Load availability has been increasing steadily on the spot market, driving the average load-to-truck ratio over 7-to-1. Flatbed freight surged for the first four months of the year, increasing by more than 1,000 percent compared to 2009, before declining by 15% in May compared to April. The ratio for flatbeds stayed above 32 loads per available truck, so capacity is still constrained, but reefers and vans are heating up in June.

Load-to-truck ratios don’t tell the whole story, however. For example, carriers continue to search for loads, even when they don’t post trucks. When freight volume is high, carriers prefer to make phone calls instead of receiving them. This is especially true for small carriers, which make up more than 59% of participants in TransCore’s DAT Network.

Your experience may vary, depending on the markets you serve. Each lane and equipment type has its own characteristics. How does freight availability look to you? What are your predictions for the second half of this year?

Motor Carrier Protection Act of 2010
Summary of Major Provisions, excerpted from the web site of Senator Olympia Snowe
 

• Increases the broker bond from $10,000 to $100,000 and applies the bonding requirement to freight forwarders.


• Establishes stricter requirements for entities seeking broker/forwarder authority as well as specific guidelines from FMCSA’s review of authority applicants and applications.


• Establishes strict penalties for violations including unlimited liability for freight charges for brokerage activities without a license or bond.  Authorizes private damages remedies against companies who violate FMCSA regulations.


• Establishes an annual registration requirement to renew broker/forwarder operating authority and generate revenue for FMCSA enforcement. Requires FMCSA to revoke operating authority that is not renewed annually.


• Establishes strict regulations on bond providers and the manner in which bonds are administered.


• Clarifies that motor carriers must have a broker’s or forwarder’s license and bond to put freight on another carrier for compensation.


• Requires separate registration numbers per authority, and that whatever authority is used in a transaction must be stated in writing. 

 Note: Both the Transportation Intermediaries Association (TIA) and the Owner-Operators and Independent Drivers Association (OOIDA) have expressed support for the proposed legislation, according to an article that appeared in the Journal of Commerce on June 17, 2010.

Throughout 2009, trade publications read like a prescription for personal and professional depression:  tonnage down, rates down, shippers switching from trucks to rail – certainly going to intermodal and regional distribution strategies – and wholesale bankruptcies affecting brokers and carriers alike.  In February 2010, when we sent out TransCore’s third annual broker benchmark survey, we could hardly wait for the results. (Not!)  Well, the biggest surprise was that the results weren’t all that different from last year’s.

More than 225 brokers, broker-carriers and 3PLs responded to this year’s survey, representing a range of business sizes from one-person operations to large public companies. Respondents answered detailed questions about their 2009 operations and financial performance. The group reported average revenues of $34.8 million, with average productivity exceeding $850,000 per employee.  The highest productivity, of more than $1 million per employee, was reported by firms with 21 to 100 employees.

Survey respondents moved an average of 990 loads per month, which was not a significant change from last year’s survey. That was surprising in a year when truck freight declined by 9% compared to 2008, according to the American Trucking Associations (ATA) For-Hire Truck Tonnage Index, and TransCore’s Freight Index reported that spot market load volume slid by 43%.

In 2009, when the bottom seemed to fall out of the transportation market, brokers without assets reported a slight uptick in gross margins per truckload, from 15.3% in 2008 to 15.9% in 2009, while broker-carriers lost a full percentage point of margin. Because of the high fixed costs associated with carrier operations, gross margin per truckload dropped to 14.1% for asset-based brokers, compared to 15.2% in 2008.  Survey respondents who identified their companies as 3PLs or freight forwarders earned the highest margins per truckload among survey respondents, with 16.5% in 2009 compared to 16.2% in 2008.  The overall average was 15.6%, which was not significantly different from last year’s 15.3% average response.  These were among the results reported this week in TransCore’s third annual Broker Benchmark Survey. 

How could the survey results be relatively good in such a lousy year? Responses may have been affected by the timing of the survey’s distribution. Freight had begun to show signs of recovery by the fourth quarter of 2009, and the broker survey was distributed in February 2010, so respondents may have felt more optimistic than last year.  Also, while there were 76% more bankruptcies among brokers in 2009 than in the prior year, according to a report in Transport Topics, the failed companies did not respond to this year’s survey. Those who responded had weathered the difficult year, and were poised to succeed in the improving environment.

