Q3 Public Company Results

Now that all the Q3 results are in for the publicly-traded truckload companies we track, we have completed our Quarterly Summary, which can be downloaded here.

For inGauge users, we have now added a new ‘quarterly’ view to both the BPG and MCD Dashboards. Within each of these new views, the public company data has been embedded in both table and chart format for further analysis.

Over the next few weeks, we will be taking a deeper look at the results of the public companies, including one consistent star performer in truckload (that doesn’t get as much press as they deserve) – Marten Transport.

The interactive chart below provides a quick snapshot of Operating Ratio results for the companies we track (adjusted Operating Ratio). For Daseke, Operating Ratio does not include aquisition financing expense (more indicative of the results of the underlying operating companies in their portfolio).

Time to Get Serious About Safety

I have a real issue with complacency from carriers when it comes to driver turnover. I will arrive at this from two different angles. When I look at a motor carrier that has excessive turnover I see any number of things that ring of serious issues that may threaten the companies very existence. When operating with high turnover, there is almost always CSA issues; this still comes with deteriorating marketability to the available insurance markets, which equals higher rates. There is a direct correlation between high insurance rates and operating ratios. There is a direct correlation between high turnover and accident rates, which is a rabbit hole in that professional drivers want to work for safe companies. Conclusion, if your company with high-turnover and poor CSA scores and a tightening insurance market, you better hope the current excess capacity the industry is experiencing stays around for a long time because when it does slow down, and it will eventually, you’re going to seriously up against it, as they say.
How do I know this? inGauge has data from over 170 carrier profiles with granular, detailed comparable data points that reveal what I have stated as fact. No more speculation or conjecture, this is now factual predicated on hard data. Being an unsafe carrier is terrible for business, you threaten the public and severely limit the return on investment, profitability.
Good news is that it is never too late to start doing the right thing, investing in a better safety program and tightening the policies, processes and bring a culture revolving around doing the “right things right”. The biggest issue here is the commitment to change, getting everyone’s buy-in and getting things started – change scares people, and change they must if you’re going to win when it comes to this stuff. So if you’ve decided to do this, the place to begin of course is with the senior management team, they have to understand and buy into the reality that living in a company with excessive high turnover is a losing proposition with a limited future. After that, you’ll need to get all the folks inside the walls onside, and that is a bit of a sales job in itself, we call it the ‘WIIFM’ = “what’s in it for me,” and there are many nice WIIFMs that come with this. For instance, back to inGauge data, we know that companies with lower turnover have the fewer accident and their CSA results are in much better shape than those folks with high turnover. Lower CSA scores and accident rates mean lower insurance premiums, which just so happens to be a direct correlation to better than the average operating ratio, profitability.
We also know that bringing in a safety-first culture into a company typically brings in tighter management practices in every area of business. Companies that operate in this fashion have a higher truck to inside worker ratio; they embrace technology at a quicker pace than their competition another direct correlation to above average profitability. We also know this, and this is a big part of the WIIFM, these companies typically pay their inside workers a higher than average wage that most companies.
If none of that works, try this, no one comes to work with the intention of failing at his or her jobs, doesn’t happen. However, here we are in many cases with turnover numbers that would make a longshoreman weep. If you can’t convince your people inside the walls that every departure from your company, whether voluntary or not, needs to be taken personally, you need new people. Every day many folks who worked at your company have to go home and tell their family’s that they don’t have a job, that the next paycheck isn’t coming, that sucks.
We all know that most can pick up another job pretty quickly, that’s not the point it’s disruptive, it is a change, again people don’t like change, people like routine in a comfortable setting. Companies call them job jumpers and refer to the situation as driver churn. Give it all the labels you want to they left because you didn’t give them a good enough reason to stay. You have to make your company sticky, sticky as in setting yourself apart from the competition.
It’s a paradigm shift that your needing and here’s one that fits. Are you a motor carrier that requires drivers to fill the seats and move the freight, or are you a motor carrier that differentiates itself from the competition by the quality of its workforce.  Think about it both of these situations would have the same amount of people in them, at which one would you want to work?
I know where I would want to hang my hat, don’t take me wrong here the transition is not an easy one, but whoever told you that running a business would be easy. A challenge yes, it is, but it is indeed a challenge worth taking in my mind, but only of course if you want to be safer and make more money.  If you’re interested in discussing this further, please go to www.tcaingauge.com/retentionscore fill in the questionnaire and let’s see where things stand.

