"We cannot use traditional thinking in making predictions for the future."
Making predictions about the future is always risky, but sometimes it helps put things in perspective to review events of the past. However, as we consider the recessions, expansions, competition and consolidation that have occurred recently, we need to remember it is indeed history and not necessarily a harbinger of how the future will play out.
I'm convinced we can not use traditional thinking in making predictions for the future of this industry and here's why: In 1998 there were about 1.4-million medium and heavy trucks produced globally. In five years the forecast is for 1.75 million, a 25% increase. This is surely a sustainable growth market.
Nevertheless, many Federal Reserve economists continue to predict an impending recession. From 1996 through 1998 they have incorrectly predicted GDP growth by estimating too low. Actual GDP growth was nearly 2% higher than their estimates each year from 1996 through 1998. Even in 1999, these economists have already adjusted their original 2.1% GDP growth-rate forecast to 3.6%.
But it is manufacturing growth that truly confirms the potential for strong growth in the trucking industry. In the '80s, manufacturing growth in the U.S. grew at a 3.4 % rate. And with the technology explosion in the '90s, it grew to an incredible 5.1 %. This is an important indicator because heavy trucks transport over 73 % of all goods manufactured in the U.S. Because manufacturing growth has increased so dramatically, the heavy truck business has turned into a growth market.
Additional factors contributing to unprecedented growth in the trucking industry are just-in-time freight as standard operating procedure, constituting 20 % of all inventory on any given truck right now; and technology that offers better service and equipment and keeps trucks safer and more productive. Infrastructure improvement in the U.S. continues with expansion and upgrading of interstate highways, roads, and bridges. Trucks also are much more nimble than railroads, and will therefore capitalize on opportunities not available to rail. Finally, the continued growth of ordering goods over the Internet (e-commerce) will demand trucking growth since more and more trucks will be needed to deliver those packages to homes.
Issues of concern in the near future? The driver shortage is real and we have to find a way to recruit more women and recent high school and college graduates into our industry. We need to monitor the type of legislation coming out of Washington and be prepared for any type of problem regarding oil demand. The recent EPA ruling for diesel engines is certain to have impact in the near future.
Domestically, I think developments in the distant future may include:
* An expanded interstate system or possibly dedicated long-distance transportation routes
* Intelligent systems to control fuel, environment, and monitor vehicle performance.
* Integrated suspension and braking systems for safer, smoother, easier-to-drive vehicles.
* Radar, GPS, electronic braking, stability systems, and other integrated technologies.
>From a global perspective, we can expect exponential market growth as roads and technology allow nations to rapidly develop and improve their infrastructures.
As Peter Drucker once said: "The best way to predict the future is to create it!" So let's make our industry's future one of solid growth by welcoming it with new ideas, open minds and confidence.