26 Jul 2010 at 3:00am
Seven of the eight publicly traded motor carriers that reported second-quarter earnings last week reinforced the trend of improved financial results driven by tight capacity, along with modest rate, volume and utilization improvements.
26 Jul 2010 at 2:45am
For more than 15 years, Just Born Inc., the Pennsylvania candy maker of Peeps and of Mike and Ike, transported newly made confections from its Bethlehem plant to two warehouses 75 miles away.
26 Jul 2010 at 2:30am
UPS Inc. "fired on all cylinders" in the second quarter, boosting profits and firming rates, despite spottiness in the global economic recovery, Chief Executive Officer Scott Davis said July 22.
30 Jul 2010 at 8:25am
UPS has set a new automotive goal to improve its fuel efficiency by 20%; and has officially opened a new facility in Portland, Oregon.
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30 Jul 2010 at 8:24am
GEFCO Spain launches new two-wheeler service, renews contract with DIA; GEFCO Romania develops new door-to-door logistics solution for Anaka; GEFCO Spain renews DIA partnership for three years; GEFCO Germany obtains ISO 14001 environmental certification; GEFCO Portugal is certified an Authorised Agent by INAC.
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30 Jul 2010 at 8:22am
GateKeeper USA has been granted an exclusive worldwide 99-year licence from an affiliate of Phoenix Partners for the fabrication of Basalt Fiber through a proprietary process in the manufacturing of cargo and shipping containers.
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30 Jul 2010 at 8:21am
The Manatee County Port Authority has awarded the contract for Port Manatee's Berth 12 dredging project to Great Lakes Dredge & Dock Co.
30 Jul 2010 at 8:20am
Deutsche Bahn is to invest around '19 million by 2014 in the expansion and modernisation of transhipment and storage capacity on Duisburg's Coal Island.
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29 Jul 2010 at 6:20am
The US Attorney's office has moved to dismiss the indictment against an Agility subsidiary, following the company's filing of motions to discover the government's evidence against it.
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29 Jul 2010 at 6:17am
AirBridgeCargo Airlines has taken delivery of its third Boeing 747-400 freighter in four months, increasing its total fleet to ten B747Fs.
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29 Jul 2010 at 6:15am
The Japan International Cooperation Agency (JICA) has signed a loan with the Indian government to help develop the country's freight rail network, adding to what will be the largest amount of ODA loan ever allocated by Japan to a single project.
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29 Jul 2010 at 6:09am
Norbert Dentressangle Transport Services has been appointed by French fine wine specialist Nicolas to provide a bespoke UK transport solution for its eighty UK retail outlets.
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29 Jul 2010 at 6:08am
Traxon Europe offers EDI link to South African customs, and Virgin Atlantic Cargo has brought sales in-house in South Africa.
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31 Jul 2010 at 12:06am
30 Jul 2010 at 4:17pm
30 Jul 2010 at 8:07am
30 Jul 2010 at 4:21pm
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![]() Trucking Firms Trail Friday
Forbes
In trading on Friday, trucks & other vehicles shares were relative laggards, down on the day by about 1.7%. In trading on Friday, trucks & other vehicles ...
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30 Jul 2010 at 12:52pm
31 Jul 2010 at 12:03am
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30 Jul 2010 at 12:54pm
31 Jul 2010 at 8:41am
31 Jul 2010 at 12:06am
31 Jul 2010 at 10:24am
Transportation companies maintain data files on sales, operations, accounting, maintenance and human resources. The data can be captured on paper or in computer systems. It is often scattered throughout companies in data bases that are incompatible, incorrect, outdated or inaccessible.
One large trucking company, U.S. Xpress, decided to see what they could 'mine' from the data in their company. The $1.4 billion trucking company recruited Tim Leonard away from Dell where he was responsible for their data warehousing architecture to become their chief technology officer. Tim's mandate was to see what he could glean from U.S. Express' data to help improve the company's profitability.
Tim found a 'lot of data in different silos in different areas.' He also found a large amount of data streaming in from the company's computers. 'Just with DriverTech, our in-cab information system, we got over 900 data elements with every pull.' This level of data was coming from over 9000 trucks. On top of that, much of the data was 'dirty - - incorrect, inconsistent or incomplete. This prevented the company from producing the types of dashboards and business intelligence reports we wanted . . .'