Retention Action Plan – Stage 2 – Laying the Ground Work

Retention Action Plan – Introduction

Wow! Let’s keep it going!

TPP Summer Update

As the number of TCA Profitability Program (TPP) participants continues to grow (both online and Best Practice Group members), we are continually refining what it means to be a part of TPP. To stay relevant, we must provide services and content that will demonstrate a real ROI to participants and their businesses. Part of this is adding new functions and datasets to the inGauge platform, to provide more value and expand the possible number of users within each company. Our development queue for inGauge extends well into 2019. Here is a small set of the features and tools we are working on:

  • The inGauge Data Translation Layer – this cloud-based tool will enable users to rapidly ‘map’ their unique Financial and Operational data to the standardized data templates, based on the user’s unique attributes. Further, this tool will allow direct connection to the raw data that drives inGauge.
  • 90 Day Lag on Data – In the Fall, we will be rolling out a new feature on inGauge, which will allow users to view population results for 17 KPIs without the 90 Day Lag. The results will only be available (in this format) on the anonymous sections of the inGauge platform (Gauges and Line Graphs) and will also tell the user how many companies are included in the peer group (20 will be required in order to display the results). These KPIs are considered more ‘macro’ in nature, and thus, are not (in combination with anonymity) as much of an Antitrust concern. More and more companies are starting to report their data in a more rapid fashion after month end. This new feature will give users a more timely look at market direction. Will share more details closer to launch.
  • Quarterly View for BPG and MCD Composite – this view will be another interactive view for these popular dashboards. Further, this view will enable us to integrate the Public Company results directly into these dashboards (instead of the separate Public Co dashboard).
  • GL Builder – This free tool will be available free of charge to any industry participant. Building on the success of the TPP Chart of Accounts (271 downloads as of today), this interactive tool will allow the user to choose: 1) Activity Groups (CF/OO/LP/Brokerage/Dedicated), 2) Operating Mode (Reefer, Dry, Flat, Specialized, Tanker, Intermodal), 3) Custom Cost Centers. After choosing the desired attributes, and adding in the numbering pattern for cost centers, the GL builder will provide a clean General Ledger for companies to implement. Thanks to all those who participate on our monthly TPP Data Standards call for your assistance in this!
  • Integrations with TMS and Accounting Software – Tell your TMS provider you want API integration with inGauge. Very few companies are utilizing our API to streamline the reporting process. Our goal is integration with all major TMS providers by Q1 2019. Further, for those using API enabled accounting software (Great Plains Cloud, Quickbooks Online, Sage50 etc), our API documentation will allow you activate a connection yourself.

TPP Quarterly Report

Jack Porter (TPP Managing Director) and I have created a template for an ongoing TPP Quarterly Report, which we plan to distribute to group members. The first edition was distributed on August 1st to all TPP members. Since the initial distribution we’ve received great feedback from members on additional datasets you would like us to add and analyze.

Brokerage Best Practice Groups

As many of you are aware, we are in the final stages of creating two new Brokerage focused/specific Best Practice Groups. Although we are still working through some of the final details, the two groups will be based on Annualized Revenue (< 50 Million, and > 50 Million). Further, the meeting format will be limited to one meeting per year, and four quarterly ‘virtual’ meetings. The data collected will be a new template Jack Porter created and is ready to go within the new mapping tool and inGauge (you can start reporting now if you would like). Further, this data will be ‘anonymized’ within inGauge (but in same format as your used to) to address some antitrust concerns which could arise with this new type of group. Currently 17 existing members have expressed interest in joining these groups, and our target is to have twenty members in each group. There will be a free trial for existing members, and the ongoing cost of participating in these groups will be significantly less for existing group members. We hope to have the details out to all of you for consideration in a couple weeks.

