This information is important to you because it shows you brokers who have slowed down on their payments.  Typically when someone starts paying you slower it throws up a red flag that something isn’t right. 

Here’s the link to sign up for the free trial.  http://www.rtscredit.com/signup.asp 

We don’t ask for credit card info or anything like that so there’s no obligation.

The following New Alerts have been issued from RTS Credit Service.
ALERT(S):

Company Name: DISPATCH LOGISTICS
Rating: F
MC #: 551623
City/ST: SAINT CHARLES, IL
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: EXMARK LOGISITICS
Rating: D
MC #: 536558
City/ST: JACKSON, MO
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: JNC TRANSPORTATION CORP
Rating: F
MC #: 582574
City/ST: HICKSVILLE, NY
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: LIBERTY LINEHAUL WEST, INC.
Rating: F
MC #: 320367
City/ST: MONTEBELLO, CA
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: NATIONAL DISTRIBUTORS, INC.
Rating: F
MC #: 196574
City/ST: SELLERSBURG, IN
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: OLSON LOGISTIC SOLUTIONS
Rating: F
MC #: 426787
City/ST: ELK GROVE VILLAGE, IL
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

Company Name: US TRANSPORT NETWORK, INC.
Rating: F
MC #: 566512
City/ST: MEDLEY, FL
Alert Description: Debtor’s credit rating has been downgraded
—————————————————————————

A blog is probably a great place to blow off steam without doing any real damage.  And that’s a good thing because I am hopping mad about what’s happened to our economy.  And I’m even angrier about how the bums back in Washington turned a blind eye while the fat cats on Wall Street gorged on our financial system.

We have been spoon-fed the usual excuses:  too much debt in the private sector,  an epidemic of sub-prime mortgage defaults,  absurd leveraging of equity, malfeasance on the part of banking officials, both private and public.  The list goes on.  Well the whole damn mess stinks.  Washington and the financial world had a great party at our expense, and now we have to suffer through a world-class hang-over.

Why did all of this happen?  Who’s to blame?  I truly believe in my heart of hearts it’s the politicians.  They were trying to buy votes by promising miracles:   universal health care, affordable housing, free college education for everyone.  And the government would pay for all of this by writing I.O.U.’s to China, or any other country gullible enough to buy our debt.  Well I’m not buying it!  Why in the world should we trust a system that got us into this mess in the first place?  I realize that my attitude is not healthy.  But I am not sure what to do about it. I find it more and more difficult to watch financial talk shows and read the journal.  It’s all too depressing.  

It was at another difficult time in our Nation’s history, World War II, that General George Patton made a rather shrewd comment to his officers before a major offensive: “there comes an inevitable point in every battle, where both sides think they have lost.”   A comment I suspect that was meant to emphasize the importance of positive thinking.   Well, I promise to work on my attitude but it may take awhile.  I do wonder how trucking (an industry I love and work in every day) will survive.  All in less than 12 months:  record diesel fuel prices, the strongest freight contraction since the great depression, record business defaults.  Wow!  Could it get any worse?

I suspect that our industry will be severely tested before it’s all done.   Thank goodness transportation is the back-bone of our country. It will need to be strong.

Bill Ryan: Chairman

RTS Credit Service

RTS Financial Service

As we celebrate the 200^th birthday of Charles Darwin (born February 12, 1809), his famous phrase, “survival of the fittest” still rings true.  This simple biological concept is very applicable to the transportation industry, especially with the current economic conditions.  To survive and make a profit, businesses are BECOMING LEAN, GETTING MEAN, and GOING GREEN.

When Coke re-did the Mean Joe Greenecommercial for the 2009 Super Bowl using the present day football star, Troy Polamalu, I think they were speaking volumes to the public that “times are changing.” Instead of that warm, fuzzy, everything will be all right feeling, this commercial leaves you with a notion that to survive you have to take what you want and do not take ‘no’ for an answer.  Carriers feel this pain every day when they are negotiating for better rates, and they really have to stand their ground; sadly, they also have to fight to get paid for their work, IF they do get paid.  The old concept of “show me the money” has changed to “find me a load.”

To help in these tough economic times, companies are cutting costs everywhere.  Wasteful expenses are being slashed to help reduce overall costs.  I think it is important to be mindful of expenses; however, eliminating too much might cost you more in the long run. To separate expenses, decide what you NEED versus what you WANT.  Figure out ways to meet your needs first, and then with a little creative thinking and American ingenuity, find other ways to obtain those things you have on your “wish list” with little or no additional cost.  This is an exciting time full of opportunity for those that have the means. 

