Syleconomics for February 2010
This email goes to many transportation companies around North America as a courtesy on behalf of GPSNet Technologies Inc.
GPSNomics (noun) ... "The economic analysis of various business indicators from the GPSNet transportation management system (TMS). A monthly review of what has happened and some suggestions on how to improve your business situation in the transportation world."
Below is a summary of transportation industry numbers from our databases.
January 2010 continued to follow the stronger numbers that began in June 2009 and carried through to the end of 2009. In fact, January 2010 volumes (trip counts) were 33% above January 2009. More important was that January 2010 revenues were 40% above January 2009, which signifies that the rates continue to firm. However, rates are still well below historical peaks. Companies need to revisit their rate structures to ensure they are not working harder for fewer dollars.
My GPSNomics commentary ...
A few years ago, we started an "index" of freight volumes by taking a subset of our customers and tracking their business volumes (trip counts). We "normalized" their trip counts so that the index would reveal "transportation industry volume trends", but not reveal any specific details about the companies that make up the index. We now have well over 3 years of index trending data and there are a few interesting notes.
- The companies that make up the index are the same, except we have lost one company who went out of business in January, 2009. We never replaced this company with a comparable company in the index. So, since January 2009, the index has had one less company contributing to the results. Even so, the remaining companies in the index have kept the index at great numbers!
- The companies in the index are seasoned, long-term and professional. They have been in the "Alliance" for years and have built very strong, very flexible and very trusting relationships with key partners within the "Alliance".
- When the economic recovery started in July-August of 2009, the index surged which means the companies in the index performed well. If I look at the companies in the index, some of them still struggled, but the majority excelled.
- The "Index" has out-performed the market (we compare it to the Dow Jones). While the Dow Jones is still languishing at 80% of its value from its peak, our index has bounced back to typical "seasonal" business volumes for our customers.
So why have "Alliance" members rebounded so quickly?
- By building their strong, flexible, trusting relationships with other members of the network, they were able to quickly adjust to the changing business volumes without having to recruit more trucks or operations staff. They merely leveraged the resources of the alliance to quickly increase their business volumes as the economy bounced.
- By saying "YES!" to their customers (these new opportunities), they gained a competitive advantage over the "non Alliance" carriers who could not quickly adjust to the business surge.
- The quality of the carriers in the Alliance program ensured the work was done to the highest of standards, thereby impressing their existing and new customers. In fact, some members have told me they have "locked in" new customers because of the great service Alliance members provided each other.
- The trust level of Alliance members allowed them to trade business opportunities between each other without the fear of losing customers via "back selling."
- All companies in the "index" are using our AlliancePro software, which allows them to act as a "single" entity using the Virtual Fleet component of AlliancePro. So, when the broker a load to another AlliancePro company, they get complete visibility to the other carriers truck. This visibility is also available to their customer. So, in effect, their customer can track the shipment, regardless of which AlliancePro carrier is actually performing the load.
In comparing the 2009 to 2008 numbers, the surprising statistic is that the miles travelled for 2009 was only 2% lower than those travelled in 2008! So the latter half of 2009 saw significantly stronger business volumes than the first half of 2009. We see this trend continuing in the first part of 2010. In reviewing our customer activity of 2009 vs. 2008:
- 10% of our customers increased revenues in 2009 vs. 2008.
- 21% of our customers booked more loads in 2009 vs. 2008, and
- 34% of our customers ran more miles in 2009 vs. 2008.
This may shock some people, but there are transportation companies in the GPSNet family who had record years in 2009! Want to know who these companies are? They will be on the podium at our annual conference in Jacksonville (Amelia Island), Florida in February. For more information , go to conference.gps411.com .
Looking Forward: We continue to see a groundswell of activity within our customer base to "position" their businesses for the "recession exit". Operations staffing, driver recruitment and technology investments are all strategic action plans currently underway. Economists are predicting an exit from the recession in 2010 and the smart transportation companies are preparing their companies to maximize their growth opportunities.
January 2010 Analysis: As you read the summary of January 2010 below, I respectfully ask each company to review their pricing policies to ensure you are not working very hard to receive very little return. It is great to be busy, but it is better to be busy and profitable.
In terms of January 2010 vs. December 2009 – business volumes were down slightly, which is typical since January is usually one of the slower months in transportation. Several auto plants were idled for parts of January to adjust for inventory.
In terms of "raw" comparisons between January 2010 to December 2009 ...
- Orders were down 6%
- Billable miles were down 7%
- Billable revenue was down 11%.
- Linehaul revenue was down 10%.
In terms of January 2010 vs. January 2009 – For the 6th month in a row, numbers are above last year, and, in fact, significantly higher than last year. January 2009 was in the major part of the recession "correction", so it was almost a given that we should be able to beat last year’s numbers.
- Orders were up 33%
- Billable miles were up 41% (Huge increase in billable miles. Longer length of haul.)
- Billable revenue was up 40%
- Linehaul revenue was up 40%.
