Bill Counts continue to decline

[Vllad]

I was going to wait until July's numbers came out but June was the worst month in almost a decade.

If July is pretty much the same thing that should sink fuel prices as far as consumption is concerned. Right now fuel should have been at its peak.

If this last through the summer then economic recovery is not likely. While 4th quarter will improve realitively speaking it won't make up the summer slump. July and August will be the telling months.

It is very possible we are heading out of the recession types of numbers and into depression types of figures.


Vllad

[Zephyrs]

.....

[Slamz]

This might be a better question for the Political forum. Answer there if need be.

But what do you think is behind it? Certainly sounds like the banks are doing well these days.

[Dustie]

This might be a better question for the Political forum. Answer there if need be.

But what do you think is behind it? Certainly sounds like the banks are doing well these days.

Banks are doing well because they can borrow money from the Central bank for almost 0%. In other words, only the most incapable of banks can't make money in this environment.

[Dustie]

Vllad, what are bill counts? Is it just a raw count in units?

[Vanraw]

I think that lower bill counts etc is based on 2 major issues.

1. The masses confidence in the economy, and this lower confidence is bringing people to the realization that they should lower their personal debt, and cut spending in case it gets worse.

2. The banks are still not opening the lending pipe up to spaces that would drive the economy. This is because even though they are starting to climb out, they still have massive amounts of mortgages that are toxic in nature. Meaning loans that are backed by a property that is no longer worth the cost of the loan.

I honestly think the best thing the government can do right now is to leave it alone (With the exception of passing some regulation that would prevent the banks from doing the same stupid shit). The last thing we need now is the banks to start going stupid agin, knowing that the goverment considers them to be "to big to fail". That needs to be fixed.

On the Masses issue, I think we need to let the stimulus that's out there solidify. In the end there is only one thing that will build up consumer confidence. The employment situation. When people see 10% unemployment, and fear it may go higher, they stop spending.

Ask yourself this. Have you decided to not make purchase because of the economy? I know I have.

[Vllad]

Vllad, what are bill counts? Is it just a raw count in units?

When you call me to move freight I come into your location and pick up 3 different shipments.
They are all broken up by destination. 1 pallets going from Dustie to Chicago, 2 pallets going from Dustie to Los Angeles, 5 pallets going from Dustie to Atlanta.

I invoice you based upon each destination. In this case you would receive 3 "bills" from me. They each move on 3 different bills of lading.

In a nut shell a carriers bill count is how many transactions he processes. The more bills you do the more frieght you move.

Disclaimer:

This really doesn't represent volume or cube so bill count is generally how you measure revenue to transaction count. So while you might do only 19k bills (shipments) this year vs. 20k last year if the average cube goes up you could end up utilizing the same amount of space because customers average cube per shipment went up. Since cube and weight are generally how you bill even though you do less transactions you could still make more or less the same amount of money.
In todays world since the US is no longer really manufacturing things so average cube and weight haven't changed much in the last 10 years.


Vllad

[Vllad]

Just looking at the rough numbers for trucking bill count (total shipments) is down 15.5% year over year and tonnage is down 16.2% year over year. That isn't surprising.

What is surprising is they are down nearly 22% vs. the volume moved in May. Historically June is a better month then May. So far since January we have seen a steady decline. That is a serious problem because usually Jan, Fed and March are the bad months.

I have never seen a calendar year where Janaury and February are the leading months.

I would link spread sheets for ya Dustie but apparently that is to challenging for me.


Vllad

[Dustie]

Thanks for the explanation. I was going to ask this:
If bill counts were down but tonnage was up, that could be ok right? For example, I ship to 3 people but one of them goes out of business and now I ship to two people but one of them picked up the business of the 3rd (that went out of business). My shipping amount is the same, but my bill count is down by 1.

But as you said, tonnage is down similarly so I guess that's not what's happening.