Retention Coach Services

Although a formal announcement will be made in the coming weeks, we are please to let the cat out of the bag on an important new service under the TPP umbrella. Former TCA Chairman Ray Haight will be leading TCA’s efforts on addressing the ever-important issue of Retention with TCA and TPP member companies. As TPP’s Retention Coach, Mr. Haight will work with companies that want to change, and implement a framework and road map to improve retention (in all roles and functions), while also reinforcing the importance of culture to the long-term success of any business.

We hope everyone is enjoying their summer, and getting in some much-needed downtime before September!

TPP Profitability Spring Seminar – Register Today!

TCA Profitability Program

Spring Profitability Seminar – Retention, Development and Recruiting

Wednesday, June 27, 2018

Location: Renaissance Chicago O’Hare Suites Hotel – Chicago, IL


Register Today! Click here

Meeting Facilitators:          Jack Porter, Managing Director, TCA Profitability Program

John Lyboldt, President, Truckload Carriers Association

Tim Hindes, CEO, Stay Metrics

Ray Haight, Retention Consultant, TCA Profitability Program

Meeting Room Opens at 7:30am with Breakfast

  • Call to Order at 8AM (Jack Porter)
    • Anti-Trust Review
    • Roundtable Introductions:
      • Name, Role
      • Business Attributes: Location, Terminal Locations, # of Trucks, Operating Mode
      • TPP On the Spot: Your worst business or career decision you’ve ever made? (ice breaker)
  • “Hot Topics” (Jack Porter) – Opportunity to go around the room and have attendees discuss what they are seeing in their respective ‘recruiting’ market, including the added pressure due to the hot freight market.
    • Have you expanded your geographic recruiting range?
    • Relaxed your hiring criteria?
    • Added new Pay / Work Packages to be more flexible to potential recruits?
  • TPP Retention/Recruiting Survey Results Review #1 (Jack Porter & Ray Haight) :
    • Turnover results – six month period
    • Current driver demographics – Age/Gender/Full and Part-time/Teams
    • Minimum hiring criteria? Internal vs External (Insurance or Gov’t req’s)
    • Lead sources
    • Compensation trends
    • Referral programs – are they working?
    • Driver Recruiting and Management Platforms
  • Break at 10:00AM
  • Retention First (Everything Else Second) – Using Maslow’s Hierarchy of Needs to Fix Your Retention Problem (Ray Haight)
    • Maslow’s Hierarchy from a “Trucking Perspective”
    • Focusing on human needs instead of the low-hanging fruit (e.g. compensation)
    • Creating a congruent company culture inside and outside your office walls
    • Action items – things you can do immediately to improve retention
  • TPP Retention/Recruiting Survey Results Review #2 – Your True Cost of Recruiting (Jack Porter & Ray Haight)
    • We will review the results of the “Driver Recruiting and Onboarding Cost Survey”
    • Did the results come close to previous internal estimates?
  • Lunch at Noon
  • How TCA Can Enhance Your Ability to Retain a Better Workforce (John Lyboldt)
    • The new Truckload Academy
    • Advocacy efforts to help widen the net for recruiting
  • Using Data to Make Better Decisions about your Retention and Recruiting Efforts (Tim Hindes)
    • The Stay Metrics Process
    • Trends
    • 10 Key Actions Items
  • Traits of High-Performing Trucking Companies – What the Top Performers in TCA’s Best Practice Groups are doing to Improve Retention (Jack Porter)
    • Trends – Turnover rates (30, 90, 120 Days)
    • Fixing orientation
    • Continued development
    • Providing career paths beyond driving a truck
    • Making their voices heard
    • Equipment Specs for better retention
  • Orientation / Remedial Training – Deep Dive (Jack Porter)
    • Equipment
    • Customer Requirements
    • Live Training vs. Online
    • Instructions / Documentation
    • Proper Techniques to Prevent WC Injuries (Lifting, Slips, Trips, Falls, 3-Points of Contact)
    • Communication methods
  • Break @ 3:00 PM
    • Driver Utilization (Jack Porter):
      • We will ask all the attendees to come prepared to discuss the following;
        • Do you use forced dispatch or have minimum standards (miles, days worked, etc.) that drivers have to meet weekly?
        • Do you require drivers to get days-off approved ahead of time, or do they let them take days off whenever they want?
        • How do you determine full/part time employment status for their drivers. What criteria they use to transition low performing drivers to part time and removing benefits
        • Driver scorecards – how do you measure, what do you measure & do they work?
        • Driver development and training, risk assessment tools, driver performance Evaluation Processes used?
        • Cameras how is it working for you. If not do you plan on putting them in.

