In The News

Sylectus numbers show another strong month

Sylectus has released the July edition of its Syleconomics report on trucking industry statistics, and the numbers point to another successful month.

June 2011 posted across-the-board increases over June 2010, highlighted by gains of 15 percent in total revenue and 9 percent in revenue per mile.

“The June 2011 business volumes were up a modest 6 percent over June 2010,” reported Sylectus President Stuart Sutton. “However, the revenue was up 15 percent and revenue per mile was up 13 percent. This continues to demonstrate that price increases have ‘stuck’ and shippers are paying more to ensure their freight demands are sated.”

Since the recession, Sutton said, there has been a slow but steady increase in rates — much of it due to a continued driver shortage. That same shortage, however, can be a hindrance to growth.

According to Sutton, increasing driver pay is gaining traction as a way for companies to combat the driver shortage. But he advises companies to tread cautiously.

“Before adjusting driver pay, every company needs to understand how it affects your bottom line, especially if the economic recovery is tenuous and we slip back into a recession,” Sutton wrote.

Sutton said he has spoken with some of Sylectus’ customers about what they are doing to attract and retain drivers, and listed a few of their strategies.

• Review their driver pay packages and make the pay a function of trip revenue. The best way to make it flexible is pay the driver a percentage of the billed revenue. As the rates to the customers increase, the revenue the driver makes improves. This means drivers revenues rise-and-fall with the carrier’s revenue (which is often tightly linked with the economy).

• Tie compensation to the driver’s CSA score. CSA scores will become a key determinant in the success of a carrier and much of the CSA score is directly related to the driver. Provide tiered compensation programs where the best drivers with the best CSA scores get the best pay structure, perhaps even adding bonus options for good CSA ratings.

• Simply raise driver pay. Before raising the “per mile” rate, Sutton advised, carriers need to fully understand their cost structure and the impact of the fluctuating economy.

• Fire customers. How does this attract/retain drivers? Not every one of your customers are good customers. There may be low rates, they may be slow paying, they may give you bad lanes leaving drivers stranded. Their business actually may cause your drivers to leave. The smart carrier is constantly looking at their revenue and asking “Is this customer delivering the revenue I need to profitably carry their freight and retain my good drivers?” If not, then you have two choices. Raise the rate to make it profitable and keep your drivers happy, or fire the customer and focus on the customers that give you the best returns. By the way, you don’t really need to “fire” the bad customers. Simply put a flag in the customer record that tells dispatch to limit their business if your fleet capacity is tight. The customer only gets trucks if you have the availability.

Sutton also advised companies to make smart choices to take advantage of the current positive business environment by:

• Balancing their business (raising rates and culling questionable customers);
    
•    Focusing on freight that pays delivers the best return;
    
•    Building a strong team;

•    Keeping your debt low;

•    Investing in the best technology.