The U.S. Xpress Solution
The company had 'cleaned' its data five years ago but it had not maintained this effort thereby allowing the data to become 'dirty' and impossible to use. Leonard launched a data quality initiative using applications from Informatica, a software vendor that provides data integration and management tools. He began with a pilot to identify, collect and clean data associated with truck idling time. Leonard created an idle report that linked truck numbers, driver names, and the fleet manager responsible for each particular truck. The project took six weeks to complete and two weeks to test.
Benefits to U.S. Xpress
Leonard and his team produced a report, backed by solid data that is estimated to save U.S. Xpress $6 million a year across its fleet of 9200 trucks. The payback period on the software investment was three months. Leonard then expanded his data cleansing and mining initiative to include maintenance, operations and customer relations management. One maintenance 'data-mart' and six executive dashboards replaced 400 reports.
Small and mid size fleets can also benefit from data cleansing and mining. Mesilla Valley Transportation (MVT) is one of the largest transportation providers in Western Texas and Southern New Mexico, with a fleet of 800 trucks and 3,500 trailers that haul goods across North America. To manage costs, MVT sought to watch every penny and count every mile per gallon, per driver. Yet, employees struggled to understand profitability and performance, manually cobbling together information from siloed data sources using various tools and resources.
'We also had a problem on the financial side of the house,' says Mike Kelley, Director of Information Technology at MVT. 'Our transportation management system didn't provide consolidated reports or historical information for trending analysis. Our complex corporate structure includes multiple companies using multiple accounting systems. Producing a consolidated financial statement was a manual, time-intensive process.'
Dean Rigg, Chief Financial Officer at MVT, wanted tools to measure companywide performance. 'Business intelligence is about showing employees our goals and encouraging them to perform. We had no way to say to everyone, 'Here is where we are today; this is where we want to be tomorrow.' Instead, the route planners and fleet managers had to pull month-old data from a variety of places. They were making business decisions based on a gut feeling rather than from factual information.'
Key performance indicators (KPIs) were calculated monthly, using complex Microsoft Office Excel worksheets. Management turned to the IT department for custom reports on KPIs such as average miles per truck, per day; rate per mile, per area; long idle/short idle data; business by sales representative; and average accessorial revenue per truck (extra services that are billable, such as including several workers to unload goods, or just-in-time delivery). Soon, 3 of the 11 IT staff members were working full time delivering reports. IT staff members struggled to consolidate data from disparate sources. Also, they used different methodologies for reports, which diluted management's faith in the data.
'We immediately started looking for a comprehensive business intelligence solution from a single vendor,' says Kelley. 'In these tough economic times, we didn't want to pay for a costly, difficult-to-use solution or try to cobble different tools together. The solution had to be easy to deploy and use so we could start seeing the value sooner rather than later.'
The Mesilla Valley Solution
Mesilla Valley Transportation chose a business intelligence solution from Microsoft. The solution provides MVT with a suite of technologies that gathers data from the company's systems, creates customized reports and dashboards for analysis and drill-down, and makes reports available to employees through familiar Office system technologies. After deploying an interoperable suite of Microsoft business intelligence technologies, staff members can access, manipulate, and share data using familiar Microsoft Office technologies and dashboards with drill-down capabilities. With reliable business data, MVT is measuring the efficacy of its cost-saving initiatives, motivating employees to perform better, cutting costs, and driving profitability to stay competitive. MVT completed the rollout of its business intelligence solution in December 2009. Today, more than 300 employees in 30 departments use it as an integral part of their work environment.
Benefits to Mesilla Valley Transportation
Mesilla Valley Transportation is using its Microsoft business intelligence solution to gain unparalleled visibility into the business so that it can compete in a tough economy. 'We depend on our Microsoft BI solution to maximize performance and productivity,' says Kelley. 'It's empowering our employees to take advantage of current data so we can work together to keep MVT trucks on the road. And the more we are able to deliver reliable business insights to improve performance, the better equipped we are to make the right decisions'decisions that save time and money.' Since deploying its business intelligence solution, MVT has improved information access, increased profitability, and improved employee performance and resource utilization'all without incurring extra work for the IT department. Clearly data cleansing and data mining are tools that trucking companies of all sizes can use to improve their profitability.
