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The Future of Finding, Loading, and Moving Freight in 2011

by Coverloads.com on 02/08/11

Another good article from Getloaded.com

How bad was the recession for moving freight in the trucking industry?  Bad by any measure, but here's one statistic that might help you see the big picture.  In the last three years, 250,000 trucks went out of service - or 13 percent of all commercial-sector vehicles on the road in January 2008.

The Longest Block
The industry's good news is that 2010 was a turnaround year for most of the companies that survived the slaughter of '08 and '09.  Recession survivors benefited not only from a modestly improved economy, but also reduced capacity in the freight market ( less competition).  Truckers who were dripping blood from cutthroat rates could at least charge break-even prices, meaning a rise in revenue per load.  And for the first time since 2006, the ATA truck tonnage index grew for 10 consecutive months (dipping in November).

"On the Cusp"
Happily, a confluence of positive economic events should produce even greater industry gains in 2011.

"If history repeats itself", say Noel Perry, an economist with Transportation Research Consulting Group (TRCG), "we will have two very good years in 2011 and 2012".
Bob Costello, chief economist for the America Trucking Association (ATA), agrees.  "The industry is on the cusp of some of the best years in trucking's history."
Why are industry veterans voicing positive turnarounds?  It helps to know some trucking history.

Prior to the recent recession, freight transport experienced a downturn in 2001, which was followed by a strong four-year period (2002-2006).  During this time, trucking companies enjoyed some of the strongest pricing power they've had since deregulation was introduced in 1980.

Trucking analysts like Perry and Costello expect the pattern will repeat.

Shippers and Shortages
The increase in freight volume, however, will likely bring its own problems, since the industry doesn't have the capacity it did prior to our recent recession.  The truckload sector (rather than LTL) is where demand will stretch supply. (Where shipping needs will be greater than carriers' ability to meet those needs.)

Perry forecasts that mid-2011 will see 3 percent GDP growth, which means similar increase in freight.  Major truckload carriers (Schneider National, Werner Enterprises, J.B. Hunt, etc), however, have cut their over-the-road capacity by as much as 15 percent.  The huge truckload surplus that began in 2009 will vanish, and as the freight economy improves, Perry predicts a shortage of some 200,000 units in truckload capacity next year.  "There is no way these carriers can ramp up trucks and drivers by the time the economy kicks in gear,"states Perry. 

The squeeze will inevitably affect traditional shipper behavior. According to a recent survey conducted by Cormark Securities, shippers are concerned about freight costs.  Perry expects shipper will try to lock in longer contracts as truck capacity worsens.

Truckload Planning and Lane Building

by Coverloads.com on 01/17/11

I recently ran across an article by Timothy Brady on truckloadplanning and lane building, that I would like to share with you.  It was posted on Getloaded.com December 28, 2010 and on January 10, 2011.

"When you think of load planning, you need to have loads planned far enough in advance so you are never placed in emergency "got to have a load now" mode.  In theory, the plan-ahead approach is great; in reality, it's one of the biggest challenges a truck-load planner faces day in and day out, week after week.  Whether freight is abundantly available or requires looking into every nook and cranny, continually honing your skills in the Art of Load Planning is necessary.

If an operation has been running on the day-to-day plan, the planner starts looking for loads only after a truck as delivered its current load.  This will put a small motor carrier in constant emergency "got to have a load now" mode.  If this is regularly happening, the trucking company is at the mercy of loads being posted at the moment.  This limits the company to many fewer loads and, most likely, the lowest rate load.  The more desparate a carrier is for a load, the less likely he will receive a rate that will pay his bills and make a profit:  hence the term "Cheap Freight".

Now, add to this approach the supply and demand factor: the few existing loads in an area compared to the number of available trucks, the greater control the broker or shipper has over the hauling rate and the lower the revenue out of an area.

So, what is an alternate plan of attack instead of getting stuck in this cycle?

The number one solution is concentrating on developing specific lanes of operation for each of your trucks.  Look for that unfilled niche of freight going in a specific direction.  Find multiple customers or brokers who have this niche freight moving in that same direction.  This approach builds diversification:  creating multiple sources of revenue within the same area and lane, but from different shippers and brokers.