By creating a tough and competitive business environment, you can not only strengthen your business, but also gain respect from your customers as well as your competitors.  Education and conservation go hand in hand.  Make sure you are getting the best VALUE.  Many of the new innovations for going green may have some profound effects, not only on costs but also the environment.  It may be necessary to evaluate these proposals not only as a business, but also as a good steward for the environment.  Change is often difficult to implement because we become comfortable doing what we have done in the past, but by having an awareness of what we are doing and striving to find a better method of obtaining our goals, change does and will occur, hopefully for the benefit of everyone’s prosperous future.

To stay alive in this industry one must not give up hope.  Instead, cut costs, not corners; make sure you know who you are working with and how long it will take to get paid.  Create a plan for the future.  In addition, understand the dramatic transportation food chain and educate yourself so you are not caught at the bottom.  Use your current resources such as brokers and financial institutions to help find loads and get some extra cash.  RTS Credit Service will help to insure that you will get paid.  It is only a matter of time; things will turn around and natural selection will prevail, just make sure your company is among the fittest.

Lauren Hatfield

RTS Credit

Business Development Manager

The first quarter of 2008 marked the highest number of trucking bankruptcies in history. Many carriers have chosen to park their equipment rather than haul freight for a loss. The fuel crisis has created issues further up the freight chain affecting both transportation brokers and shippers. Increasingly, both find themselves under pressure to “pay-up” or face the prospect of having no one left to haul their freight.

In the face of “vertical” profitability issues, RTS Credit Service has strengthened its credit guidelines for brokerage and shipping firms. As a result, you will notice a higher number of credit alerts. These reflect both our tougher credit standards and, in some cases, a slowing down of pay. We would like to make a very important point here. It is one thing for a brokerage or shipper to pay freight invoices slower than the industry average when transportation resources are available. It is quite another issue not to have the resources to pay more efficiently when the market demands it. Therefore, we think that slow pay under the current difficult conditions represents a high level of risk for the carrier, one to be avoided if possible.

Even though the first five months of 2008 have painted a bleak picture for motor carriers, there may yet be a silver lining to this economic storm. Our sources tell us that freight has picked up in June. Carriers are dictating pricing more and more with a take-it-or-leave-it type of strategy. In many cases, we are seeing a bidding war for available equipment. There are numerous instances of long hauls paying four to five dollars per mile. A note of caution is appropriate here: don’t be taken in by extraordinarily high rates. Slow paying brokers and shippers are often more desperate to secure equipment and will need to pay-up to keep a customer. Check the credit rating and rate of pay on everyone that you are not absolutely positive about. If you have any questions, please give us a call.

While we are clearly entering a period of opportunity for truck lines that should extend through December, there will be an increased wave of defaults on freight liabilities for that period as well.

Have a successful summer and watch those receivables.

Ryan Beasley
Manager
RTS Financial Service, Inc.

]]> http://rtscreditwatchblog.wordpress.com/2008/06/11/tougher-credit-standards/feed/ 0 rtscredit http://rtscreditwatchblog.wordpress.com/2008/05/06/paying-the-fuel-bill/ http://rtscreditwatchblog.wordpress.com/2008/05/06/paying-the-fuel-bill/#comments Tue, 06 May 2008 12:54:49 +0000 rtscredit http://rtscreditwatchblog.wordpress.com/?p=66 ]]> In the entry posted January 7, 2008 entitled “Relief from the high fuel prices” I had mentioned the need for fuel tax relief at the pump for truckers. Unfortunately, the need for a temporary solution has grown more acute with $120 per barrel oil.

There is growing consensus out there that high priced oil has a silver-lining. Consumers will drive less, buy more fuel-efficient cars and create a cleaner environment.

All valid points. However, there is a disconnect when one throws truck traffic into this argument. Since no one has figured out how to haul a load of watermelons to market on a moped, fuel costs as a percentage of operating revenue need to be examined very closely to ensure that reliable transportation is in place to transports goods to market.

Again, institutionalizing a method for fuel surcharges in respect to interstate commerce is a step in the right direction. Temporary suspension of federally imposed taxes is probably off the table because of the elections. Politicians are more concerned with gaining voter influence by rebating fuel tax to automobile owners.

