Recon Logistics - Freight Advisors

Recon Market Update - February 25, 2022

Posted by Hank Newman on Feb 25, 2022 12:50:02 PM
I couldn't resist the meme, and it's the message this week! 

Although the Federal Reserve’s Economic Data can be slow-moving and a laggard, it still tells a story worth listening to. The inputs may be more relatable to very large companies, but that’s what makes the LTL and TL PPIs even more dramatic for smaller firms!

The updated PPI charts are below, and they are — um, inconceivable.  

We’re all quite aware of rates rising for some time now and have discussed ad nauseam all the root causes  — many of which won’t be resolved anytime soon. But perusing through recent Transport Topics magazines, I couldn’t help but notice the following headlines (abbreviated and just a sample):

  • UPS records record 4th quarter earnings
  • C.H. Robinson saw net income soar during the 4th quarter
  • ArcBest reports record Q4, year
  • Norfolk Southern posts Q4, full-year record results
  • Old Dominion reports record annual results
  • Saia’s annual revenue exceeds $2 billion for the first time
  • XPO record $3.36B in Q4 revenue
  • Hub Group reports record Q4 revenue
  • Forward Air reaches all-time records in Q4 for revenue profit

So listen — volumes have been up substantially after our Covid shut down for quite a while now, so we should expect revenue records, but there’s something else going on. Carriers and investment groups are flush with cash and are gobbling up smaller players. And, we all know service isn’t getting much better. They are making significant investments in technology which helps them. Data is incredibly powerful now and after basically decades of super-thin operating ratios, carriers, and their investors, appear to be far more disciplined and conscious than ever before. FYI — they don’t want to give anything back!

Now, I can’t blame them because my personal feeling is that most carriers weren’t making the money they expected. Still, smart shippers with the right tools and executive strategy should be able to work WITH THE CARRIERS to optimize their freight operations.

What’s the point here? DATA IS CHANGING THE GAME! We can’t stress enough how important it is to have good data, good metrics, a solid freight management strategy, carrier-friendly processes, etc.

You cannot leave these things to last-minute dock decisions. You have to be smarter — because the carriers are more intelligent now.

“This is how we’ve always done it” is a recipe for failure and even higher rates. Change the game in your favor by understanding the carrier’s needs, and you’ll win.

Recon’s TMS is the best out there. The undisputed, unsolicited champion of conversation at last month’s SMC3 conference in Atlanta. Power Bi dashboards, Live Audit, Smart Select™ analysis, prepay and add modeling, and a TRANSPARENT partnership model! All best-in-class, but you have to establish a winning strategy and push it through the organization. Like anything tech, it can be manipulated and bent to accommodate outdated practices.

Recon is here to help!





Tags: LTL, Freight Rates, LTL Carrier Cost, Logistics, LTL Service, Freight News, Freight Update

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