Dollars & Sense
The Numbers Are In: June 2010 was Great, July Might be Better...
Last week, Sylectus released their monthly analysis and comparative figures for June 2010, and in keeping with the trends over the past year, volumes over June of 2009 show a considerable increase. In fact, June 2010, according to Sylectus, was the best June theyâ€™ve yet seen.
Specifically, volumes were up 54% over June 2009. While this number in and of itself is certainly impressive and show the improvement that the industry needs--at least in the way that it shows that there are clearly expediters at work--there has also been a need in the industry for rates and rate per mile to make a turnaround.
For the first time in quite a while, weâ€™re starting to see increases in rates. This is something that Sylectus has been paying very close attention to over the past several months, as has been the rest of the industry, presumably, and itâ€™s some of the best news that people in the expediting industry could ask for. What the rate increase represents, above and beyond just getting more money per mile, is a return to what we know to be normalcy within the business.
Along with this increase in rates, Sylectus reports what appears to be something of a crunch relating to capacity. Along those lines, theyâ€™re saying that thereâ€™s a distinct possibility that if this crunch is handled correctly, rates could go up even further in the months to come. Hereâ€™s the â€œrecipeâ€ that they propose:
Carriers are running out of trucks (capacity) early in the day and early in the week. They are getting better rates for their available capacity. Due to the capacity crunch, we are seeing a significant jump in the amount of â€œload sharingâ€ happening. Rates are increasing. Carriers have stepped up their recruiting programs to increase their fleet counts. A negative side effect is that drivers now find it easier to move to another company. Driver retention may become a problem soon. Some shippers will start to â€œdemandâ€ capacity and will be willing to pay for it. July is usually a very slow month due to manufacturing shut downs. However, the first few business days of July have been strong! We are seeing business volumes that would match a February or April type of month. If this continues, July could be a profitable month for many trucking companies and this would bode well since July is usually a soft revenue month.
In summary, Sylectusâ€™s advice here for carriers would be to look to increase the number of your available trucks so that the recent increases in volume, rates, et al can continue to grow and the industry can see increases above and beyond where things were prior to the recession. Of course, such increases in capacity will have to be balanced in such a way that carriers donâ€™t have too much capacity--in many ways, thereâ€™s a definite â€œThree Bearsâ€ approach that carriers will want to take in order to ensure their continued growth and capitalization on the available market.
Overall, though, all signs continue to point to a very positive 2010 and, hopefully, beyond.