- Fuel revenue was up 56% (we are seeing an increase in pump rates)
- Linehaul revenue per mile continues to stabilize after taking significant drops earlier this year.
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 is starting in the low $1.40 range.
The following data / chart shows 2005, 2006, 2007, 2008, 2009 and 2010 in terms of total revenue per mile, linehaul revenue per mile, accessorial revenue per mile and fuel revenue per mile.
The three charts below show Revenue per Mile for the past 6 years. We the show 3 charts of:
- Total Revenue per mile (includes line haul, accessorial and fuel)
- Line haul revenue per mile (rates are still below last year values).
- Fuel revenue per mile (rates have stabilized since the 2008 fuel spike).
As mentioned earlier, we created a new graph to try and compare how the "Expedite Load Index" compares with the "Dow Jones Index".
The "Expedite 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. We started recording the index on November 1, 2006, so we have over 3 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 "Expedite Load 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 December 31, 2009. The BLUE LINE is the "Expedite Load Index" and the RED LINE is the "normalized DJIA"
Sources:
- "GPSNet Expedite Index" – Summary of data from GPSNet companies.
- "Dow Jones Industrial Average" – Yahoo database of Dow Jones closing values.
So what does this chart tell us?
- Although both graphs tend to TREND in tandem, the DJIA tends to be lower that Expedite Load Index for most data points. This would seem to indicate that the companies in the Expedite Load Index, in general, outperform the market.
- In most cases where the Expedite Load Index is BELOW the DJIA, it is during calendar periods where Expediting is traditionally slower (January, July).
- The exception to #2 would be the March to May 2008 timeframe ... which is when American Axle was on strike and resulted in the idling of several GM plants. So "expediting" was stifled during this 3 month timeframe while the general DJIA was not as affected (as much).
- Over the past 14 months, the Expedite Index has outperformed the DJIA by a significant amount. This can be explained as the "power of the Alliance" allowing companies to react better to economic fluctuations.
LOAD INDEX – 2007-2010
Below you will find same 2007, 2008, 2009 and 2010 numbers used in the first graph, except the data is shown year-over-year. 2010 is starting out similar to a "normal" year. There are more glimmers of hope considering more of our customers are starting to show year over year growth. We continue to see the economy starting to exit from the recession.
Consider the following graph which shows the daily "Load Index" for January 2007 through January 2010.
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 and the purple line tracks 2010 (so far).
TRUCK SEARCHES – 2007-2010
Below you will find same 2007, 2008, 2009 and 2010 numbers for the number of TRUCK SEARCHES done on the system. 2010is showing encouraging numbers as the number of daily truck searches average around 8,000 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 and the purple line tracks 2010 (so far).
(Y axis = Number of Truck Searches done per business day)
LOAD POSTINGS – 2007-2010
Below you will find same 2007, 2008 2009 and 2010 numbers for the number of LOAD POSTINGS done on GPSNet Load Board. 2010 is showing encouraging numbers as the recent number of daily load postings average around 400 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 and the purple line tracks 2010 (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 the our software solution to:
- 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).
How to keep busy???
First ... make sure your dispatchers are creative with load opportunities. Try not to turn down any reasonable load opportunity. Use the resources of the Alliance to move that freight if your own trucks cannot cover the freight. This keeps your customer calling you and you keep the alliance working. Also ... the other alliance members will keep your trucks moving for the same reason (share the love!).
Second ... make sure you keep your truck postings current. There are thousands of users on the Alliance system that could potentially see your truck and move it for you - as long as the truck information is kept current! Those of you using our integrated Qualcomm or GPSPhone interface know that your truck locations are always current. But those of you manually updating your truck locations risk missing good business opportunities if your available truck locations are wrong.
Third ... turn your dispatchers into an internal sales force! If times are slow, your dispatch area is not as busy. So convert that "down time" into productive, pro-active, person-to-person marketing time. The following two suggestions will keep YOUR COMPANY NAME on the "top of mind" of all your customers. How? First ensure that you use the GPSNet e-mail system to email your truck availability to as many customers as possible. This keeps them aware of your available equipment. Second, try to pro-actively find back haul loads for your drivers by calling customers directly. Generate a list of your customers in the area of your selected truck and start making calls (for those of you on Alliance Pro, use the backhaul assistant tool). Your customers may not have a load immediately, but they might have a load in 2 hours. By generating the truck-availability-emails and by making the solicitation calls, you will keep YOUR name on the top of THEIR mind. When a load does become available, you want them thinking about YOUR company first! The cost (risk) of this program is minimal. The potential benefits are huge.
Fourth... if you are an AlliancePro subscriber, take advantage of the various AlliancePro tools (backhaul assistant, load board, bid board, virtual fleet, automatic emails, customer track and trace, etc.) to creatively say "Yes" to your customers and to keep your trucks moving with paying freight!
Fifth... build those inter-company relationships with other Alliance companies. Sharing loads and trucks is built around trust. Build that trust level, nurture that trust level and mend strained or broken relationships. You never know when you will need each other.
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).