Dollars & Sense
How's Business These Days?
Our gross revenue in 2008, was 20% less than in 2007. Some of that is attributable to the greater amount of time off we took in 2008. But 10% or more of it is because of slower and lower-priced freight.
The first quarter of 2009 will end in ten days. The downward trend in freight availability and rates is not only continuing. it is accelerating too. The economic bottom that people are looking for shows no sign of developing. Every time the indicators rebound, they give back their gains, leaving people to look for them to rebound again. The recovery will come, most people believe, but it appears that it will be a while before it does. So, most if not all expediters (including us) continue to do less and earn less than they did in more prosperous times.
To be a little more specific, from January 1, 2009, to March 20 (today), we hauled 21 loads over 15,525 loaded miles. In the same period last year, we hauled 28 loads over 21,401 loaded miles. That is a 25 percent drop in loads and a 27 percent drop in loaded miles. Gross revenues for that time period are down by 27 percent.
Year over year, from 2007 to 2008, our gross revenue declined 20 percent. Early in 2009, gross revenue is showing a 27 percent decline. In other words, the downward trend in our little one-truck business is continuing and doing so at a faster rate.
I am told of a saying that comes out of East Texas. "Nothing is ever so bad that at can't get worse." Those words ring true these days, that's for sure.
Despite these numbers, Diane and I are doing OK and love our life and work on the road as much as ever. There is nothing we would rather be doing than the work we are doing now, though it would be quite nice if available freight and rates recovered to previous levels. We are doing OK because we managed our money well when the good money was there to be made. We prepared for the slow times we knew this cyclical business has.
That's our story. But what about people who are thinking about getting into the business now? There is a lot I could say. The short story is this. If you are using this web site to research the expedited freight transport career opportunity, please be careful to notice the dates of the items you are reading.
A severe recession is now in progress that is hitting our industry like a series of bombing runs. Today's expediting world is nothing like the expediting world Diane and I jumped into in 2003. Some expedited freight carriers have failed. Some expediters have failed and many today are saying they cannot hold out much longer. Enjoy the older stories, but be careful to notice that they were written in more prosperous times.
Simply put, the good money Diane and I made as expediters early in our career is not there to be made today. While we are all hoping the economy will soon bottom and begin a recovery, there is very little in the news to suggest that will happen any time soon. I am afraid there will be more blood of failed expediters in the streets before this is over.
See my daily blog for or a day-by-day look into our life and work on the road.
UPDATE (March 29, 2009): With the first quarter of 2009 ending on March 31, I will be updating this piece to reflect that time period. Since writing the above, the February ATA Truck Tonnage Index figures were announced on March 25. ATA Chief Economist Bob Costello said that tonnage plunged again on a year-over-year basis, and nothing suggests freight volumes are about to embark on a sustained recovery.
ATA truck tonnage numbers are gathered from ATA member carriers, which haul a large portion of the freight moved by truck. Expedited freight transport is so tiny a slice of that freight that if it was removed from the index, it would not be noticed. Nevertheless, expedited freight volumes seem to parallel the larger index, making the index a useful indicator.
A few analysts and trucking company executives are starting to say the industry has reached a bottom and things are firming up. That is meaningful to some, but to those of us actually hauling the freight, moving slowly out of historically low levels means freight volumes will continue to be slow for several months at least.
I wrote in my blog a while back that Diane's and my strategy was to outlast weaker competitors and benefit from the truck shortage we expected to develop. While our strategy remains the same, we are finding that the shortage is not developing as quickly as we expected. With the employment picture as it is and jobs being scarce, people are not readily leaving the expedite business because they have nowhere else to go.
UPDATE (April 8, 2009): Our first quarter numbers (Jan-Mar):
Runs completed 2009: 24
Runs completed 2008: 32
Gross revenue 2009: Confidential
Gross revenue 2008: Confidential
News reports and informal trucker chatter show no sign of a freight recovery. Airlines are mothballing planes in record numbers. Container ships are stacking up in ports because they have nothing to haul. If freight is like a river, the water is low.
Written March 20, 2009, for publication on SuccessfulExpediters.com .