LOWER REVENUES CREATE OPPORTUNITY
As this economy gets rough, it is still possible to increase your profit margin by 12%. If your business is anything like that of most carriers:- Fuel accounts for 40% of your total operating costs,
- Hyliion’s ‘Electric Slide’ eliminates 31% of your fuel usage,
- Net total you’ve INCREASED your overall bottom line by 12% by using the ‘Electric Slide’.
You could use that 12% increase in profit to hire more people, buy more equipment, or under-cut the competition’s prices by 10% and still have some cash left over. Who says that you have to dig into your own profit margins to acquire & retain customers?
Otherwise, the economic facts are not pretty:- Total freight shipments in the first 4 months of 2016 were almost 5% LOWER than in 2015.
- April’s new orders DECLINED almost 4%, and high inventory levels are setting May up to be another soft month.
- With oil at $50/barrel, diesel fuel is back to $2.40 per gallon.
- Daimler estimates a 15% CONTRACTION in the NAFTA market this year.
- Trailer orders in the U.S. were DOWN 12% year over year – registering the weakest April since 2010.
- April’s dry-van orders were the 2nd LOWEST total for the year, while ‘reefer’ orders are the LOWEST since 2013.
The slowdown is directly traceable to: (a) the loss of jobs and income from plunging oil costs, which shut down the fracking business and cut back on coal shipments; and (b) to poor export figures due to the strength of the U.S. dollar. Recently nondefense capital goods fell for the 3rd straight month – down about 1%. New orders are down 4% for the first four months of this year, and business investment has dropped 7% year-over year (the 14th decline in the past 16 months). According to Stifel’s economist Lindsey Piegza: “Without ample development and innovation (resulting in a stronger pace of hiring), there is little hope of maintaining even the current moderate trend of growth and employment, let alone gaining momentum from here.”
However, lower revenue climates often create opportunities for those companies better positioned. Companies that reduce their costs and pass those savings on to customers can cause others to switch from one freight hauler to another. We at Hyliion would like to make sure YOU are the one that they switch TO.
This Memorial Day we give thanks for everyone that has served in our Armed Forces. On a personal note, my grandfather served in WWII, and earned a purple heart. When Vietnam came around my father was too young, and the war ended just as he turned 18, but he lost two older friends in that affair. For them and the millions like them we say thanks. Enjoy this holiday weekend, and a heartfelt tip of the hat to all of you that have served and continue to serve.