would not have the ability to move expedited freight in the lanes we operate within.
- Sourcing capacity would become difficult and inefficient- like the old days
- Only reason we'd unsubscribe, would be to quit doing what we do in the transportation industry!
- My business would literally fail without the technology and network.
- Extreme hardship
- A Serious Decline in Business.
- Immediate loss of capacity and the ability to give our customers options
- income will slow down
- We would struggle to service our customers in a timely manner and we'd lose the competitive edge due to the on-line tracking technology we have because of Sylectus
- We would have to go back to the old ways and say no to customers with shipments outside our coverage area.
- Potentially reduce our sales growth and customer coverage by 50%
- We would be out of business.
- We would lose business and valued partnerships
- Our business would die.
Don't forget to build your network of trusted trucking companies
The coming months will see swings in shipper demands. The Sylectus Alliance offers your business “variable
capacity”. The alliance is a collection of hundreds of trucking
companies and thousands of trucks across the continent. The smart members
of the Alliance build strong, TRUSTING business
relationships with other Alliance members. These business relationships help
each member survive the bad times (recessions) and quickly grow during the good
times (quick access to quality, trusted, available trucks). Even smarter
carriers subscribe to the Sylectus AlliancePro software with Virtual Fleet that
automatically and seamlessly integrates you with thousands of trucks, hundreds
of qualified dispatchers and a continent wide sales force. Attend
the Sylectus and TEANA (www.teana.org)
network events to build and nurture your business relationships within the
Alliance. The next Sylectus event is in Orlando, February 10-12, 2011.
Click here to see more details and register!
NINTH ANNUAL
SYLECTUS Conference
Kissimmee, Florida!
“February 10-12, 2012!"
Register Today!
To register, click HERE!
Six Strategies to Grow Your Business
Business is good right now. Shippers in certain geographic areas are
willing to pay great rates to get their products shipped. Now would be a
great time to:
-
Balance your business (raise rates and cull your questionable customers);
-
Build/enhance/nurture your network of Alliance partners;
-
Focus on freight that pays/delivers the best return;
-
Build your strong team;
-
Keep your debt low;
-
Invest in the best technology to drive your business forward (oh … another
shameless plug). If any of you want to find the best technology, we invite
you to ask any of our AlliancePro customers about our award winning dispatch,
billing, payroll, imaging, fleet management (and much more) software.
Now … the charts!
Supply/Demand Analysis
2010 was the best year ever for many Sylectus customers and 2011 is
shaping up to surpass 2010. We see a particularly strong increase in our
long-term customer base (customers with us for at least 5 years). The
long-term customers have such a strong, well-established, trusted network within
the Sylectus Alliance, that they have been able to leverage the Alliance
capacity into higher business volumes.
Our SUPPLY-DEMAND index (below) is comprised of a subset of our customers
that have been on our system for a minimum of 5 years. The BLUE line is
the normalized load count (DEMAND) and the GREEN line is the normalized fleet
count (SUPPLY) for the companies in the index. The RED line is the DOW
JONES INDEX normalized the same way as the DEMAND and SUPPLY chart.
What is driving this success of our customers is not a strong, rebounding economy,
but rather a continued and prolonged shortage of capacity. The “Bubba Gump
Shrimp” effect that I discussed in the October, 2010 issue of Syleconomics.
Looking Forward
Chart Analysis
If you look at the table below … you will see that Linehaul revenue per
mile in 2008 was in the $1.50 to $1.60 per mile. In 2009 the Linehaul
revenue per mile has slipped as low as $1.25 before rebounding to the mid $1.40
range. 2010 has rebounded and ended the year nicely, and 2011 has started
as the strongest months ever, even surpassing the 2008 high months that were
affected by the high price of fuel.
The following data / chart shows 2005, 2006, 2007, 2008, 2009, 2010 and
2011 in terms of total revenue per mile, line-haul revenue per mile, accessorial
revenue per mile and fuel revenue per mile.
Total revenue per milee is a combination of:
- linehaul revenue per mile
- accessorial revenue per mile
- fuel revenue per mile
The three charts below show Revenue per Mile for the past 7 years. We the show 3
charts of:
- Total revenue per mile (numbers include line haul, accessorial and fuel)
- Just "Line haul" revenue per mile (rates are well above last year’s values and they
also exceed seasonal values).
