Chapter 3 -
Gathering information

Knowledge is power. In any competitive business environment, the person who understands the market best will succeed. He may not defeat his competitor, but he will at least know when he can’t win a head-to-head battle and adjust accordingly. The successful executive knows how to plan and think strategically, a topic we will address in more detail in Chapter Four.

But before you can plan, you must educate yourself on the business environment. You can’t afford to think you know everything. Decades of experience in trucking alone may be enough to survive, but only by striving to learn and stay informed will you excel.
You can’t make decisions in a vacuum. You need answers to some questions. For example:

• Is there a market for the new service you are contemplating?
• Are shipments likely to rise or fall in the next few years?
• Is there an end in sight to the driver shortage?
• Will there be a glut of used trucks for the next several years?

Follow the news
Your most pressing information need is news on trucking, the economy and shippers. Staying on top of the news on a daily or weekly basis is the best way to ensure you don’t miss out on opportunities and can avoid potential threats to your business.

Read trade journals like Transport Topics and The Trucker and surf websites like eTrucker.com or Truckline (www. truckline.com) regularly to stay abreast of industry developments — regulations, legislation, litigation, fuel prices, mergers and acquisitions, etc. General business publications, such as The Wall Street Journal or BusinessWeek, can give you a broader perspective on economic trends.

To be a truly savvy owner, track news related to your shippers to make sure you don’t miss important developments within those companies and within their industries that likely will affect future traffic volume. A merger of your biggest customer with another company, for example, could be significant; don’t rely on your employees to hear about it from the shipper’s traffic manager. Or you may learn of a new manufacturing plant planned for construction near one of your receiver’s locations. This could be a great opportunity to land a steady source of backhaul freight. A subscription to the local newspaper in your receiver’s communities could be a great investment.

Subscribe to and read trade journals concerning your shippers’ industries just as you would those for the trucking industry. You should be able to find these publications and websites quickly by using a good Internet search engine, such as Yahoo! (www.yahoo.com) or Google (www.google.com).

Use government resources
The U.S. government collects large amounts of information that can help you make informed decisions. Some reports and databases relate directly to trucking. The Commodity Flow Survey, for example, outlines historical shipment trends among various modes of transportation. You can find the report on the Bureau of Transportation Statistics website (www.bts.gov).

Historical shipping trends may be useful in strategic planning, but what you really need, both in planning and day-to-day decision making, is current information. After all, if you will have no freight for the next few months due to a collapse in demand or production for the only commodity you haul, it may not matter that economists expect that commodity to grow over the next five or 10 years.

A tool for tracking current commodity trends is the Federal Reserve’s monthly and quarterly statistics on industrial production and capacity utilization, which you can find on the Fed’s website (www.federalreserve.gov/releases). These data show recent changes in production rates for most products and materials.

Although shipment rates don’t always follow production rates due to the occasional need to rebuild inventories, the Fed’s industrial production numbers are an excellent tool for helping you make near-term decisions on good prospects for freight. If production of a particular commodity is going through the roof, that could be a market in which demand for shipments is far outstripping the usual supply. It may be an opportunity to find not only new freight, but also top-dollar freight — assuming you can find the drivers and equipment to haul it.

If any of your shippers are publicly held companies, you can find useful financial and operating information on them in Securities and Exchange Commission filings. Publicly held companies must disclose information regarding their financial health, as well as key actions affecting their future. Search the Edgar database at the SEC website (www.sec.gov).

For trucking companies with a recruitment problem, the Bureau of Labor Statistics website (www.bls.gov/data/ top20.htm) is a good source of national, regional and state employment statistics that might help you identify the best areas of the country for hiring.

Newspapers report the national unemployment rate, but that number is worthless as a business tool. The nationwide statistics mask local unemployment trends that might show you where you have a better-than-average chance of recruiting entry-level drivers — and where you would be wasting your time.

Seek out best practices
Information on what others are doing is important; so is knowledge of how they are doing it. You can’t know everything. You may have some strong ideas on how things should be done, but that doesn’t mean those are the best ideas. Good managers continue to seek best practices throughout their careers.

Best practices is a quick way of saying that you try to learn from what others do. Sometimes what you do now is best; sometimes it isn’t. Searching out best practices doesn’t have to be a formal, time-consuming process. Just by keeping your eyes and ears open at industry association meetings, for example, you can learn a great deal about how other trucking company owners run their businesses.

Probably the most direct way to learn best practices is to participate in seminars and other educational opportunities on specific areas of concern, such as recruitment and retention, working with brokers or complying with the latest Department of Transportation rules. Some venues, such as the “Trucking in the Round” sessions at Truckload Carrier Association meetings, are designed to encourage the swapping of advice and best practices among trucking company executives.

Busy trucking company owners have limited time for seminars, of course. That’s one reason TCA is developing its Truckload Academy as primarily a “distance learning” institute. Truckload Academy’s mission is to provide educational programs to trucking personnel at all levels — senior management to drivers — through media that don’t require the time and expense of travel, such as audio-conferencing and the Internet.

You might even consider a graduate or undergraduate degree in business management or a similar discipline, especially if your business is or will be growing rapidly. Many universities have evening and weekend programs that allow business executives to complete a degree program in several years.

Benchmark
Another common concern of business owners is where their companies stand financially compared to others of similar size that provide the same service. Being better than average may not mean you are where you want or need to be, but you certainly don’t want to be below average.

Large corporations can benchmark their finances easily because even if they are privately held or closely held companies they have competitors who must file detailed financial information with the Securities and Exchange Commission.

In trucking, more information is available on smaller companies because every motor carrier that has $3 million or more in annual revenue must submit annual reports to the Bureau of Transportation Statistics detailing assets, liabilities, revenue, expenses, wages, operating statistics and more. Also, many state public utilities commissions require similar information.

The BTS data are available free to anyone who wants to travel to Washington, make an appointment to use the reference room and wade through volumes of printed reports. Or you can buy the data from private resellers. The TTS Blue Book of Trucking Companies, for example, can be purchased from Transportation Technical Services (www.ttstrucks.com).

But what if your company has less than $3 million in revenue? If your sales are close to $3 million, the BTS information is probably sufficient. But even if your company is much smaller, you can still create a benchmark — if you are willing to work at it.

An excellent source of financial comparison data is RMA, an association that represents lending and credit-risk professionals.

RMA obtains financial statement data from lending institutions and presents information for companies by North American Industrial Classification System codes. For example, you can order annual statement studies online that cover truckload carriers (the NAICS code is 484121).

In the RMA report you will find numerous financial statement ratios, along with definitions, and average figures from balance sheets and income statements for companies of various sizes. You may need your accountant’s help deciphering what the report means, but the result will be a comparison of your important financial data to an average trucking company of a similar asset or revenue size.

Don’t quit
Gathering information takes time and effort, and sometimes you will invest hours of searching and come up with nothing useful. But resist the temptation to let the demands of running your company excuse you from research. A few hours each week spent scouting out intelligence might be the most cost-effective investment you can make in your business. And knowing the market is essential to plotting your business strategy.

In Summary
The most successful business managers don’t rely on experience and instinct alone; continuing education is indispensable. Small trucking company owners should stay on top of news related to trucking and to shipping and make full use of free government resources. But news and government statistics are only part of your information needs. Fine-tuning your management skills and procedures and benchmarking your finances are important endeavors as well.