ORLANDO–It’s easy when sitting through another panel at a meeting like the Truckload Carriers Association annual convention here to become slightly bored when the executives on the stage give yet another talk about their best practices.
But then the realization sets in that in an industry that continues to see bankruptcies pile up–in just the last two weeks, FreightWaves has reported on trucking company chapter 11 filings in Florida and Alabama– the ones up in front of the audience are the survivors. At the start of the great freight recession, there was no guarantee they’d make it. But they did.
Think that’s easy? Just ask the owners and about 1,000 employees who lost their jobs at Montgomery Transport. Or check in with a lot of other now defunct trucking companies.
The continued existence of the panelists’ operations, no small feat, was the reality behind the forum’s title at the TCA conference Monday: Surviving & Thriving as a Carrier.
Trucking executives on the panel were Chris Hummer, the president of Iowa’s Don Hummer Trucking Corp.; Mark Walker, CEO of TransLand in Missouri; and Ty Walker, no relation to Mark and the Director of Finance at Stokes Trucking of Utah. The panel was moderated by Graig Morin, president of Brown Dog Carriers.
None of the companies that were on the panel are particularly large. Don Summer was the biggest, with about 300 trucks. TransLand has about 180 trucks. Stokes Trucking sits at about 50.
Having endured the pain of a multi-year freight recession, the panelists made clear that waiting and hoping for a turnaround was not a strategy. But there was a shared agreement on one key tool to get through the tough times: data and benchmarking.
Praise for TPP
The speakers were complimentary of the TCA Profitability Program (TPP), which takes input on performance from participating members and produces data on how a company’s peers are doing financially on average. (Company names are not disclosed).
Ty Walker said when Stokes joined TPP, the data his company received from the program “at first was daunting.” Taking the numbers coming out of the TPP system and comparing them to Stokes’ equivalent figures “takes some effort, but I’ve seen a lot of value in it as well being able to compare specific line items.”
As an example, the data goes down to the granular level of cost items like lumper payments. The calculation then, Walker said, is “let’s see what these guys are spending and be able to adjust accordingly.”
Mark Walker said TPP has “helped our company just tremendously in getting a lot better.” He said the data coming to them gives TransLand “an understanding of which numbers matter the most.”
Figuring out the most important numbers
Among the benchmarks he said his company particularly emphasized were costs on a per truck basis or revenue per truck.
Summer cited some of the key data points his company monitors, including network density, which has been defined as the concentration of freight deliveries in a given area. “How the network is performing is very critical,” he said.
Don Summer Trucking also calculates a profit/loss statement for individual drivers, he said. “I don’t know that we have it perfect, but it is another really excellent way to be able to benchmark your drivers against each other,” Summer said.
Mark Walker said TransLand looked over the various data points and landed on two being more important than all the others: revenue per truck per week, and EBITDA.
That simplification also came with a need to improve communications with the TransLand staff on the company’s targets. “Several years ago, we had put the goals in front of the employees, and we thought we were on the right communication path with all of them,” Mark Walker said. “We had an employee survey a number of months later, and they said they had no connection to these goals and what we do in our daily jobs.”
Communicating what the data means
Mark Walker admitted to being “perplexed” by the reaction. The next step, he said, was to establish what TransLand called the “financial acumen workshop.” He said the training in that course, for example, would take the revenue per truck per week number and break it down further into subcategories that would impact the final number. Mark Walker cited such measures as miles driven and percentage of seated trucks.
The other message to the employees, beyond just drivers, was “what is your role in impacting one of these key metrics or multiples.” It might take four or five sessions of training to fully bring employees up to speed on the meaning of that data, he said.
Ty Walker said the “scorecard” that Stokes produces weekly for internal consumption cites several different data points, including total revenue, revenue per truck per week minus fuel surcharge, and the available load count.
What are the best indicators?
Summer said in the last year, the number that has had “the highest probability of making a difference” has been the company’s loaded percentage in its non-dedicated network. And that’s a function of the market.
“In an era where you have limited pricing power, you can help your network by improving that percentage,” Summer said. “That’s one where we actually have the ability to change and that we can control a bit.”
Mark Walker also said the “best indicator right now” at TransLand is “miles driven in a day by a driver.” In the current market, he said, that data point is best at forecasting “whether or not we’re going to meet our needs.”
As Summer said to the audience, “the majority of us in the room are probably, for sure, privately held and probably many are our family businesses.” He said that means “you can sort of choose your planning horizon. We’re not necessarily chasing quarterly earnings.”
Summer said it was possible to operate a business like that with a 10-year window.
He then cited an important lesson Summer learned from a mentor: “Do not make permanent solutions to short term problems.” “We try not to have that knee jerk reaction, realizing it’s a cyclical business,” Summer said.
And that comes back to data. Different pieces of data, Summer said, have different values depending on where a company is in the freight market cycle. “If you have good vetted data that you trust, but you are not using it to make decisions, you probably shouldn’t be collecting that data,” Summer said.
Mark Walker echoed a similar sentiment. “Driving to just a few key, key numbers is really important,” he said. “Only put a few things out there. Stick with them.”
More articles by John Kingston
Derek Barrs defends FMCSA’s bold moves at TCA
Broker liability at SCOTUS: judges debate meaning of ‘motor vehicles’
Next step in a peaceful 10-hour truck driver rest period: lithium batteries
The post Panel’s message: In order to survive tough trucking market, don’t overlook data appeared first on FreightWaves.