[Thudz]

So basically our economy is grinding to a halt. Atleast my customers are "Too Big To Fail".

[Vllad]

Thanks for the explanation. I was going to ask this:
If bill counts were down but tonnage was up, that could be ok right? For example, I ship to 3 people but one of them goes out of business and now I ship to two people but one of them picked up the business of the 3rd (that went out of business). My shipping amount is the same, but my bill count is down by 1.

But as you said, tonnage is down similarly so I guess that's not what's happening.

Your bill count should remain the same if you picked up the other customers freight. We might be down one customer but the transaction counts should remain roughly the same.

Basically you got it though.

When you are talking about a loss of 5% of your bill count talking about cube and weight is still in the conversation. When you lose 40% of your bill count cube and weight are irrelevant at which point now your conversation is purely on how survival.

In a nut shell people aren't shipping any goods. If they aren't shipping any goods no one is selling anything.


Vllad

[Vanraw]

In a nut shell people aren't shipping any goods. If they aren't shipping any goods no one is selling anything.

Vllad

Yea this is why I'm so interested in shipping data. Though some of the numbers might be about companies selling over stocked inventory. 4Q08 and 1Q/2Q09 were terrible. I hope its about selling inventory, and not dipping into the big nasty D word.

[OrsunVZ]

The only thing I'll contribute to this, (mostly because I don't know enough about this to state much in the way of fact) is that what you're talking about here is the supply side of the business equation.

Supply tends to be more of a lagging indicator, while Demand tends to be more of a leading indicator. Naturally demand has to be there before supply is. So when people talk about economic recovery, I ask what they are looking at that idicates a shift one way or the other. The news is generally pathetically inaccurate and will nearly always quote unemployment as the most tell-tail sign of the economy. It is interesting to hear about things from a bill count perspective though. If anything, it certainly gives an indication where along the cycle of recession/recovery we actually are. There are a great number of people talking about the fact that we are in recovery already. Within the Vistage group of businesses, they are reporting that 72% of the membership companies (not mine unfortunately) are either reporting profits, or minimally a postitive shift in the downward trend last month. That is way up from a few months ago the last time the published a report (and just so you know there is no agenda behind this report, as that would be totally out of line with the orgs goals). 72% sounds high, but realize the shift in trend is a kind of catch-all that basically says business owners themselves are seeing improvements.

When you look at shipping however, the numbers are horrible. The reason is that companies have slowed down purchasing and have been selling off existing inventories as much as possible. Since demand has been slowed so much, they've been able to affectively do this, and after downsizing the reduced revenues are still enough for companies to show some improvement.

The real question will be this, will demand pick back up and therefore enable a slow trickle of increased purchases, and when is that going to happen? Many of the people in the know that I've spoken to have been talking about a time frame as early as September and as late as June next year, before we start to see the uptick we're all hoping for. but how this translates to shipping, I really don't know. If someone had a metric for seeing how much available inventory there was cumulatively across each market, we would better be able to predict the point at which companies are going to be forced to increase their purchases (and subsequently see a rise in shipping).

That's super super simplified I know, but I could write a book about the stuff with all the talks and discussions I've had lately with some really qualified people. And I guess the real short version says that we are in recovery already, and have been for the past 6-8 months, but things are going to "feel" worse still before they "feel" better.

Just as a side note, (and if I get some time I'll post the article) there is talk of the European banks being able to really throw a wrench in the works in terms of Americas recovery timeline.

[Slamz]

Ask yourself this. Have you decided to not make purchase because of the economy? I know I have.

Actually my spending has gone the other way. I've spent a lot more in the last year than normal, largely because the sales are so good.

But then, I always played the Good Fiscal Conservative. My car is paid for. I don't have any credit card debt. Only debt I have is my mortgage. While I guess everyone else is trying to lower debt and increase savings I've used the recession as a chance to lower savings and buy stuff I wanted at a discount! (Amazon DVD box set sale?! I'm in!)

