New Dynamics Reshaping Freight Industry

According to Fleet owner magazine, increasing freight volumes have exceeded existing capacity in many cases, which in turn is convincing many transportation companies that better days lie ahead.

FedEx Corp., for one, expects earnings for its fiscal first quarter (which ends August 31 this year) to be in the range of $1.05 to $1.25 per diluted, up 81% to 116% from the 58 cents per diluted share it earned during the same period in its previous fiscal year and up from 85 cents to $1.05 per diluted share predicted during the company’s further fiscal quarter, which ended June 16.

“Our revenue and earnings growth are exceeding original expectations, primarily due to better-than-expected growth in FedEx Express and FedEx Ground volumes,” said Alan Graf Jr., FedEx executive vp & CFO.

“Our package volume growth rates in our first quarter are continuing at a pace similar to our fourth [fiscal] quarter,” he added. “Resumed growth in industrial production and global trade is increasing demand for our transportation services.”

For the full year, FedEx expects earnings per diluted share to range between $4.60 and $5.20, up from $4.40 to $5.00, which reflects the current market outlook for fuel prices and a continued moderate recovery in the global economy.

Others, however, are more cautious. “We’re at another interesting inflection point in our outlook. While we don’t think we’ll see a double-dip recession, we do project the overall economy growing slower than we previously forecast. That means the downside risks are increasing,” said Eric Starks, president & senior consultant with FTR Associates, during the firm’s “The State of Freight” webinar last week.

On the plus side, Noel Perry, principal of research firm Transport Fundamentals as well as managing director & senior consultant with FTR Associates, said freight volumes are definitely on the upswing, with a growing capacity crunch helping truckers boost rates and margins.
After watching truck freight pricing plummet by 11% last year, excluding fuel surcharges, Perry said prices should recover roughly 10% this year and next because freight demand is exceeding current capacity so strongly.

However, the overall economic picture that is causing some concern. Based on its analysis, FTR is scaling back its U.S. gross domestic product (GDP) forecast to the 3%-3.5% range – a full percentage point lower than its previous estimate. The firm also thinks growth will remain “choppy” and not just in the near-term; this will become the nominal state of economic behavior.

“We’re entering an era of ‘slow’ economic recovery, one characterized by several quarters of slow uneven growth,” Perry said. “Economies just don’t recover in consistent ways – they jump around a lot more and while this is painful, it will be normal.”

He thinks that will also be strongly reflected in trucking industry financials from here on out. “The long term volatility of the economy is going to be six times that of the 1980s and 1990s,” Perry said. “And transportation demand is going to be five times more volatile, with extremes in capacity doubling.”

As a result, trucking earnings will be far more volatile as well -- and not necessarily match the economic picture. “Carriers have tried to maintain steady earnings and just can’t. That’s going to be the challenge in the future here,” Perry said.

Truckload carrier Werner Enterprises also sees similar dynamic forces at work in the freight market. “We continue to believe that more of the improvement in the freight market over the last six months can be attributed to a decreasing supply of truck capacity rather than rising demand, however both factors are helping the freight market improve,” the company noted in its second-quarter earnings report.

Werner benefited handsomely from those factors in the second quarter, as its operating revenues increased 15% to $463.5 million compared the same period in 2009. And its pure trucking revenues, net of fuel surcharges, jumped 5% to $326.5 million compared to the second quarter last year. Finally, Werner’s earnings also went up a healthy 63% to 29 cents per diluted share compared to 18 cents per diluted share in second quarter of 2009.

“Inventory restocking also appeared to improve demand in recent months, particularly with many of our large retail customers,” the carrier added. “Our brokerage data suggests that carrier failures have begun to slow in recent weeks due to an improving freight market. However, we believe that many carriers are aging their fleets due to the rising cost of new trucks and inadequate rates. In addition, we believe the challenges of complying with increased government regulations and a lack of available equipment financing are proving difficult for smaller, private carriers.”

How to be Accountable and Hold Others Accountable

This is a story of four people named Everybody, Somebody, Anybody, and Nobody. There was an important job to be done and Everybody was asked to do it. Everybody was sure Somebody would do it.

Anybody could have done it, but Nobody did it. Somebody got angry about that because it was Everybodyʹs job. Everybody thought Anybody could do it, but Nobody realized that Everybody wouldnʹt do it. It ended that Everybody blamed Somebody when Nobody did what Anybody could have done. - Unknown

Does this sound familiar? What kind of workplace situations does this remind you of? The topic of accountability has been such a hot topic for the last decade, it’s almost turned into just another corporate buzzword. However, for some reason, the word still seems to be a lightning rod when it comes to leadership development.