23 Jul 2010 at 4:05pm
Noel Perry, a Partner with FTR Associates, has written a very interesting and thought provoking paper entitled, 'The Challenge of Deep Economic Cycles,' In his report, he argues that 'the United States has resumed a pattern of high cyclicality. That means bad things for logistics.'
Mr. Perry suggests that most of us tend to operate in a 'bipolar' way. As creatures of the present, we interpret a good stretch of economic activity as a constant that will last forever. Our confidence in a continuation of the good times leads us to 'end up in an overbuy mode. At some point, usually after a significant overbuy, we realize our error and stop buying. The same focus on the present . . . now causes us to . . . underbuy, again by a significant amount. That is a recession. The economy is bipolar, cycling between euphoria and depression.'
As we become more euphoric, 'our neurosis becomes psychosis and the overbuy becomes a 'bubble.' At some point the bubble bursts and we get a long-overdue big correction.' Most recently, 'the . . . three overbuys of the cycle were consumer credit, home prices and financial risk taking. When those bubbles burst in 2008 the economy collapsed.'
This leads to Mr. Perry's key thesis that the latest bubble has yet to burst. This bubble will result from the credit problems in Europe and in the United States. 'Since I have yet to see the least evidence of the resolve to reduce U.S. governmental borrowing, from either party, I conclude that our creditors will prick our bubble sometime this decade, probably sooner than later. Moreover, the resulting shock to a governmental system . . . will create a wave of . . . taxes and spending policies that will add another level of volatility to the transportation environment.'
Using historical data on previous economic cycles, Mr. Perry demonstrates that recoveries following deep downturns tend to be much shorter (e.g. 10 quarters versus 25 to 28) than the more shallow cycles and the peak to trough is five times worse. 'Short recoveries are bad for transportation for a simple reason. The benefits from an upturn take about a year to come in. It takes six months or more for the average manager to realize that there has been a turn; it takes another six months for that manager to take advantage.'
These rapid changes in a short time frame make it difficult to right-size the fleet. 'Right-sizing usually falls short of the required amount because the fleets seldom choose to right-size fully and because they can't right-size fast enough, even if they wanted to. They must complete the job after the rises and falls are complete.' This creates a significant capacity utilization issue. In addition, regulatory changes are expected to take more than 200,000 drivers out of the U.S. workforce. This will create stress for all industry participants. Mr. Perry also argues that 'truck pricing has entered a new and radically more volatile phase.' A more volatile environment also creates large swings in trucking company earnings as we have seen the past year.
If we are headed into a more difficult freight environment, what should trucking company leaders be doing' Mr. Perry argues that there are two approaches to developing a cyclical strategy.
'Smoothing The Cycle. Mr. Perry suggests that there are five variants to this option for a carrier:
' Choose a customer segment that is growing, in the hope that the underlying trend will moderate a downturn.
' Choose a customer segment with inherently low cyclicality. The classic example is the reefer segment. Americans always overeat; there is no undereat. . .
' Assemble a diversified portfolio of customer segments that vary in different ways and at different times. Railroads, inherently do this with large portfolio of weather-related commodities (grain, coal) that offset autos and steel that cycle with the economy. . .
' Concentrate on the most stable portion of any customer's business, usually the base load, dedicated portion. Customers attempt to protect their dedicated operations in a downturn to keep productivity high and cost low. . .
' Attempt to lock in volume during a downturn in exchange for guaranteeing capacity during the next upturn. The catch to this strategy is the tension between market conditions and the smoothed trucker's earnings. During the downturn those earnings are above industry averages attracting competitive attention. During the upturn the smoothing results in earnings below industry averages, creating pressure for a move. This tension requires very committed manage¬ment and solid relationships with customers.'
The other option is:
'Chasing The Cycle. The alternative is to adopt flexible operations that move with the cycle. One cuts cost aggressively during the downturns . . . then adds capacity rapidly during the upturn'for a price. This approach puts a premium on forecasting and monitoring because the highest returns go to the first adapter. That firm cuts costs before prices collapse in a downturn and scarfs up capacity just before the real capacity crunch.