How much attention should be given to the issue? Look at the banking sub-prime crisis. Just because an industry is large doesn’t mean that it can’t go over the cliff. Clearly the standard of living that we all enjoy is tied to an efficient transportation system. I hope for all of our sakes that someone back in Washington is minding the store.

–Bill Ryan

Why Factor?

A truck line factors for two main reasons. First, it is a new business and does not have enough equity to go to a bank for a conventional line of credit. Second, the truck line is growing faster than its bank line will allow.

How Does Factoring Work?

Factoring is not a bank loan. It involves a buyer and a seller. The seller (the truck line) sells its accounts receivable invoices to a buyer (the factoring company). The buyer (factoring company) pays cash for the invoices. The result is that the carrier has the immediate benefit of working capital as a result of selling its freight invoices. The factoring company now owns the freight invoices and it invoices the truck line’s customers.

Cash-flow Benefits

As a truck line, you wait on the average of 30 to 45 days before getting paid on freight invoices. You must pay many expenses, such as fuel and wages, on a weekly basis. This often results in a cash-flow issue for you. To make matters worse, spiking prices in areas such as diesel fuel further degrade your cash flow. You may have much of your operating budget tied up in accounts receivable resulting in an empty checking account.

Factoring gets to the heart of the problem. You sell your freight invoices to the factoring company for cash. You now have the benefit of working capital to finance and grow your business.

How Do I Find the Right Factor to Work With?

Start by asking your trucking friends who they like working with. As you investigate their referrals, you’ll find that customer service, a fair, easy to understand contract and complimentary benefits are important points to consider when choosing a factoring company.

Customer service is the most critical consideration in a long-term factoring relationship. Does your factoring company understand your business? Will it bend the rules a little when you are in a jam and need fuel money for a long weekend? Will you be working with one account representative who will know your business needs? Many factoring companies do customer service “on the cheap” and prove difficult to work with over the long run. Good customer service should include a willingness of the factoring company to do what it takes to help your business grow. Remember, your factoring company will be working with your customers. Poor customer service from the factor may imperil your customer relationships.

It is important to carefully review a factoring company’s contract. Are there minimum monthly fees? Can you get out of the contract without paying a hefty penalty? Is the language in the contract clear or does it require a lawyer to understand? How are your rates structured? Understanding the contract gives you a clear picture of your factoring company’s character and the true cost of financing through factoring.

Finally, look carefully at complimentary benefits of your potential factoring company. Does it help with collections? Does it give prompt credit feedback on shipping prospects that you are considering? Does it offer credit information online that is free and easy to understand? Are accounting reports readily accessible? Is your business easier to manage because of factoring or is it more complicated? These additional benefits can make the difference between a good factoring relationship and a poor one.

The right factoring partner will make your job easier and help grow your business. The wrong partner may put your business in jeopardy. Taking the time to investigate your factoring options will help your factoring relationship be successful long-term.

Still have questions about factoring? Give me a call or email me, and I’d be happy to help you.

Krisha Newham is Director of Communications for RTS Financial Service, a factoring company that specializes in financing transportation receivables. You can email her at knewham@rtsfinancial.com or call her at 800.492.7006.

Our company has a program for building long-term relationships with our carriers. We pay competitive rates. We pay our trucks weekly. And we treat our contracted carriers with respect. I hear a lot of grumbling about bad brokers. In most of these instances I am amazed at how little care has been used to check out the broker. I think that everyone needs to understand there are good and bad brokers and carriers.

I would suggest the following steps in checking out a brokerage:

1. Verify active surety bond and brokerage authority.

2. Ask for and check credit references.
-current payment (look for paying carriers within terms)
-credit rating from credit service
-years in business (less than 1 year, treat with caution)

3. If they are less than one year-old or you can’t find out much about them, ask for a 40% advance. Negotiate advance amounts before you commit to load.

4. Execute a written contract with every brokerage.

5. Confirm if they are a member of the TIA (Transportation Intermediary Association). Most reputable brokerages are.

6. If the load pays above the market, be cautious. It doesn’t matter if they are offering $4.00 per mile, if you don’t get paid the rate is zero.

It is my theory that when you begin checking the “scam-artist” out, he will run for cover. New carriers check us out every day. We encourage and appreciate their desire to do things right. This level of consideration extends to the freight they haul for us.

Don’t make yourself an easy target for those unscrupulous brokers out there trying to make the easy buck.

Mel Winstone
President of Ryan Transportation Service, Inc.