It’s a word with a lot of arms and legs. It’s often used to describe:- a personal value (someone who is accountable)- something you do to others (hold them accountable)- and something that an organizational entity should be or isn’t (e.g., there’s no accountability in government).For leaders, accountability starts with looking in the mirror.

Being accountable is our ticket to earning the right to hold others accountable.When someone else screws up, we tend to blame it on their personal characteristics. However, when we screw up, we tend to blame it on external circumstances. It’s a cognitive bias social psychologists call “fundamental attribution”.

Neither serve us or others well as leaders.What does it mean to be accountable as a leader? Let’s just say I know it when I hear it. It sounds something like this:- “I made a mistake”- “I screwed up”- “That’s on me, and no one else”- “No excuses” - “I’ll do it – it’s mine”- “I got it”- “I’m already on it, it’ll get taken care of”- “I’ll make sure everyone gets regular status reports”I also know what it doesn’t sound like… it doesn’t sound like:- Whining- Finger pointing- Blaming- “I’ll try”, “maybe”, “I’ll do my best”- Excuses, excuses, and more excuses- A victim-

Insincere, rehearsed, b.s. apologies Leaders can start creating a culture of accountability by being accountable. However, being a role model isn’t always enough to help someone else be accountable. As leaders, we often need to hold others accountable. In order to do this, we need to:1. Establish expectationsWithout expectations, managers and employees both end up frustrated and disappointed.

It’s important to clearly describe what “good” performance looks like, and what it does not look like. Gain Commitment...Without commitment, we get compliance – or even resistance. Don’t assume you have someone’s commitment just because you’ve discussed it with them. Watch out for those phases like “I’ll try”, or “I’ll do my best”.

Ask for and listen to people’s concerns. Help them overcome their obstacles, explain the benefits, and help them figure out what they need to achieve the goal. Ask: “Do I have your commitment?”, and “What needs to happen in order for you to commit to this?” Inspect what you expect“Inspection” sounds like a dirty word, indicating a lack of trust or micromanaging. It’s really not – following up shows that it’s important, you care, and you’re there to help remove obstacles.

Inspecting also provides an opportunity to give praise for progress towards a goal. In time, hopefully, your employees will learn how to proactively provide progress reports. Let’s face it, these days, we all have all kinds of competing priorities. Even with good intentions, it’s easy for things to slip. Inspection and follow-up make sure the really important things don’t fall through the cracks.

Provide feedback and consequences.Feedback lets someone know how they’re doing. If expectations are not being met, then they need to know about it, as well as how to get back on track.If expectations are being met or exceeded, then they need to hear about that as well. If performance consistently is below expectations, then there needs to be consequences. Without consequences, there is no accountability.

If you follow this process consistently as a leader, and role model accountable behavior yourself, you’ll create a culture of accountability and “no excuses” within your team or organization. From Dan McCarthy at Great Leadership.

Taking Risks in Sales!

According to "Sales Cowboy", nobody knows about risk and reward better than salespeople do. They get into the field because they believe in themselves and their abilities, and understand that they control their own destiny. They don’t sit on the sidelines and wait for things to happen. They’re not fans, they’re players. They know the rewards (large pay days) and they understand the risks (termination).

When 2010 Masters Champion Phil Mickelson was asked after his recent thrilling win...

what’s the difference between a great shot and smart shot he replied, “A great shot is when you pull it off. A smart shot is when you don’t have the guts to try it.” It’s an interesting line, one to mull over if you’re in sales.

Those who follow golf know that Mickelson is a risk taker who can pull off memorable, how-did-he-do-that? shots at crucial, nerve racking times (as he did on the 13th hole yesterday), as well as make some bone-headed moves, like his “I’m so stupid” moment on the 18th hole of the 2006 US Open.

Always true to himself, Mickelson lives and dies by his risk-taking ways.
Playing it smart is playing it safe is what Mickelson is talking about. Certainly there’s nothing wrong with playing it smart, playing the percentages, containing yourself, not trying to do too much.

The flipside is: How can you grow if you don’t take chances, don’t challenge yourself? Well, you can’t. Playing it safe might be smart but it’s never going to take you places you need to go... namely success (and failure). The successful salesperson builds on success and learns from failure.

