In The News
Syleconomics - showing modest year over year growth
Supply/Demand analysis
2011 was the best year ever for many Sylectus customers and 2012 so far is surpassing 2011. 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.
What is driving this success of our customers is not a strong, rebounding economy, but rather a continued and prolonged shortage of capacity. We are beginning to see an equilibrium reached between supply and demand, which is stabilizing rates.
So what does this all tell us?
Supply of trucks (capacity) continues to lag below demand and has slowly recovered. It is now at the pre-recession levels. This is reflected in a stabilized line-haul rate per mile.
The Demand (loads) chart is tracking better than 2007. 2010 and 2011 were great rides and 2012 is ahead of the same period last year.
The survivors of the recession are reaping the benefits of the business volume uptick.
We are heading into the “quiet time†for trucking. The Christmas holidays and then the slow month of January as freight volumes get very light. January is often a time when carriers take stock of their business and put together plans to move their business forward and prepare for “the next pushâ€.
The uncertainty ahead is the fiscal cliff. Whether legislators act or don’t act to reduce the impact of the fiscal cliff, trucking companies must take steps to ensure they can continue operations profitably. During the last recession (which was a BIG recession) the lessons our subscribers learned included the power of an Alliance. Strong, trusting relationships were built between companies within the Alliance to share their excess freight, pay each other as quickly as possible, and respect each other’s customers.
Personally, I remain upbeat on the trucking industry for the first half of 2012 and even more upbeat for the second half of 2012. Although 2011 was not as strong as 2010 or 2012, it was still a good year for many of our subscribers.
What are we seeing our “smart†customers doing to mitigate losses if we go back into a recession?
Sylectus has over 650 customers in the transportation industry, so we have the luxury of witnessing the good, the bad and the ugly in the industry. At our customer meetings we hold throughout the year, I spend time chatting with some of our more forward-thinking customers. Here is what they attribute their ability to survive, and even thrive, during an economic downturn.
Build a strong network of trusted partners. Partners who have complementary services or complementary geographies to the customers they serve. Partners who are connected not only in their business philosophies, but also their technologies (especially Virtual Fleet). This allowed them to rely on their partners to help them both in the lean times and the good times.
Build a strong team. Trucks don’t move themselves. Shippers don’t have business relationships with trucks. To move freight you need people. To move freight and make money in any economy, you need good people. To keep your good people (drivers, dispatchers, sales people, etc.) you need to treat them right.
Give your team the best tools. The best computers, the best phones, the best chairs, the best software, the best business partners, the best communication devices.
Things are not dire right now. Shippers in certain geographic areas are willing to pay decent rates to get their products shipped. Now would be a great time to:
Balance your business
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.