Your next step is to look at the final destination of this niche freight and find several customers with freight headed back in the general direction of your location or outbound freight.

For example:

  1. In the trucking area I specialize in, we hauled high-value electronics  The items we loaded were manufactured in the San Jose are of California; Phoenix, Arizona; Albuuerque, New Mexico; Dallas, Texas; northern New Jersey; and Greater Boston.  Backup load areas were Los Angeles, CA; Las Vegas, NV; Austin, TX; and Harford, CT.  We would build our loads based on running this corridor.
  2. Each location had its specialty.  The San Jose area manufactured equipment required by most high-tech clean rooms, which was needed in plants in Phoenix, Albuquerque, and Dallas.
  3. Once our trucks delivered in Dallas, we picked up cabinets used in telephone switching and large computer server banks.  These cabinets were hauled to norther New Jersey where the other components for the units were manufactured.
  4. Once delivered, our drivers would load finished telphone switching cabinets or servers headed back to the West Coast, or contunue up the East Coast to the Boston area to complete the round with additional cabinets from Dallas or clean room components from the San Jose area.
  5. The return trip West had varied possibilities.  We hauled digital TV transmission euipment, high end consumer electronics, store cabinets, medical electronics and mail sorting equipment.  The common denominator was that they all required our specialized trailers and handling capabilities and all traveled along the same freight lane.
  6. Consequently, the areas of Los Angeles, Las Vegas, Austin, and Hartford became backups if freight became light or non-existent in any of the other areas.

Whether or not you haul electronics, dry bulk freight, refrigerated or general freight, the baic principle still applies:  Your load planning begins with the shipper and broker base you establish.  This perspective not only applies to both ends of your corridor, but must also include multiple locations for pick ups and deliveries in the middle of your freight lanes.

Unfortunately, too many small trucking companies limit their lanes and available loads to the economic fluctuations of two or three areas.  Instead of limiting your loads, you should diversify your freight corridor with multiple pick up and delivery locations.  Doing so provides you with greater opportunity to find the loads you need in advance with minimum deadheading.

Using the example above, if the San Jose area's freight suddenly disappeared, my planner would still have the options of locating freight in Los Angeles or Las Vegas without leaving a truck in the San Jose area until a load became available--or worse, having to deadhead to an unkown area.  The same held true in Texas and the East Coast for Austin and Hartford.

For the small motor carrier, developing your load-planning area based on your fleet size is very important.

In the previous example, there were 11 shipping customers (with multiple locations) and 15 trucks available.  Scale your freight corridor to your number of trucks.  The fewer trucks, the smaller the range of travel you need to establish.  Part of the art of load planning is not hanging your trucks out where there is very little to no freight.  The only exception to this is if you are receiving round trip rates to cover returning empty.  With a smaller fleet, the shorter the return distance to you home terminal (the location of your outbound freight), the easier you can absorb the cost of empty miles when they occur.

This type of set up is asset utilization:  Maximizing the space on your trailers.  If the load in your trailer has not met its maximum gross weight and has available floor space, there is usually a partial load that can fill the trailer gap.  Most partials pay a higher per rate CWT or cubic space than the rest of a truckload, and the additional money to the overall revenue can increase your bottom line significantly.

Keeping your trucks loaded with reasonable paying freight is the name of the game.  Honing your load-planning skills, maintaining a good freight lane, and asset utilization will keep the words "Cheap Freight" out of your vocabulary - and the revenue and profits flowing."

 

 

JANUARY CLASSES!!!

by Coverloads.com on 12/29/10

Two options for you! 

Option 1:  January 4  MEETS EVERY TUESDAY AND THURSDAY from 1PM to 3PM CST for FOUR WEEKS.  This option is a little slower paced and is designed to allow more time for you to absorb all of the information.

Option 2:  January 10 - 14  MEETS EACH DAY MONDAY THROUGH FRIDAY FROM 3PM TO 5PM CST for ONE WEEK.  This is fast paced.  You must have good computer and communication skills, as well as being able to learn quickly.

To see an example of what we will be discussing in class, click on "Our Gaurantee" and the click on the "dispatcher training" link.  You will see that this is an in depth comprehensive approach!

