While presenting hard trucking data, a TCA exec hints that what is coming is way better

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In a presentation at the Truckload Carriers Association annual meeting in Orlando that had many very specific numbers, some of the most interesting data by contrast was intentionally vague.

The program, entitled “The 9 Traits of High-Performing Trucking Companies,” focused not only on those traits but also on data that TCA has gathered through its TCA Profitability Program and published through its inGauge data aggregation platform. Because of anti-trust concerns, data can only be publicly disclosed with a 90-day delay.

But that doesn’t mean that inGauge isn’t pulling in current data. Chris Henry, program manager of the TCA Profitability Program, said the data he is seeing coming in is backing up the bullish reports on the state of the industry.

“If I were to show you December, January and February results, there are some pretty dramatic changes,” Henry said after reviewing some numbers that went through November.

For example, he said he has seen one company for that 90-day period that had an operating ratio of 68%. Another company reported a gross margin of 42%. Within the aggregate numbers posted by inGauge, there always are wide individual differences. But those sorts of numbers would very much  stick out when looked through the lens of the aggregate performance in periods prior to the last three months. 

For example, a slide on gross margin for all modes of trucks showed a downward trend from a bit above 20% in the second quarter of 2015, dropping down to 15%-18% by the third quarter of 2017. Those would be the numbers to serve as a contrast with the 42% cited by Henry.

A chart shown by Henry had the three categories with operating rates between 88%-93% in the second quarter of 2015. But by the third quarter of 2017, the range had deteriorated to 95%-97%.

There was significant variation within those numbers depending upon type of truck, and there were also some dramatic recent improvements. For example, the flatbed/tanker segment had an operating rate in the final quarter of 2017 above 102%, but it slid back to about 95% in the third quarter of 2017.

After showing a slide of data for revenue per truck per week–showing a trend that has been mostly down to flat for the past three years–Henry again repeated that better days are ahead. If the last three months could be seen, he said, “you’d see a pretty dramatic increase for this measure.”

The data Henry discussed was under three categories: the Profitability Program’s 20 High Performer’s index; members of the Best Practices group; and the wider universe of companies that participate in inGauge, supplemented by available public company data.

Top 20 usually the best…but not always

The presentation showed how–mostly–the companies in the top 20 high performers consistently outperform both the members of the Best Practices group and the larger number of companies surveyed by inGauge. For example, administrative wages and benefits as a percent of net revenue–which could be viewed as how much money a company is spending on things other than drivers getting goods to their customers–came in during November at 7.02% for the top 20. It was 7.26% for members of the Best Practices group, and shot up to 9.08% for the broader inGauge survey.

But that sort of ordinal ranking didn’t always work cleanly. While total wages and benefits as a percentage of fleet revenue was 43.21% for the top 20 in November, the best practice group members saw that number shoot up to 47.24%, while the inGauge group was in-between at 44.02%.

Similarly, for miles per week, Best Practice group members had the best performance at 2096.13, which was significantly better than the top 20’s average of 1967.60. Companies in the inGauge universe were at 1937.18 in November.

What are the practices that distinguished these companies? As spelled out by Henry, they are not necessarily unique to trucking; they could probably be adopted in any industry.

Among the more intriguing out of the nine:

  • Adding by subtracting: “It’s easy to get enamored about a new project, goal or task,” Henry said, referring to a point on his slides that declared humans and systems have a “terminal capacity.” “Your  people are doing redundant tasks every day. Before you add to them, make a list of the things you are going to stop doing.”
  • Investing in intangible assets as well as tangible ones: the slide featured a quote from a member of the Best Practice group. “If I had to choose between adding a driver or a software developer, I choose a software developer,” the quote said.
  • Build a skilled workforce: Henry gave particular emphasis to training, and not just in an employee’s direct tasks. And it may not cost a lot, he said; utilize both trucking-specific learning platforms, like the TCA’s Truckload Academy, or less-specific courses from the so-called MOOCs, massive open online courses.
  • The one percent: Henry said top performers are not just looking to hit home runs; bunts will work too. And that sort of incremental progress can lead to that 1% per day goal.
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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.