Not all the news was good. Days-to-pay increased and credit scores slid throughout the year. Brokers reported that they struggled to pay carriers on time while some of their own customers were paying late or even declaring bankruptcy with freight bills left unpaid. Despite the difficult environment, however, brokers on TransCore’s DAT Network participants maintained average credit scores of 94.5 or above throughout the year, and paid carriers within an average of 30 days or less.

For more details, download the 2010 TransCore Broker Benchmark Survey report or stop by TransCore’s booth (#203) at the Transportation Intermediaries Association (TIA) annual conference April 7-10 in Tucson, to pick up a printed copy.

New carrier tools, including a driver pay management feature, have been added to TransCore’s Logistics Software. The carrier module will enable freight brokers and third-party logistics providers (3PLs) to manage a small fleet of trucks.

With the new carrier module, Logistics Software now provides driver reports, payroll management and profitability analyses for drivers who are either employees or contractors, in brokered, company-owned and leased-on trucks.

Introduced in 1985 as Keypoint Systems, TransCore’s Logistics Software is designed specifically for freight brokers and 3PLs who move full loads, LTL or partial loads, intermodal or international freight. The software includes the tools necessary to run a successful brokerage, including operations, dispatching, accounting, and document management.

“As the economy improves, and truck capacity tightens, freight brokers will find it increasingly advantageous to own and operate trucks,” predicted Steve Blair, TransCore’s general manager for transportation management.

“Thousands of freight brokers and 3PLs have relied on Transcore’s Logistics Software over the past 25 years, to run their operations efficiently and profitably,” Blair said. “Now these productivity benefits are also extended to brokers with assets.”

To learn more about Logistics Software visit www.transcorebrokertms.com.

Starting in July, the Federal Motor Carrier Safety Administration’s  (FMCSA) new Comprehensive Safety Analysis (CSA) 2010 will go into effect. By improving the FMCSA’s  carrier compliance and enforcement programs,  CSA 2010 aims to reduce injury accidents involving large trucks.   It also heralds a new level of complexity in carrier relations. CSA 2010 continues the FMCSA’s system of inspections at the roadside and in the yard, but it includes significant changes in the measurement of carrier performance data and adds new categories for driver performance, as well.

Instead of the four categories that exist today in SafeStat, the CSA will group carrier and driver safety performance data into seven categories called BASICs: Behavioral Analysis Safety Improvement Categories.  All seven BASICS may be affected by driver behavior:

1. Unsafe driving
2. Fatigued driving (hours of service)
3. Driver fitness
4. Controlled substance or alcohol
5. Vehicle maintenance
6. Improper loading of cargo
7. Crash indicators

Based on a carrier’s weighted score within each BASIC, the CSA 2010 measurement system will trigger the Agency to intervene with the carrier, or alert the agency that carrier performance has reached the “unfit” threshold.

At that point, CSA 2010 calls for progressive interventions – from a warning letter to an actual claim notice – to advise the motor carrier or driver that their safety performance requires correction.  These steps are meant to improve unsafe behavior early.

As the CSA 2010 system rolls out, fitness determination will be based on performance data processed through the measurement system, and will not necessarily follow the current FMCSA compliance review process.  The program has already been field tested in six states, and is scheduled to be fully implemented nationwide by the end of 2010.

What are the implications for brokers? According to Mark Yunker, vice president of RJ Ahmann and an expert in contingency cargo insurance and other freight broker insurance instruments, the short-term effect has been to confuse brokers about the future of their carrier relations.

“In the longer term, [CSA 2010] may be good, because current sources of safety information don’t necessarily agree with each other,” Yunker said. “But 60-65% of carriers are unrated now, and that number is likely to increase before it improves, Yunker continued. “Brokers will find it more difficult than ever to qualify carriers in a consistent, reliable way,” he said.

Yunker also cautioned that capacity shortages will affect brokers’ ability to qualify carriers in a timely, effective way: “If the economy continues to improve, there will be a shortage of trucks, so extra validation will be difficult to implement,” he said. “Historically, standards tend to be looser when there is a shortage of trucks.”

 For more information about CSA 2010, go to http://csa2010.fmcsa.dot.gov/

Note: Portions of this article were adapted from an article found on the web site of the Transportation Intermediaries Association, with additional material added. TransCore plans to incorporate CSA 2010 measurements into its CarrierWatch® carrier validation, monitoring and insurance certificate solution. Stay tuned for upcoming announcements.

Landstar System, Inc., one of the nation’s largest transportation and logistics services and ranked first in Fortune magazine’s 2009 list of “America’s Most Admired Companies” in the trucking category, has completed integration of TransCore’s CarrierWatch® monitoring service into their companywide transportation management software (TMS) system.

