Dollars & Sense

2007 Expedite Freight Trends Recap

While business in the trucking industry overall was down about 2% in 2007 compared to 2006, a measure of the expedite business shows it did far better during the same time – although times are not as good as they once were.

The software maker GPSNet Technologies has released its year-end numbers for expedite carriers that its AlliancePRO software, which allows them to broker loads to other carriers.

A look at 2007 shows total business for these carriers was up about 10% from the year before. The trip count rose by 10% while the average length of haul increased 1% to 352 miles per load. Revenue was up about 10%. Linehaul revenue was up 8%, while revenue from accessorials and fuel surcharges were each up 19%.

“Generally it was a better year, especially the first eight to nine months of 2007, but the last three to four tapered off,” says GPSNet Technologies President Stuart Sutton. He says this improvement over 2006 is slowing in terms of trip counts, noting December was the first month in 2007 where the number of loads was below the same month in 2006.

According to Sutton, reports from other transportation segments such as truckload, less-than-truckload and specialized, are all showing weakness in 2007, with some larger truckload companies indicating a 10% year-over-year decline in business. Some of the same factors that affect those sectors do affect expedite, as well.

“North American auto manufacturers are adjusting production schedules downward,” he says. “We saw the manufacturing and automotive sectors being affected by all of the other negative economic news that was going on in North America, spawned by the decline in the U.S. housing market. So when credit got tight, people stopped buying, automobiles especially, and a lot of the expedite business is based on the auto business.”

Sutton says while his numbers are a pretty good snapshot of how the expedite business did in 2007, he says they are probably a little better than the expedite business overall, “because [our customers] carriers use each other’s resources to help grow each other’s businesses.

“If you are acting as an island it’s hard to make things grow when things get tough,” he says.

Sutton says numbers from early January of this year indicate this normally slow period of business is down further than the usual trend.

In addition, a quick look December’s figures versus November and compared to year-ago numbers from December 2006 indicates they are disappointing. Trip count was down 2% in the past year, while it dropped 14% from the month before. The average length of haul was up 8% in December 2007 compared to the same time a year ago, while it was up about 4% over November 2007. Finally, total expedite revenue fell from the previous month by 8% but was up 8% over the same time a year ago, thanks mainly to a 57% hike in revenue related to fuel charges.

All this disappointing news doesn’t mean it’s time to fold your tent and head for the hills. In fact things could be a lot worse. Even during a recession, which some economists say we are experiencing or on the verge of entering, freight still needs to be moved, There's just less of the freight pie to go around. The key, says Sutton, is to realize business in the expedite industry is slower in January through early March.

“This is typically when companies scramble for every freight opportunity to keep their drivers busy,” he says. “It is also a time when the wise companies plan restructuring, rebuilding or retooling to get ready for the next push. The wise companies will ensure they have the proper pricing policies in place to take advantage of any business opportunities."