- Just Fuel revenue per mile (rates have stabilized since the 2008 fuel spike).
- Accessorial revenue per mile
Sylectus Index
Sylectus created a graph to try and compare how the “Load Index” (Demand) and
“Truck Count Index” (Supply) compares with the “Dow Jones Index”.
The “Load Index” (Demand) is the combined load counts of a subset of our
customers normalized to an index value. A value of 1.0 is normal. A
value of 1.2 is 20% above normal. A value of 80 is 20% below normal.
We started recording the index on November 1, 2006, so we have over 5 years of data
in the index now.
The “Truck Index” (Supply) is the combined fleet counts of a subset of
the same “load index” customers normalized to an index value. A value of 1.0
is normal. A value of 1.2 is 20% above normal. A value of 80 is 20%
below normal. We started recording the index on November 1, 2006, so we have
over 5 years of data in the index now.
We took the closing value of the Dow Jones Industrial Average (DJIA) and used
the same process to normalize the data (we did this by using the same “measurement
period” for calculating the normalization value). Just like the “Load Index”
and “Truck Index”, the “normalized DJIA” will have a value of 1.0 being normal and
value of 1.2 is 20% above normal (etc.).
Below you will find the two normalized indexes charted from November 1, 2006 through
to current date. The BLUE LINE is the “Load Index” (Demand), the GREEN LINE
is the “Truck Index” (Supply) and the RED LINE is the “normalized DJIA”
Sources:
So what does this chart tell us?
- Supply of trucks (capacity) continues to lag below demand, but it is slowly creeping
back up. This is reflected in an improved rate per mile.
- The Demand (loads) chart is tracking better than 2007. 2010 was a record year for
carriers and 2011 has started strong.
- Although both graphs tend to TREND in tandem, the DJIA tends to be lower than the
Load Index for most data points but tracks the capacity graph very closely. The
survivors of the recession (Bubba Gump Shrimp story mentioned in the October
2010 Syleconomics)
are reaping the benefits of the business volume uptick.
- The “supply” side of the equation took a dip in January, which will put upward pressure
on pricing.
Load Index – 2007-2011
Below you will find the same 2007, 2008, 2009, 2010 and 2011 numbers used in the
first graph, except the data is shown year-over-year. 2010 was a good year
for trucking. 2011 is starting out strong.
Consider the following graph which shows the daily “Load Index” for January 2007
through to current 2011.
The “Load Index” is the combined load counts of a subset of our customers normalized
to an index value. A value of 1.0 is normal. A value of 1.2 is 20% above
normal. A value of 80 is 20% below normal.
The green line shows the 2007 index value, the orange line shows the 2008 index
value, the blue line shows the 2009 index value, the purple line tracks 2010 and
the gold line tracks 2011 (so far).
Truck Searches – 2007-2011
Below you find the same 2007, 2008, 2009 and 2010 numbers for the number of TRUCK
SEARCHES done on the system. 2011 is showing encouraging numbers as the number
of daily truck searches average over 11,000 per day.
The green line shows the 2007 index value, the orange line shows the 2008 index
value, the blue line shows the 2009 index value, the purple line tracks 2010 and
the gold line tracks 2011 (so far).
(Y axis = Number of Truck Searches done per business day)
Load Posting – 2007-2011
Below you will find the same 2007, 2008, 2009, 2010 and 2011 numbers for the number
of LOAD POSTINGS done on Sylectus Load Board. 2011 is showing encouraging
numbers as the recent number of daily load postings average over 700 per day.
It continues to track / exceed previous years values.
The green line shows the 2007 index value, the orange line shows the 2008 index
value, the blue line shows the 2009 index value, the purple line tracks 2010 and
the gold line tracks 2011 (so far).
(Y axis = Number of Loads Posted per business day)
You still need to remind your operations staff to become "creative" when presented
with load opportunities. Get them to try to use our software solution to::
3 Practices That Increase Revenue
- Turn every load opportunity into an order
- Turn every order into repeat business
- Keep your drivers happy.
Working together as a team (Alliance) can help weather any seasonal
economic slowness and take advantage of the seasonal busier times
(never saying "no" to a customer).
It just keeps getting better ... and the best is yet to come!