Register Today! Click here

100 and Counting!

100 weeks ago, we started publishing our weekly email newsletter. At that time, there we just under 100 recipients on our distribution list. Today, there are close to 3200 people that receive the inGauge Data + Action newsletter each Sunday. I’m well aware that this level of growth wouldn’t get too many professional marketers excited, but frankly I don’t care. It’s been entirely organic, and I can see first-hand that people are reading it (and hopefully getting value our of it). Our focus is to improve 1% each and every day.

When you start something, it’s easy to get caught up in the hype of trying to make something ‘viral’, instead of staying committed to consistency and the core purpose of whatever you are bringing to the table. Preaching the value of benchmarking and sharing ideas hasn’t been easy. In fact, four years ago (yesterday), we had our first development planning session to discuss the core features of inGauge – essentially trying to predict what our future clients would value.  Today, we are proud of the fact that 158 companies and their subsidiaries are actively using inGauge to move their businesses forward, and modify the ‘status quo’. With that being said, we are not even close to reaching our goal as a service, an Association, and as a group of forward-thinking Trucking organizations committed to continuous improvement. This last sentence captures what inGauge and TPP is all about – working as a group to advance the status, profitability and sophistication of the North American Trucking Industry. In today’s post, in light of the above milestone, I thought I would share a snapshot of both our short and long-term vision of inGauge for the TCA Profitability Program.

Short-Term Vision and Strategy

I’ve always been my biggest critic. I think this trait has been helpful in building a service that provides real value. Odds are that when a member communicates a ‘missing piece’ or any other type of service ‘deficit’, I’ve already identified it, and perhaps ruminated (and lost sleep) over it. The biggest problem in building a valuable benchmarking or comparison tool is ensuring that participants are speaking a common language. Language has nuance. If you’ve used Google Translate, you have seen this first-hand. Each trucking operation has slight difference in ‘dialect’. Although many of the variables are the same, you all address those variables in slightly different ways. Conversely, these slight differences affect how, and what you account for with respect to your financial and operational data internally. The biggest obstacle to continued growth of benchmarking in Trucking is the creation of a common language that removes (to the greatest extent possible) that nuance, which can obviously pollute the comparative data. I’m pleased that we have made significant progress on this specific topic. Recently, with the help of Best Practice Group members and valued partners, we published the first TPP Chart of Accounts. The TPP Chart of Accounts, available to every company free of charge, by clicking here, is result of sixteen years of contemplation, discussion, and iteration from Best Practice Group members. The TPP Chart of Accounts, fill a massive void (based on my first-hand daily experience) in the trucking industry. We haven’t necessarily created a new language, we’ve improved an existing one – and removed much of the nuance.

It would be foolish to think that companies will simply do a complete (and quick) ‘renovation’ of their internal reporting processes and models. As such, having an easy to use interim step is (and will always be) important. This missing link needs to be able to translate existing data, that may not be in the form that is required (has that nuance). In July of 2017, we started building a data mapping tool to address this critical requirement. Prior to that, we expected inGauge and BPG members to perform that interim step themselves. Many have, and continue to do a great job in this regard, but it has been a big barrier to entry for companies looking to get started. We are now (as of late Friday evening), on our 79th version of this data mapping tool. This tool allows companies to swiftly categorize, allocate (in six different ways) and report their financial and operational data in a standardized fashion. This tool, I am proud to say, is saving members a significant amount of time each month, and providing inGauge with better data – which as a by-product, improves the credibility of the results and the elevates the status of our platform in the industry.