But I'm kind of winding down on that now. Can't keep spending forever, no matter how good the sales are. I guess hopefully the other side of things will come around soon as well and people who were paying down debt and building up savings will start to redirect back to purchasing as people like me start to wind down our purchasing.

[Vllad]

Good point Maull and O. You are right that people are not restocking and burning through their inventories however in the last 8 or 9 years people have been eliminating inventories altogether.

The base DC model of the retailers of 30 years ago is dead. People in general no longer need DC's and the cost of keeping them have grown beyond their use. People ship from manufacturer to store now. Well... not everyone so my statement is more general then actual fact.

My question about those people in the know Orsun is do they really know anything at all? Every year the peak months are Sept to November. Those months are always the strongest. Saying things will pick up in September is like saying the Sun will rise tomorrow. The question is how much will they pick up and by how much? Those good months have to cover for the last 5 horrible months.

Granted my concerns are premature until we get through August but if the numbers continue like they are even a really good peak won't keep us from a negative GNP.

By the way I would like to debate your take on Demand showing the signs first on recovery vs. Supply. That would be interesting however that is another subject.


Vllad

[Vanraw]

Good point Vllad on the inventory. At the retail level I think this is true, but I was thinking more at the manufacturing / assemble / distributor level. ie auto makers having cars just sitting in the rain, waiting to load up and ship out.

But your right on the retail side. Stores done stock anything anymore, Everything is from the truck to the shelf.

Scary stuff. I hope it picks up.

On a secondary note, it will be very interesting to watch fuel prices now. I thought it was interesting that Oil took a big speculator dump, and now I see it creeping up again. I guess the speculatores think if the DOW goes up then fuel usage must be going up too.

If gas takes a big dump back to low 2.ish a gallon, it will be interesting to watrch the speculators whimper yet again. But it will be also very interesting to see how this maps out, in order to play the futures a bit.

[OrsunVZ]

In retail, people try to minimize the amount of inventory they carry, but they still have to have some. Case in point, my wife went to macy's with a gift certificate and walked out with nothing. I asked her why, and she said the selection was terrible, and that the store had a "picked-over" feel about it. Companies all over are stretching everything they can. In this case, they were hurt by it because my wife didnt buy anything. But statistically speaking they are making out better than they would if they held the same inventory levels they would have otherwise normally had. But you're right that people are trying to minimize stock levels in retail. There are still massive distribution warehouses and the "flow through" is really just inventory in transit. So even in retail (which has been hit harder than most) they are living off inventory. By the way in the case of textiles (probably electronics and possibly most retail industries), most companies would have been contractually obligated to take the inventory they purchased during the market's downward turn. So they were sitting with large inventories from the start. If you figure many retailers were off by 60% or more, that's over a year's worth of additional inventory.

Look across the board, there has been incentive to reduce inventories for a 1/4 century. Necessity is the mother of all invention, and people are going to be a lot better at it after this recession/depression/whatever-the-hell-ya-wanna-call-it. Construction is a huge driver of material shipping too, and that industry has been decimated. I have a friend who owns one of the largest construction companies in my area, they did close to 1 billion in '07, about 650mil in 08, and they are down to just under 290mil projected for the end of this year. But even a behemoth company like this is seeing a turn in future, and have projects running much further out into the future than you'd think, and some absolutely massive projects in future. I have to be very careful about what I say in this regard because it is publicly traded. One thing I can say start watching for large power companies to invest in green initiatives (nevermind your political views, just keep your eyes peeled).