We can finance your tuition with a 50% down payment at which time we will send you the Independent Freight Agent Business textbook, and then the remaining balance is due the Friday before the class begins.

We look forward to teaching you how to cover loads!

CSA2010

by Coverloads.com on 12/17/10

Everyone is talking about CSA2010, but does anyone know what it really means?  What does CSA2010 stand for?  Comprehensive Safety Analysis 2010, and the www.safersys.org website has updated their site to include the scores related to CSA2010.  It is an issue with much debate that really needs to be investigated from reliable sources and not just word of mouth.

Do I think CSA2010 was designed to put anyone out of business? NO.  It is designed to reduce the number of large truck and bus crashes, injuries, and fatalities.  Will some trucking companies go out of business?  Probably, but if they are already practicing safety and maintaining their equipment then CSA2010 is not going to be the reason they go out of business.  The safety violations are the same as they were prior to CSA2010, however, the drivers are now more accountable.

There are four major elements to CSA2010-

  1. Measurement
  2. Intervention
  3. Safety Evaluation, and Information Technology
  4. COMPASS

1.  The measurement system would group the safety performance data of motor carriers and drivers into seven categories, called BASICs--Behavioral Analysis Safety Improvement Categories.  The seven BASICs are:

  • (1) Unsafe Driving
  • (2) Fatigued Driving
  • (3) Driver Fitness
  • (4) Controlled Substances/Alcohol
  • (5) Vehicle Maintenance
  • (6) Improper Loading/Cargo Securement
  • (7) Crash Indicator

This data would be score and weighted based on its relationship to crash causation.  Based on a carrier's score within each BASIC, the measurement system would trigger when the Agency should begin to intervene with a motor carrier, and when its performance has reached the proposed "unfit" threshold.

 

2.  Intervention - Once the measurement system signals the need to intervene, CSA2010 would draw upon a broad array of progressive interventions that are designed to advise the motor carrier or driver that their safety performance has come to the government's attention.  These steps are meant to improve unsafe behavior early.

These include:

  • Warning Letter
  • Targeted Roadside Inspection
  • Off-Site Investigation
  • On-Site Investigation - Focused Cooperative Safety Plan Notice of Violation Increasing Severity Onsite Investigation
  • Comprehensive Notice of Claim/Settlement Agreement

3.  Safety Evaluation - Safety fitness determination would be based on performance data processed through the measurement system, and would not necessarily be tied to the current FMCSA compliance review.  Depending on the motot carrier's BASIC scores, the safety fitness determination could be "continue to operate", "marginal" (with ongoing intervention), or proposed "unfit".  Each motor carrier or driver for which there is sufficient data would receive safety fitness determination that would be updated every 30 days.

4.  COMPASS - CSA2010 is closely aligned with COMPASS, an FMCSA wide initiative that is leveraging new technology to transform the way the FMCSA does business.  By optimizing FMCSA business processes and improving the Agency's IT functionality, COMPASS will help FMCSA and State enforcement personnel make better decisions, identify high-risk carriers and drivers more effectively, and apply a wider range of interventions to correct high-risk behavior early.

You can see all of the CSA2010 violations and how they are scored, by clicking on the CSA2010 link to the right of this page.  Remember, don't take anyone's word for CSA2010---DO YOUR RESEARCH! 

A New Year us upon us!

by Coverloads.com on 12/16/10

Wow!  What a year it has been!  We are excited about the new year, and just like everyone else, we are making New Year's Resolutions.  One of ours was the website.  We have been updating and making changes, and I have gotten many phone calls from those of you who have been keeping up with the site.  In between the holidays I will be working on the curriculum to have even more hands on assignments to help people have a more thorough understanding of the paperwork involved in finding and securing freight.

Do you have a New Year's Resolution that includes spending more time at home with your family?  Maybe you have been laid off and are looking for a career that lets you stay at home, or maybe you are just looking for a change in your quality of life.  We can help you achieve any of those.

What is my New Year's Resolution?  To make a difference for someone by educating.

May God Bless you all.  Judi, Coverloads.com Instructor

Moving Freight is like a fun game of Chess!
A detailed breakdown of the BASICS and weighted factors.