Dollars & Sense
Sylectus: Growth continues at slower pace in May
The transportation industry continued to show strong year-over-year growth in May, according to the monthly report released by Sylectus, although business volumes have cooled someone since a March spike.
According to Sylectus, total revenue in May 2011 showed an increase of 21 percent over May 2010 and a 4 percent increase from April 2011. Total miles also were up, 8 percent from year to year and 4 percent from month to month.
Total revenue per mile increased 12 percent from May 2010 to May 2011.
The industry has shown year-over-year growth for 21 consecutive months, according to Sylectus.
Rates have gotten a boost from a capacity shortage and a spike in demand, providing trucking companies with an opportunity to build a â€œnest eggâ€ for the next downturn.
In fact, Sylectus President Stuart Sutton wrote in the report, smart companies are planning now to mitigate losses if another recession occurs.
Sutton said his discussions with successful Sylectus customers yielded the following recommendations:
â€¢ Build a strong network of partners, whose services and geography complement your own. Partners who are connected in their technologies also can be very valuable in good times and bad.
â€¢ Build a good team by bringing in good people for positions as drivers, dispatchers, sales people. Treat them right and keep them in your organization.
â€¢ Make sure your team has the best resources available â€” the best computers, best phones, best chairs, best software, best business partners and the best communication devices.
â€¢ Integrate your network. Sutton recommends the Sylectus AlliancePro software with Virtual Fleet.
While times are good, Sutton said now is the time to focus on quality freight that delivers the best return, kept debt low, build a strong team and invest in the best technology.
Sutton also addressed the capacity shortage within the trucking industry, which traces back to the recession of 2008 and 2009. During that time frame, Sutton said, 260,000 trucks were taken out of the transportation system and almost 10,000 trucking companies went out of business.
Now that the economy has improved and demand has increased, shippers are encouraging trucking companies to invest in more equipment, and truck plants are beginning to increase production to meet the demand for new equipment. Still, some companies may wonder whether itâ€™s prudent to invest in new equipment.
Sutton said he remains optimistic about the trucking industry, especially for the remainder of 2011. Still some potential dangers lurk, including record debt by federal governments around the word. If those countriesâ€™ strategies to address the issue fail or stumble, their governments run the risk of defaulting on debt, which could have far-reaching implications.
Another danger is the fact that unemployment remains an issue in the United States, which threatens the overall economic recovery.
A parts shortage caused by the Japanese tsunami and the rising price of fuel â€” which hurts consumer confidence â€” also have an impact on the trucking industryâ€™s economic performance.