Moving Words – Forecasting
“Prediction is very difficult, especially if it’s about the future.” – Nils Bohr, Nobel laureate in Physics
Being successful in the moving business is all about anticipation of relocation needs of the cities, areas and regions you service. It also involves the expected relocation of personnel for the national accounts with which your company works. As an example, the recent announcement of five GM plants closing across the US and Canada and 15,000 people being furloughed or offered transfers to other GM facilities would be extremely valuable information to have. Especially if you’re in an area of one of the plants that’s closing or near a plant providing positions for the furloughed employees.
Each hauling segment, each region, and each lane is going to have its own set of circumstances which need to be looked at in order to forecast freight volumes in 2019. Here’s a list of questions to which you should be getting answers now.
- What’s the current unemployment rate for the area?
- What portion of the GNP (Gross National Product) does the area contribute?
- Is the area in an economic growth or decline?
- Any new industry slated to begin operations in 2019?
- Did any plant closings occur in 2018?
- Any plant closings expected in 2019?
- What were the outbound move numbers for 2018?
- How about inbound move numbers for 2018?
- What’s anticipated in those relocation numbers for 2019?
- Check for the same information for areas and lanes adjacent to your current service area.
As you find the answers to these questions, you’ll start to see a picture of what you can expect in relocation volumes in your sector of the business as you move into 2019.
If you’re working in SpecCom or Electronics/High-Value and Tradeshows, the next part of developing your 2019 forecast is what’s changing in how shippers are conducting their business. With your customers having to deal with unpredictable fuel cost fluctuations, they’re searching for ways to cut the distance their loads travel. Because of this, shippers are being told by the prognosticators and industry pundits to do a number of things differently for 2019 than they did in 2018 when working with moving and relocation companies. Be aware of these before you go into any negotiations with your shippers or 3pls.
- They’re going to look at what it costs them to hold inventory rather than the current just-in-time shipping methods with which we’re familiar.
- They’re considering setting up shop closer to their customer base, to reduce the distance their product needs to be transported in order to shrink fuel costs.
- They’re thinking about consolidating their raw material sources and having them located closer to the manufacturing facility.
- Are there possible ways to ship directly to their customers, thus avoiding having product stored in transit—reducing the number of times a product is handled and the amount of fuel necessary to transport it.
- They’re also redesigning product and packaging so it takes up less space and weight, saving cubic feet in shipping.
- The last one is a big one. Logistic consultants are recommending shippers negotiate their best hauling rate deals now for extended periods and as long as possible into the future. If there’s an economic upturn in 2019 and hauling capacity becomes tight, they’re securely locked into paying lower freight rates. Be careful what you agree to – don’t get locked into a long-term low rate.
Last, and definitely not least, you must look at what you did in 2018: how it increased, decreased, or stayed the same, and what the tendency has been throughout the year. This will help establish the pattern moving into 2019.
- Are your sales growing, “flat-lining” or in decline?
- What seasonal or cyclical factors are typical for products or commodities you haul? Is it what it’s been historically or is there a new pattern developing?
- How is your availability of loads affected by swings in general economic activity? (Increases in the cost of fuel can lead to a decrease in sales for your customer, thus causing a drop in loads for your company.)
- What measures are you taking to increase sales? (e.g., a marketing campaign to locate new customers)
- What are customers saying about their intentions to continue shipping products in 2019? Is the number of loads going to increase or decrease?
- What have they done in the past during similar economic conditions?
The results of your investigation will form a picture of what you can expect in 2019. But, as we all know, predicting the future is a guessing game. Creating a series of models of what could occur and what your plan of action needs to be for each one will help you weather any financial storm ahead. Prepare for the worst, have options laid out for improving conditions, and at least, you won’t be knocked off your financial rocker.
“An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts – for support rather than for illumination. ” – Andrew Lang
Timothy Brady
To contact Brady go to www.timothybrady.com