The same order is needed for the American trucker today: “stand and fight.” The reasons to throw in the towel are many: high fuel prices, predatory pricing, a complete lack of effective government policy for our industry. There are a ton of legitimate reasons to accept defeat, but I am encouraging you to “stand and fight.” Our country needs you to haul its goods to market. Without you, people don’t eat. Medicine doesn’t get delivered. People don’t get the mail. Commerce grinds to a halt.

Capitalism is cyclical. The economy expands and then it contracts. Unfortunately we are going through a contraction today that makes it very difficult to survive as a business. Surviving won’t be easy but times like this teach can us a number of valuable lessons:

• Be honest with your people. Let them know that they are important. Break down your employees into teams. Teams will give them direction and create goodwill.
• Watch out for waste. Every penny needs to be tracked. Office supplies, the cost of fuel, fuel efficiency.
• Develop service-oriented relationships with all of your customers. Regardless of the economy, customers are willing to pay for service. Be up front with your customers. Let them know that you will help make them money because your people will do a good job.
• Communicate with your drivers. Thank them for their hard work and service. Let them know that they are a valuable part of the team. Turn them into salesmen. Every pick-up and delivery point is a potential customer.
• Create recognition programs. When people do a good job make sure they are recognized. Create a company newsletter. Give out awards. And yes, talk to your people in groups. Remember, praise in public, reprimand in private.

Keep in mind that it takes a lot of guts to operate a truck line. The fact that you are here is a pretty good sign you have what it takes. Make it happen. Stand and fight!

Marc Andreoli

Marc is the operations director of RTS Financial Service. His background in banking, transportation and his knowledge of history give him a unique perspective on many of the challenges facing our industry.

I remember a large, publicly traded truck line in the late 90′s. It struggled with profitability toward the end of its life. Whenever it released earnings, it blamed its lack of profitability on deregulation and poor quality brokers. Each quarter we heard the same old story. It was like a broken record.

I didn’t buy it then and don’t buy it now. Don’t blame a lack of success on the wrong business relationships. Have the courage to say “I’ve had enough. We are not going to haul for these guys any more. We are going to build a network of premium brokers who will pay us on time and fill our empty miles.”

So what are the traits of a premium brokerage company? Are there enough premium brokers out there to reload your equipment? We think so. We estimate that there are about 2,800 premium brokerage companies doing business in the U.S.

How would I define a “premium” brokerage?

• Freight bills paid in 35 days or less.
• A competent payables staff in place. (You won’t ever hear excuses like our payables clerk is on vacation in Antarctica and won’t be back for several weeks.)
• A high net worth of at least $250,000. $500,000 or more is even better.
• A membership in the Transportations Intermediaries Association.
• They don’t run away from problems and shippers love working with them.
• They control some of the best freight in the United States and for a reason.

There is even talk of a number of these brokerages getting together to form a “Premium Association.” Requirements would include a high net worth and a surety bond of $500,000 or more. These brokerages believe that if it’s good for the industry, it’s good for them.

We are currently working on an upgrade to RTSCredit.com. It will allow you to do a radius search for premium brokers anywhere in the country. Our goal is to allow you to work with the best. Make a conscious decision to put the aggravation of slow pay and bad debt behind. Start building quality relationships today.

Elizabeth Beerman
Director of Marketing, RTS Credit Service, Inc.

Payment-terms are a critical part of the pay-collections cycle for the businessperson. It is especially important for the truck line owner. Why? The trucker has fronted the expense of moving the freight from point A to point B before he receives payment. He has paid for the fuel and the drivers’ wages. He has incurred the liability of transporting the freight over our congested U.S. highways. We are all familiar with the headaches that result from traffic accidents, lawsuits and litigation.

And to add insult to injury, slow pay! Don’t put up with it. You are not anyone’s bank. Here are the facts:

Freight invoices are paid on an average of 33 days. This is measured from the time that the invoice is mailed until payment is received. Brokers that pay in less than 33 days are typically using their own cash to pay the freight invoice. This is what you look for. It is a positive sign of business liquidity and financial strength.

We think it is good business to pay freight invoices faster than the average of 33 days. Shippers and brokers who pay faster than the norm typically enjoy greater levels of service and loyalty from their carrier friends. Greater service equates to long-term relationships with customers.

Accepting slow pay can be dicey. If it is slower than the norm, your risk of never getting paid goes way up. You don’t need the aggravation. So why put up with it?

Elizabeth Beerman
Director of Marketing, RTS Credit Service, Inc.

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