The deep-cycle economics of the current decade will require managers (and investors) to adopt four new paradigms, heretofore seldom seen in North American logistics. The first is a switch to flexible budgeting and planning, abandoning the comfortable notion that the next year is predictable. This will take a significant increase in market tracking and scenario planning.
The second switch is from short-run profit maximization to full-cycle profit maximization. All of the possible strategies for managing deep cyclicality make the practitioner suboptimal at some point in the cycle. Management (and investors) must fight the urge to abandon the strategy at that point.
The third switch is related; that is the development of full-cycle relationships between shippers and carriers, characterized by much tighter three- to five-year contracts rather than the loose one-year contracts in vogue. Jumping ship has a much higher cost in a deep-cycle economy.
The fourth switch is the change from simple cost minimization to cost minimization with capacity assurance. This will be a major challenge to a shipper base whose value system rejects price premiums and a carrier base shy about extracting capacity premiums.'
17 Jul 2010 at 10:18am
In 2009, trucking company executives faced the most serious economic challenge since the Great Depression. Many leaders adopted a survivor mentality. The focus was on maintaining essential business while cutting all discretionary costs. Despite the departure of an estimated 3000 trucking companies, most industry leaders were able to right size their business model, park excess equipment, reduce staff and freeze or cut salaries to remain in business.
This year is shaping up to be very different from the previous one as trucking company executives are facing a new set of challenges. Business levels are improving but at an agonizingly slow pace. The European debt crisis has created a new level of uncertainty as to whether or not the economy will continue its growth pace or slip into a double dip recession.
In the LTL sector there is still excess capacity that is making it difficult to increase rates. In the truckload sector, capacity shortages are being experienced on certain days in specific geographic areas. The intermodal business is running at about full capacity.
The new CSA 2010 initiative will raise the bar on truck fleet operational performance at a time when driver shortages are occurring. In the U.S. potential new cap and trade legislation and new emissions standards could have far reaching effects for the trucking industry. Truckers are buying fleet equipment again but mostly as replacements rather than in anticipation of growth. Consumer confidence has taken a step backwards in recent months.
This evolving economic environment will require modifications to the leadership styles of truck fleet executives. The 'bunker mentality' of 2009 must be replaced with a new leadership paradigm.
Improved Skill Sets
According to a new survey conducted by ExecuNet of 3,636 executive recruiters and human resource professionals, big changes are under way. Over one in four companies surveyed plan to expand their executive teams with new hires and 56 percent are planning to 'trade up.' They are seeking replacements that are better equipped than the incumbents to meet current expectations and market demands.
Drivers of Business Growth and 'Quick Wins'
This year industry executives must be able to drive growth. Business owners are looking for 'adaptability,' the ability to change course and take decisive action to make things happen. Executives must be able to secure 'quick wins,'. . . . 'launch new initiatives and make an immediate positive impact on the organization and its bottom line,' according to Craig Herner, a partner with recruiter Odgers Berndtson in Vancouver.
Motivators
This year leaders must be motivators. As reported in a prior blog, many survivors of staff cuts are suffering from 'employee layover syndrome,' an emotional and physical state brought on by over work and stress. These employees are looking to their leaders for good direction, a solid plan, support and team building skills.
Retention of High Potential Staff
In a recent Toronto Globe & Mail article, Rick Lash, Toronto-based national practice director of leadership coaching company, Hay Group, expressed the view that 'in a recovery, organizations want managers who can retain their high-potential staff because, as the economy improves, top quality staff are usually the first group to look elsewhere for other opportunities.'
Operational Excellence
Trucking company executives will also need to bolster their operational skills to ensure their drivers pass the CSA 2010 checks. For truckers that have not focused on this area, this initiative will force these companies to improve their fleet management processes. This will take operational excellence and quality improvements skills.
In summary, trucking company leaders will need to drive business growth, upgrade their skill sets to meet changing environmental factors and regulation, improve morale, retain their top performers and upgrade operational performance to achieve success in 2010.
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