Dollars & Sense
Sylectus: February Numbers Show Across-the-board Increases
Sylectus has released its monthly analysis of the data it collects, which quantifies the good and bad trends of the expediting industry.
The most recent numbers are based on data from February 2011, and it would appear that business is building steam across the industry.
â€œFebruary 2011 was well ahead of last year and for â€˜companies that are tracked in the Sylectus index,â€™ it was the best February since we started recording our index 5 years ago,â€ Sylectus reported.
â€œFebruary is typically when trucking companies start to see a little â€˜black ink on the ledger;â€™ however, this year, our customers have realized an excellent start to the year and are on course for their best first quarter ever.â€
A primary reason for the surge: a continued shortage in trucks, which Sylectus reports has kept rates strong. â€œWe are seeing the strongest â€˜rate per mileâ€™ value since the fuel crisis of 2008,â€ Sylectus said in its report.
Indeed, total miles for February 2011 were up 23 percent from 2010, while total revenue for the same period jumped a whopping 39 percent.
One very interesting observation during February: There were two large snow storms that hit the industrialized Midwest in February that shut down many businesses. On those two days, Sylectus had record load postings go through the system (over 1,000 loads posted each of those days). Furthermore, February 2011, which had one less business day than January 2011, still outperformed January by 4-6 percent.
One of the great numbers coming out of the start of 2011 is the rate per mile. January is typically a slow business volume month and companies often drop their rates in January to keep their trucks moving. But January rates â€œheldâ€ and February rates moved up, which is good for the profitability of the industry. Part of the price increase in February can be attributed to the continued rising fuel costs and rising fuel surcharge.
â€œ2011 is shaping up to be an important year of change for transportation,â€ Sylectus reported. â€œ... We started coming out of the recession in mid-2009 an it came to an official end in late 2009. In 2010, we saw several strong indicators of growth in transportation. The overall profitability was positive, as reflected by the strong performance of the Sylectus customer base. In 2010, their revenues surged considerably as a result of both stronger demand and a healthier rate per mile. This reflects high market expectations for growth. Why?
â€œFundamentally, because demand has come back, inventory levels remain low (5% below their historical norm), and capacity (trucks and drivers) has remained lower than normal (see accompanying demand/supply charts). Shortage of capacity is a double-edged sword. It allows you to keep your rates higher, but it also means saying â€˜noâ€™ to customers more often.â€
The good news for the expedited industry is Sylectus expects the trend to continue, based on the following factors:
Rates have stabilized; in fact, theyâ€™re on the rise, especially in the early part of the year when rates are traditionally muted. Volumes are up. This was true in 2010, as well, but the 2011 numbers show even stronger numbers. Expedited companies are investing in their businesses more: hiring more people, recruiting more drivers and improving their infrastructure (trucks and technology). Earnings are up. Publicly traded companies are reporting healthy increases in revenue and profits, and as expectations increase, aggressive companies are making their move to ramp up their bottom lines.
One potential dark cloud is the increase in fuel prices. Sylectus points out that the recession of 2008 and 2009 began with a spike in fuel prices, making the current rise even more ominous.
Even though almost all the key indicators are very positive, Sylectus reminds its clients that they still have to work hard and stay true to the same values that helped them achieve success, especially with three key guidelines:
Turn every load opportunity into an order. Turn every order into repeat business. Keep your drivers happy.
For a copy of the complete Sylectus synopsis, go to www.sylectus.com and look at the Stuâ€™s News section