Landstar, long known for its safety-first culture, continues to deliver on its commitment to providing safe and compliant capacity providers to its customers. 

According to Sandi Edwards, Landstar’s vice president of Capacity Qualifications, “Through this customized system integration with CarrierWatch, we are confident that we supply Landstar’s independent sales agents with the most current safety and authority data on our contracted third party carriers.”
 
CarrierWatch integration benefits to Landstar include:

• Imposing a systematic approach to regulatory due diligence in the contract motor carrier selection process
  
• Continuously providing Landstar independent sales agents with the most up-to-date FMCSA safety and authority carrier data
  
• Paperless regulatory data retention on all carriers utilized

Don Thornton, TransCore’s senior vice president of Freight Services, commented, “This technical collaboration with Landstar will serve as a model for other firms as they integrate critical carrier monitoring data into their TMS systems.”

CarrierWatch is a monitoring service that provides shippers and freight brokers with an immediate, online method of validating and monitoring carrier credentials.  At the heart of CarrierWatch is a database that stores key information on more than 270,000 North American motor carriers. CarrierWatch allows companies to avoid the risk of using unsafe, unauthorized or underinsured carriers and reduces the time-consuming paperwork that is normally a part of the hiring process.  

All subscribers to TransCore’s 3sixty Freight Matching services get free carrier monitoring tools including automatic notices on changes in authority, safety ratings, SafeStat SEA Scores or DOT-reported insurance changes.  Subscribers can create a Watch List, receive email notifications, spot check individual carriers, print carrier snapshots for company records, identify bad carriers with the Alias search feature, and much more. 

CarrierWatch options include valid e-certificates of insurance --  the only carrier monitoring service to offer this up-to-date proof of a carrier’scurrent  insurance.   CarrierWatch integrates with the TIA Watchdog service and is the only carrier monitoring service endorsed by TIA, the Transportation Intermediaries Association.

Freight availability on the spot market has been trending upward since February, as depicted in Figure 1: 2008-09 Spot Market Freight Index, below. The graph represents available freight loads on TransCore load boards in 2008 and 2009. The blue line in the graph, 2009 spot market loads, first exceeded the 2008 totals in October, on a year-over-year basis. The gap between the two years widened from 10% in October to 65% when comparing November 2009 to the same month of 2008.

Figure 1: TransCore Spot Market Freight Index, 2008-09, U.S only. (Year 2000 = 100)

This year’s gradual improvement of spot freight availability contrasts with the sharp downturn in load postings in the second half of 2008. Following the financial market crisis of September and October 2008, spot freight postings continued to slide from unusually high levels posted in that year’s second quarter.

Overall freight tonnage is also trending upward in 2009, as reported by American Trucking Associations not-seasonally-adjusted index. Tonnage totals through October 2009, depicted by the blue line in Figure 2 below, contrast sharply with the trajectory of 2008 tonnage. Shipment levels fell precipitously in the fourth quarter.

Figure 2: American Trucking Associations Tonnage Index, 2008-09, not seasonally adjusted. (Year 2000 = 100)

It appears that November and December are on track to exceed last year’s tonnage for the same months, and if this trend is sustained, it may indicate the start of a gradual economic recovery in 2010. Other indicators are pointing to the imminent return of economic health, as well. Business inventories rose in October for the first time in a year, and sales rose by 1.1%, exceeding expectations. If these indicators continue to improve, they can be expected to generate further increases in freight tonnage.

TransCore customers are the best in the industry, and many have received recognition in 2009 for their excellent business practices, high standards and rapid growth, even in the face of this year’s economic challenges.

Des Moines Truck Brokers (DMTB) was recognized as the 2009 Broker of the Year by the National Association of Small Trucking Companies (NASTC.)  DMTB president Jimmy DeMatteis accepted the award at the NASTC Annual Convention in October.

DMTB, which also celebrated its 40th anniversary this year, was profiled in TransCore’s Broker News, Spring 2009 edition. We reported on the fast carrier settlement that earned  DMTB a better-than-perfect credit score of 103, with help from TransCore’s Logistics Software.

TransCore also spotted 31 customers in the Transport Topics Top 50 Logistics Companies and many more in the same magazine’s Top 100 For-Hire Carriers. Earlier in the year, the Inc.Top 100 Freight and Logistics Companies included 25 TransCore customers among the fastest-growing firms in the field. Four of them made the top 10, with annual revenue growth rates above 500%.

We’re proud of our customers – you’re all winners to us!