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Sylectus numbers show strong August for trucking industry

Sylectus has released the September 2011 edition of its “Syleconomics” summary of transportation industry statistics, and the numbers indicate that August 2011 was an outstanding month for the industry.

Numbers were up both from August 2010 and from July 2011, and Sylectus reported that many of its customers posted record load counts and record revenue.

Total miles in August 2011 increased 17 percent from August 2010 and 27 percent from July 2011, and total revenue was up 28 percent and 26 percent, respectively.

In his commentary, Sylectus president Stuart Sutton addressed the question of why the trucking industry is faring so well while the rest of the economy is struggling.

According to Sutton, the answer includes several factors. He also pointed to some key differences between the current weak market conditions and those of 2008, just before the most recent recession.

• Inventory levels are vastly different in 2011. Companies that survived the recession have consciously modified their manufacturing processes to reduce excess inventory and limit their vulnerability to another economic downturn.

• There are about 30 percent fewer trucking companies in 2011 than there were before the recession, and it’s difficult for new carriers to enter the trucking industry because start-up capital is hard to come by. This, combined with the decrease in inventory levels, means that any slight uptick in manufacturing activity creates more freight for everyone.

• The driver shortage remains a fact of life in the trucking industry, limiting some carriers’ ability to grow. According to Sutton, carriers affiliated with Sylectus have an advantage because of their ability to network with other carriers and handle more freight.

• Fuel prices are below 2008 levels, mostly because shaky consumer confidence has decreased demand.

• Trucking companies that survived the recession have been able to replenish their “war chests” over the past two years, building up some reserves to help weather a subsequent recession. As proof, Sutton pointed to the number of mergers and acquisitions within the industry.

• Smart companies have invested in technology to gain an advantage over their competition.

While all of those points might seem to indicate that trucking would be immune to a new recession, Sutton also pointed out some other factors that aren’t so positive for the trucking industry.

• Many world governments spent substantial amounts of money to stimulate their economies during the most recent recession, and are now much further into debt than they were three years ago. That means that if another recession occurs, those governments might not have the funds for another round of stimulus programs.

• Unemployment remains a major issue in the United States and around the world. That translates to fewer Americans buying goods and services, which in turn will slow the economy’s rebound. However, Sutton writes that if auto manufacturers are careful not to produce more vehicles at a rate faster than the demand, inventories should hold steady and the trucking industry can continue to do well.

Sutton advises carriers to do all they can to say “yes” to their customers, make sure they keep whatever business comes their way (even if it means brokering loads to another carrier) and keep drivers satisfied.

Sutton also advises companies to network and build partnerships with similar companies to expand their market base, outsource functions that aren’t their core competency (especially as it relates to technology), leverage technology optimizations and use those areas to market themselves to customers.

Sutton predicts that the coming months will see swings in shipper demands. He advises companies to use the current good times to balance business by raising rates and culling questionable customers, build, enhance and nurture partnerships, focus on freight that delivers the best return, build a strong team and invest in the best technology.

www.sylectus.com