Anyway, way off topic here. Regarding forcasting in Sept-Nov, the people I speak with are taking into account season fluctuation, and don't talk in total revenues. they talk in trends (typically in trailing 12 month averages to get rid of the fluctuation). John Muadlin is a guy I recommend people trying to get his news letter. He typically deals with people whose net worth is in excess of 1.5mil, but he really knows what he's talking about, and publishes a newsletter every week. He's really quite prolific, and surrounds himself with some real powerhouse opinions - not the kind of people on CNN or NBC mind you. The other thing we are going to see though is some crazy spikes over the next several months - a real rollercoaster ride, and you can bet your bottom dollar that the drama queen media is going to shout out about the end of the world again (which may actually have a huge affect on the speed we recover). The one really good thing we have going for us versus other countries, is that we cannot help ourselves from spending money, so at the first glimmer of good times, people will be back to their old ways.

Don't get me wrong, I don't want you to think that in a few months to a year we're going to be back to normal (I'm hearing everythign from 2-5 years depending on the industry). But in all honesty, and I am probably the last person who should say this right now given my company's state, I hope it takes longer than that. We need to learn our friggin lessons here, and there's nothing like severe pain to indelibly imprint a notion into people's minds. And the only time people change is when the pain exceeds their threshold to ignore it.

Regarding Supply/Demand signs of recovery, you can definitely make an arguement, but once that argument is made there's a counter, and you can keep spiraling outward from micro to macro. The thing is, that ultimately supply can be first, but if it is, then it is an invention never seen before, and it creates a demand - in most cases (enough to make generalizations about where recovery will be seen first) demand will be the driver.

[Thudz]

In retail, people try to minimize the amount of inventory they carry, but they still have to have some. Case in point, my wife went to macy's with a gift certificate and walked out with nothing. I asked her why, and she said the selection was terrible, and that the store had a "picked-over" feel about it. Companies all over are stretching everything they can. In this case, they were hurt by it because my wife didnt buy anything. But statistically speaking they are making out better than they would if they held the same inventory levels they would have otherwise normally had. But you're right that people are trying to minimize stock levels in retail. There are still massive distribution warehouses and the "flow through" is really just inventory in transit. So even in retail (which has been hit harder than most) they are living off inventory. By the way in the case of textiles (probably electronics and possibly most retail industries), most companies would have been contractually obligated to take the inventory they purchased during the market's downward turn. So they were sitting with large inventories from the start. If you figure many retailers were off by 60% or more, that's over a year's worth of additional inventory.

Look across the board, there has been incentive to reduce inventories for a 1/4 century. Necessity is the mother of all invention, and people are going to be a lot better at it after this recession/depression/whatever-the-hell-ya-wanna-call-it. Construction is a huge driver of material shipping too, and that industry has been decimated. I have a friend who owns one of the largest construction companies in my area, they did close to 1 billion in '07, about 650mil in 08, and they are down to just under 290mil projected for the end of this year. But even a behemoth company like this is seeing a turn in future, and have projects running much further out into the future than you'd think, and some absolutely massive projects in future. I have to be very careful about what I say in this regard because it is publicly traded. One thing I can say start watching for large power companies to invest in green initiatives (nevermind your political views, just keep your eyes peeled).

Anyway, way off topic here. Regarding forcasting in Sept-Nov, the people I speak with are taking into account season fluctuation, and don't talk in total revenues. they talk in trends (typically in trailing 12 month averages to get rid of the fluctuation). John Muadlin is a guy I recommend people trying to get his news letter. He typically deals with people whose net worth is in excess of 1.5mil, but he really knows what he's talking about, and publishes a newsletter every week. He's really quite prolific, and surrounds himself with some real powerhouse opinions - not the kind of people on CNN or NBC mind you. The other thing we are going to see though is some crazy spikes over the next several months - a real rollercoaster ride, and you can bet your bottom dollar that the drama queen media is going to shout out about the end of the world again (which may actually have a huge affect on the speed we recover). The one really good thing we have going for us versus other countries, is that we cannot help ourselves from spending money, so at the first glimmer of good times, people will be back to their old ways.

