In The News

Trucking Industry Posts More Positive Growth In June

Higher load posting totals, higher mileage counts and total revenue posted higher than last year numbers, signaling a potential growth in the manufacturing sector and continual truck driver hiring.  Although June posted 5% gains over May, there was 1 extra day in May which could have shot the gains slightly higher.  Load postings and truck-related searches also posting winning totals over the same period one year ago.  Line haul rates per mile have remained consistent over one year, showing strong future optimism despite available capacity declines.

Implementing Increase In Rates

Based on the information above, implementing increases in rates often becomes a question when economic figures for trucking companies pour in. Trucking companies tend to fluctuate how they implement rate increases which most commonly happen yearly.  Many factors, including current rates of fuel, revenue from loads, and the number of loads along with other economic factors signify when the optimal time to hike rates has arrived.  Seven timing factors can play into your decision as to when hiking the rates is appropriate:

Researching current trends – Finding out what other transport firms are doing, where their revenue is heading and stock activity can significantly increase your company’s awareness, or give the opportunity to follow their lead. Timing the increase – Obviously you’ll avoid increasing rates when volumes are low; since freight volumes run higher during end of summer to end of fall, you should plan your increases around these higher load times. Cost factoring – Can your current balance sheet support offering an increase? Balance costs on administrative side and weigh in the potential impact that raising rates would have.  Keep in mind profitability, driver morale and potential for future failures also weigh into frequency of rate increases. Economic status – View historic stability, or the lack thereof, over the course of time to levy whether increases would be frugal, factoring in driver shortfalls and capacity hurdles. Sizing the increase – Companies tend to ‘lead by others’ examples when implementing customer rate increases.  View others’ historic increases in relevance to above factors before deciding on percentages. Customer history – Factor in the profitable customers versus those slowing down, or historically slow, and weigh the most frugal approach to take from there. Accessorial rates – Make ample consideration, based off reported accessory rates, to see if the set amount would merit or disengage current customers based off historical trends.
Once you’ve weighed options, making the decision from there should be cut-and-dry; bear in mind you could, inevitably, discontinue or reduce accessory rates to certain shippers which would then merit the rate climb.

Current Supply and Demand Stats

Although 2011 showed incremental supply and demand increases, 2012 is bucking the previous year’s bar-raising figures.  Impacting this analysis were long-term customers, those having been with Sylectus over 5 consecutive years, attributed heavily to this 2012 growth spurt. Line haul rates have remained strong, posting a $1.66 average.  That current rate is $.35 higher than the same period three years ago with six months remaining.  Total revenue per mile is currently up near the $2.20 per mile mark, a steady jump from the same period a year ago.

Final Thoughts

With load index rates increasing, revenues soaring and truck searches dramatically increasing in 2012, teamwork is really paying off for the trucking industry with the best still yet to come.  Make sure to seize every load opportunity and convert them into orders and continually keep driver morale high by offering the best possible rates and incentives relevant to your current revenue increases.  Economic times for the trucking industry continue to rise with many more record-shattering numbers expected in future months.

Sources:
“Sylectus Expedite Index”  (graph)- http://www.sylectus.com/sylectus/images/syleconomics/2012-07/7.png