How many sales managers out there are encouraging their employees to roll the dice and "go for it"? How many leaders are telling their teams, “Go after that hard to reach prospect, experiment with your pitch and post-pitch, be bolder, don’t be afraid!”? Salespeople in a leadership role should encourage their employees to take chances, take risks, and have fun doing it.

There is a certain joy about watching Mickelson play golf. He’s fun to watch because he’s having fun and he’s unafraid. And for those people out there who believe that you need to be steely-eyed, cold, and robotic to be successful, well, you didn’t watch the Masters this year and you didn’t see how being risky sometimes pays off—pays off big time!

Public Confusion over Implementation of Health Care Overhaul!

By MARGARET TALEV
McClatchy Newspapers

WASHINGTON -- Two weeks after President Barack Obama signed the big health care overhaul into law, Americans are struggling to understand how - and when - the sweeping measure will affect them.

Questions reflecting confusion have flooded insurance companies, doctors' offices, human resources departments and business groups. "They're saying, 'Where do we get the free Obama care, and how do I sign up for that?' " said Carrie McLean, a licensed agent for eHealthInsurance.com.

The California-based company sells coverage from 185 health insurance carriers in 50 states.
McLean said the call center had been inundated by uninsured consumers who were hoping that the overhaul would translate into instant, affordable coverage. That widespread misconception may have originated in part from distorted rhetoric about the legislation bubbling up from the hyper-partisan debate about it in Washington and some media outlets, such as when opponents denounced it as socialism.

"We tell them it's not free, that there are going to be things in place that help people who are low-income, but that ultimately most of that is not going to be taking place until 2014," McLean said.
Adults with pre-existing conditions are frustrated to learn that insurers won't have to cover them until 2014 (though those under 18 will be protected in late September); then they become both hopeful and confused upon learning that a federal high-risk pool for them will be established in the next few months. "Health insurance is so confusing. You add this on top of it and it makes it even more confusing," McLean said.

The Obama administration is embarking on a years-long public education campaign about the overhaul, including a Web component. However, much of the guidance will depend on Department of Health and Human Services regulations that are still being developed.
Parents of young adults, including those who are preparing to graduate from college this spring, have heard that the overhaul will let them keep their children on their insurance plans until they reach age 26. That starts in September, however; they have to determine how to cover them until then.

A new wave of inquiries could come next month as federal COBRA subsidies for laid-off workers dry up. Ann Wooten of Austin, Texas, a breast cancer survivor, said she didn't understand whether the health insurance overhaul law meant that she should try to access private coverage again someday. She was diagnosed with breast cancer in 2008 after she lost her insurance in a divorce, and soon after she lost her job at a convenience store as a result of the economic crisis.
Medicaid has covered her treatments but she must apply regularly to renew the coverage. She went back to school to learn hotel management and is seeking a good-paying job with benefits. She doesn't know how the health overhaul will affect her options, and hasn't yet found the time or energy to investigate.

Americans who already have good coverage aren't so worried about the immediate implications, but some admit that they're plenty confused. "Why does it take so long for certain health care things to take effect?" said Sandra Preston, a state employee in Paterson, N.J.
Ben Wiesen, a software engineer who works for a small company in Tarrytown, N.Y., said he'd read up on the overhaul but remained concerned about the unknowns.

"The timelines have been pretty clearly stated," he said. "It's the execution and the details: How are they really going to roll out the changes, and who ultimately will be the arbiter and decision-maker?" Actor Sam Robards, the son of Lauren Bacall and the late Jason Robards, was visiting Washington last week with his children and Danish-born wife. Chatting in front of the White House gate, he said he tried to follow news coverage of the overhaul but conceded that "I'm not totally clear" on the details. He said he was glad that he got good coverage through the Screen Actors Guild so he didn't have to worry about it.

The couple previously lived in Denmark, which has universal health coverage. They applauded the overhaul's aim of extending coverage to nearly all Americans. Many small-business owners are nervous about requirements being phased in. "Members are still trying to wrap their head around everything that's in this law," said Michelle Dimarob, the manager of legislative affairs for the National Federation of Independent Business, the small-business lobby.

Dimarob said the lobby's primary concern was that its costs would rise over the next four years as a result of fees, taxes and coverage mandates related to the overhaul.
"The next question that comes out of their mouths is: 'What do I have to do right now?' They need to start talking with their accountant, depending on how they're organized, what industry they're in and whether they're offering insurance now and what kind they're offering. We're suggesting they talk to their agent or broker."