However, we’re not done (not even close). The current version of our mapping tool is simply a ‘proof of concept’. We have already started building what we are now calling the inGauge Data Engine (please send me your feedback for a better name). This cloud-based tool will not only provide the critical mapping functions, it will also provide an enhanced developer environment, to allow you to more rapidly connect your databases (securely) to inGauge. Further, using machine learning, it will perform the initial steps in the data mapping process for you, automatically. Finally, and most-importantly, it will allow you to connect data, build dashboards, KPIs and visualizations for your own internal purposes, as opposed to external benchmarking.

In short, our short-term vision and strategy is making it increasingly easier for existing and new members to extract the most value out of the exercise of benchmarking, while at the same time reduce the resources required to transform the data into that common language required.

Long-Term Visions and Strategy

The biggest value of the Best Practice Groups is that the program provides companies with the ‘How’ (simply stated). Each group is comprised of people that want to get better, and desire external feedback on their strategies and activities. No one leaves a group meeting without at least one actionable task, project or thought to take back, and implement within their respective organizations. However, the onus is on that individual attendee to ensure that they deliver that idea, next step or strategic change when they arrive back to their business. Understandably, people can get caught in the whirlwind as soon as they arrive back at their facilities. Although it’s understandable, it still represents a massive gap – one that needs to be filled.

In early 2017, we introduced inGauge Actions, a simple project management tool to help capture and translate some of those great ideas that flow out of group discussions and presentations. We are pleased that some companies have used this tool, but we also understand that this feature is simply (again) a proof of concept. On that note, part of our long-term vision for inGauge is three-fold:

  • Increase the number of inGauge users, within each participating company with access to inGauge. Additional ‘subusers’ are free – and very strongly encouraged.
  • Automatically capture, and assemble pre-built projects within inGauge Actions that companies can utilize to move their businesses forward. These projects will be both group-specific.
  • Provide a auto-suggestion feature, to scan the library of good ideas (based on the group-specific presentations and discussions) and automatically recommend, based on performance on one or multiple KPIs. For example, if your Driver Turnover results are subpar, inGauge will automatically scan the pre-built projects that can help you to improve your results, and link those team members (based on their defined roles) to the project.

The above is an ambitious pursuit. Any time you attempt to link the qualitative with the quantitative, you will encounter many obstacles on the path. However, once we have our short-term vision and strategy completed, it will clear the deck to allow us to attempt this ambitious strategy. Stay tuned and feedback welcomed!

Onward and upward!

Thanks to all the BPG and inGauge members who have made all of the above possible. Your support is greatly (and graciously) appreciated!

Public Company Results – Q4 2017

Time Value of Money: Knowing Your Effective Rate per Mile

Most of us are familiar with factoring companies, as well as the quick pay programs that some freight payment companies offer.  There is a time value to money (receiving a dollar today is worth more than receiving a dollar next month), but are these ‘incentive programs’ really worth the fees?  And aren’t factors just for companies that aren’t doing very well, and having cash flow issues?

We are going to address the second statement first.  Traditionally this point of view was correct, and factoring companies were there to service the smaller companies that were unable to get a more traditional financing arrangement to help fund working capital (e.g. Line of Credit).  At one time it was not unheard of that some carriers would look at the use of a factoring company when evaluating carriers for brokered loads.  In today’s economic reality some larger, more stable companies have started to turn to factoring companies in lieu of an operating line of credit facility.  The reason for this is depending on the risk profile of your customers you may be able to get the percentage rate that the factor charges into the range of what a bank will charge for an operating line – into the 3.5-5% area for customers that meet the factor’s credit rating scores.  With most factoring companies you no longer need to do an “all in” arrangement so you could just factor an amount that will cover your operating needs.  This may make this a potentially interesting arrangement for a fleet that is in need of a large scale equipment refresh, and needs to maximize their ability to finance these investments.  Additionally a factor can provide funds as quickly as the same day if a wire option is chosen or the next day if using an ACH.  In terms of drawbacks, these are shared with the Quick-Pay programs so we will discuss them at the same time.

