Stu's News - January 2010

This email goes to many transportation companies around North America as a courtesy on behalf of Sylectus, a division GPSNet Technologies Inc.

Syleconomics (noun) ... "The economic analysis of various business indicators from the Sylectus 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.

December 2009 continued to follow the stronger numbers that began in June 2009 and carried through to the end of 2009. In fact, December 2009 volumes were 47% above December 2008. The only significant "negative" is that rates are still somewhat depressed. Companies need to revisit their rate structures to ensure they are not working harder for fewer dollars.

My Sylectonomics commentary (for what it is worth) ... July, August and September saw some impact of the "cash for clunkers" program in the U.S. and October/November/December numbers have scaled back a bit from the September peak. However, the numbers over the last few months and the first few days of January indicate that the economy continues to emerge from the year-long funk. Although the "Cash for Clunkers" ended in September, the inventory levels of many retailers and wholesalers were considerably depleted over the first half of 2009. This was evident as shipment volumes were quite strong in the weeks leading up to the Christmas 2009 season.

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. In reviewing our customer activity:

  • 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.

Again, even though the volumes at our customers are increasing, the rate per mile has yet to fully recover.

What we are seeing is that many our customers have emerged from the economic downturn and quickly took advantage of the surge in business that began in June. This may shock some people, but there are transportation companies in the Sylectus family who had record years in 2009! What do they have in common? They all took the economic downturn as an opportunity to focus on what was important in their business. They focused on their best customers, their best employees, their best drivers and their best suppliers to form strong, lasting partnerships.

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: Although we in the traditional "slow months" of January and February, we are seeing 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 early in 2010 and the smart transportation companies are preparing their companies to maximize their growth opportunities.

December 2009 Analysis: As you read the summary of December 2009 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 December 2009 vs. November 2009 – business volumes were almost identical. This is actually good news since December has fewer business days compared to November and December month end is usually very slow due to the holiday season.

In terms of "raw" comparisons between December 2009 to November 2009 ...

  • Orders were down 2%
  • Billable miles were down 1%
  • Billable revenue was the same for the two
  • Linehaul revenue was up 1%.

In terms of December 2009 vs. December 2008 - For the fourth month in a row, numbers are above last year, and, in fact, significantly higher than last year. December 08 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 51% (Huge increase in billable miles. Longer length of haul.)
  • Billable revenue was up 47%
  • Linehaul revenue was up 45%.
  • Fuel revenue was down 27%
  • 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.

The following data / chart shows 2005, 2006, 2007, 2008 and 2009 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 5 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).

In terms of the 12 months of 2009 vs. the same period in 2008:

  • Orders were down 11%
  • Billable miles were down 2% (companies almost ran as many miles in 2009 as 2008!)
  • Total Billable revenue was down 19% (This can be broken down into Linehaul down 14%, Accessorial down 5% and fuel down 58%)

Sylectus 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:

So what does this chart tell us?

  1. 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.
  2. In most cases where the Expedite Load Index is BELOW the DJIA, it is during calendar periods where Expediting is traditionally slower (January, July).
  3. 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).
  4. Over the past 12 months, the Expedite Index has outperformed the DJIA by a significant amount. It is difficult to infer the exact reason(s) for this, however, we like to believe that by working as an "Alliance" of companies, there is strength in numbers.
  5. VERY INTERESTING ... The "Normalized Dow" has only recovered to 80% of its value based on our normalization process. While the Expedite Index is over 100% of its value based on our normalization process. The two normalized indexes have never diverged this much since the measurements began 3 years ago. If there is a strong correlation between the two indexes (which has never been proven), then either the Dow is undervalued or the Expedite Index is in need of a market correction.

LOAD INDEX – 2007-2009

Below you will find same 2007, 2008 and 2009 numbers used in the first graph, except the data is shown year-over-year. 2009 is starting out below prior years. There are more glimmers of hope considering more of our customers are starting to show year over year growth. For the year, we are seeing the economy starting to exit from the recession.

Consider the following graph which shows the daily "Load Index" for January 2007 through December 2009.

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 and the blue line shows the index for the first 11 months of 2009.

TRUCK SEARCHES – 2007-2009

Below you will find same 2007, 2008 and 2009 numbers for the number of TRUCK SEARCHES done on the system. 2009 is 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 and the blue line shows the index for 2009.

(Y axis = Number of Truck Searches done per business day)

LOAD POSTINGS – 2007-2009

Below you will find same 2007, 2008 and 2009 numbers for the number of LOAD POSTINGS done on Sylectus Load Board. 2009 is showing encouraging numbers as the recent number of daily load postings average around 5250 per day. It continues to track / exceed 2008 values.

The green line shows the 2007 index value, the orange line shows the 2008 index value and the blue line shows the index for the 2009.

(Y axis = Number of Loads Posted per business day)

You still need toremind 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 weatherany seasonaleconomic 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 Sylectus 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 AllianceProtools (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 weatherany seasonaleconomic 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!