Tanning salons face a new excise tax starting in July as part of the overhaul. Other business owners are trying to understand new Internal Revenue Service reporting requirements related to business-to-business transactions that will kick in as a result of the new law. Others are looking ahead to coverage mandates for 2014 and calculating how many part-time versus full-time employees they should have to best contain costs.

While Obama has been touting a tax credit for small businesses that offer employees health coverage, Dimarob said many small businesses wouldn't be able to participate. First they must do research to see whether they qualify. "It requires them to understand the intricacies," she said.
The president has begun traveling the country to talk about the new law to ordinary Americans. In Maine last week, he explained many highlights of the four-year phase-in. However, Obama's remarks were laced with enough political rhetoric to dilute his policy message.

Many organizations have produced timelines explaining when provisions are to be phased in. Still, it's confusing for consumers, and until the administration issues more regulations, many details can't be pinned down.

"The first meeting the president held with the team post-passage was on implementation," White House press secretary Robert Gibbs said. "Obviously this is a big task, and a campaign to ensure that people understand what benefits are coming online when obviously will be tremendously important."

Small Businesses See Economic Conditions Improving!

DOW JONES NEWSWIRES

More than half of small business owners see improved economic conditions for their companies compared with a year earlier, according to the Capital One Small Business Banking survey.

One in four respondents said business conditions improved and another 28% said their businesses were in a better financial position than a year ago.
Among the most heavily hit by the recession, financial conditions for many small businesses have remained relatively constant over the past year.

"The lack of further deterioration and a growing access to capital are reasons to be cautiously optimistic as we look ahead," said Robert Kottler, executive vice president of small business banking at Capital One.

The survey, conducted between December 2009 and January 2010, polled small business owners to assess their businesses during the recession. More than two-thirds of respondents said they had access to the credit and financing they need.

Most businesses owners surveyed, however, said they had no plans to make major investments in the companies in the next six months and only 28% said they planned to hire.

Over half respondents said the primary business challenge over the next six months is the ability to acquire new customers, while maintaining existing customers and finding new revenue streams are among top concerns.

-By Jodi Xu, Dow Jones Newswires

Electronics Buyers' Report Biz is Improving!

What a difference a year makes for electronics buyers: In March, 49% of buyers said business was improving and demand for their companies' end equipment was growing, according to Purchasing's monthly survey of business conditions.

In March 2009, only 11% said business was improving.With business improving, buyers are increasing their purchase orders. A hefty 65% said they would increase their purchase orders (POs) over the next 90 days. The last time that many buyers said they would increase POs was in July 2006.

While some of the orders may be for inventory replenishment, a lot of orders will be for parts needed to build new electronics equipment."There's no question business is heating up," says Paul Blom, senior vice president supply chain for electronics manufacturing services provider SMTC in Markham, Ontario. "There is an incredible increase in demand that we are seeing from our customer base."

SMTC has a broad range of customers, including industrial control, computing and telecommunications OEMs.He says while business tanked in the first half of 2009, it started to rebound in October 2009. "As bad as it was in the first half of last year, it is the opposite today.

"Business is incredible."

13 Customer Retention Tips!

Salespeople are wise to focus on their existing customer base to impact success during economic recovery. Competitors are getting creative and aggressive and existing relationships could be up for grabs … unless…you treat your existing clients like new customers. Think about how you treat new customers.

During economic recovery, treat your customers like new customers by trying the following things:

* Conduct a thorough needs-analysis with them to make sure your solutions still are solutions. Their business has likely changed like the rest of the world.

* Find out where they need help and deliver.

* Figure out how your company can better service them – clear billing, better response on customer service issues, etc.

* Bring senior leaders to face-to-face meetings to thank them for their business and show how valuable they are to your company.

* Sincerely thank them for their business.

* Share new ways to solve old and new problems.

*Share industry expertise. Help them be innovative.

* Help them help their customers succeed.

* Learn everything you can about their business – you’ll recognize ways to help them the more you know their business.

* Be attentive, present and part of the team.

* Commit to quarterly business reviews to hold yourself accountable to the results you promised.

* Make sure they know all that you can do for them. (Exercise: Think of 10 things your top customers may not know about your offering that may help them.) Figure out how to share all your services without giving a sales pitch. Your competitors are sharing this information. It’s best to share this information in response to a business need they have.

* Be someone they can’t live without!

Competitors are gunning for your clients. Treat your existing customers like the gold that they are.