Quick-Pay programs offer another way to accelerate the payment cycle.  Many of them are structured as a 5% discount to be paid in 5 days and then a second option in the range of 3-4% to be paid in 10-15 days (the second option tends to vary).  For larger carriers, the discount may be between 1-2% and 0-1% respectively. The discount may vary between freight payment companies and brokers, but they follow the same principles – accept a discount and we will pay you quicker.  Part of this discount is to cover the cost of fronting the payment to you, while they are waiting to get paid by their customer.  However these are also a profit generator as the cost of short term financing the fronted funds is nowhere near the discount they are asking.  The true cost of advancing the funds to you is less than half of a percentage point so they are making a decent profit on the spread.  One thing to consider with this scenario is that in the best case scenario you are paid via EFT or ACH after the waiting period.

Both scenarios share some drawbacks.  First of all, you are taking a discount to get paid quicker than the normal 30-45 day terms.  Using a very simple example, if you charged $2.00 per mile all-in, and you have to accept a 5% discount under either scenario, that is the same as only having charged $1.90 per mile.  You need to make sure that you have a good handle on your operating costs to ensure that this does not put you into a loss position, especially after allocating for fixed overhead.  You need to consider that many of these freight payment companies have already been working at getting the rates reduced, so have you really left enough margin in the rates to allow for an additional discount?  Another consideration in factoring is if the factor has recourse or not.  Having recourse means that you have assumed the risk of non-payment by your customer.  This will generally reduce the discount rate (in some cases, by a significant amount).  There may be an additional holdback involved – as an example, 80% of invoiced amount next day via ACH, a 5% discount on the total amount and then the remainder after the customer has paid the invoice.  If the customer defaults on the invoice then the factor can come back at you for the advanced amount.

So, now we offer a few generalized statements in conclusion.  First, is that any quick-pay solution likely has some hidden costs in terms of how quickly you receive the cash.  These options are generally non-recourse, so the payment company takes on the risk of default.  However the delay between when the payment is processed, and the receipt of the money needs to be taken into account when determining if the discount is worthwhile taking.  A similar argument exists for the use of factoring companies.  One notable exception is with a customer that takes extended payment terms.  A recent example shared by a client, was a major manufacturing company whose standard payment terms were 120 days, and generally stretched closer to 150 days.  In an extreme example like this the discount required for a quick pay may be worth it as the lost interest on the money will be close to the cost.  However unless you are a small cash strapped carrier, the discount cost is unlikely to be worth getting paid in 5-10 days instead of 30.  The only other exception would be if you are using these scenarios to avoid or replace an operating line.  There will be some fairly complex calculations (that are beyond the scope of this discussion) to determine which is the best option for your situation.  Remember to keep your margins in mind when determining if you can afford to use either of these options, especially for dry freight lanes that will have more “commodity” pricing as opposed to more specialty work such as temp control or flatbed.  Finally, if you have to use these services, like anything else, try to negotiate a better rate where possible.  This is more likely with a factoring company, but if you are doing a large amount of business with a company that offers a quick pay option you may be able to negotiate a better discount rate or a better payment vehicle (wire or ACH instead of a check).  Regardless the calculations will be different for different carriers and even different customers and/or lanes.  Know your costs, follow best practices, negotiate your best deal and monitor on an ongoing basis to ensure that the assumptions have not changed.

These two options may not be your preferred vehicles, and for some companies it would never be a consideration, but they are good to keep in the tool box in case if, and when they are needed.  It’s just like in baseball – any pitcher can throw a fastball, most can throw the curve, but to be highly successful you need to have an off-speed, a split finger, a cutter, a knuckler and maybe even an Eephus to match specific batters and counts.  You may not ever use them but understand how and when they work and then have them as an option if the situation arises.