Don't get me wrong, I don't want you to think that in a few months to a year we're going to be back to normal (I'm hearing everythign from 2-5 years depending on the industry). But in all honesty, and I am probably the last person who should say this right now given my company's state, I hope it takes longer than that. We need to learn our friggin lessons here, and there's nothing like severe pain to indelibly imprint a notion into people's minds. And the only time people change is when the pain exceeds their threshold to ignore it.

Regarding Supply/Demand signs of recovery, you can definitely make an arguement, but once that argument is made there's a counter, and you can keep spiraling outward from micro to macro. The thing is, that ultimately supply can be first, but if it is, then it is an invention never seen before, and it creates a demand - in most cases (enough to make generalizations about where recovery will be seen first) demand will be the driver.

In your wife's particular case the store made out because the gift certificate is already paid for and since she didn't use it the store hasn't had to give up any inventory, yet.

[OrsunVZ]

True, but stores also look to try and get the person to buy more than the gift card. Retail outfits prefer to sell gift cards due to the fact that the person who buys it has to come into the store (and possibly buy something for themselves) and then when the recipient comes in they may buy more than the gift card because "hey it's like 2 for 1!!"

Really interesting stuff though.

[Vanraw]

Vllad, I have a friend that owns a small frieght company in Green Bay. He said his bill counts are rising and he is starting to rehire drivers he lost.

Are you guys seeing a recovery in traffic too?

[Jakensama]

Do you get forwarders and consolidators doing cargo under 1 bill or on the trucking level is it pretty much by the individual shippers? I know when I was running the documentation department and generating bills of lading for a living shipping the same amount of cargo could have 1 or 100 bills of lading depending on the situation, but I imagine inlands quite different.

Then again it didn't really matter in ocean shipping as everything is by the revenue ton (whatevers higher metric ton or cubic meter), so thats all we care about.

[Vllad]

Vllad, I have a friend that owns a small frieght company in Green Bay. He said his bill counts are rising and he is starting to rehire drivers he lost.

Are you guys seeing a recovery in traffic too?

We are seeing increases because this is the peak time of year. It is to early at this point to tell whether they are going to make up for the dump of a year it has been in general.

By the end of December we will be able to tell if it was a real peak or just another pathetic one.

Personally I don't expect it to be a very good peak but maybe that is the "old age" talking.


Vllad

[Vllad]

Do you get forwarders and consolidators doing cargo under 1 bill or on the trucking level is it pretty much by the individual shippers? I know when I was running the documentation department and generating bills of lading for a living shipping the same amount of cargo could have 1 or 100 bills of lading depending on the situation, but I imagine inlands quite different.

For Air/Ocean, Import/Export business you can get multiple shipments moving on a single House Bill of Lading.

It works that way because you are shipping goods based on "entry" not "ultimate destination". i.e., People don't want to pay brokerage charges on all the individual shipments in a container (That is why they move it in a container in the first place) so each container(s) are handled under a single entry. You only pay Duty and Taxes on each individual entry.

The only bad part of that is if you move 3 containers on a single entry if customs stops one container they all have to stop. Other then that it is just a huge cost savings in brokerage duty and taxes.

This only applies to entry and exit of the US border though.

Once inside the country everything moves on individual bills of lading. The exception being if you are delivering a single container to a single location. Even then you cut a domestic bill of lading to get it delivered.

Each US destination by law has to have a single bill of lading. The use of the word "law" in this case is pretty liberal since DOT laws are more like suggestions but that is another story for another thread.

So when you say "bill count" while it does not represent tonnage it does represent shipment count. Every shipment to every destination in the US does have a single bill of lading.


Vllad

[Jakensama]

Explains alot - right before I left my old job the US government lost a fuckload of customs documents and to fill in their holes decided to make a legal mandate to us to find fuckloads of bills of lading over the past 3 years, and I remember hunting down you damn truckers for hundreds of bills..

Now i know why.

[Vllad]

That is so typical. If you had lost the documents they would have wanted compensation. US Goverment accounts suck, even the domestic ones.


Vllad