Crystal ball for sale

Jan. 1, 2007
It wouldn't be January without forecasts, but this year I think I'll take a pass. It's a fairly safe business this new-year forecasting because within six months no one remembers what you predicted

It wouldn't be January without forecasts, but this year I think I'll take a pass. It's a fairly safe business this new-year forecasting because within six months no one remembers what you predicted, and you're never held accountable for all the sure things that didn't pan out. Even under those undemanding standards, 2007 looks like it's too tough to call.

Start with the economy. Freight volumes and trucking's economic health in general closely follow our overall economic condition. So where is the economy headed?

Based on the so-called major indicators, it doesn't look like anyone really knows. The housing market is down, level or up depending on the report released on any particular day. Inflationary pressures are growing with increases in wages, employment and energy costs, but inflation numbers aren't budging. The Christmas retail season got off to a fast start, but fizzled and sputtered the closer we got to the holiday.

In other words, the signposts point up, down, left and right all at the same time. If they tell us anything, it's that no one is too confident about the direction of our economy this year.

Of course uncertainty about the economy in general spills over to trucking's leading indicator — freight volumes. It looks like the growth in volume is slowing, and if you had to find freight on the spot markets recently, you're bound to be a bit pessimistic about the near future. Still, volumes are strong enough to keep rates at the profitable levels they reached in 2005 and 2006. Are for-hire carriers teetering on the edge of a cliff, or just taking a breather before resuming their push for more profitable ways? Take your pick of industry analysts and you can have the forecast that suits you.

No matter how clear the economic indicators are in any given year, there are always elements in the trucking business that are truly unpredictable. Can anyone really tell us where fuel prices will go over the next 12 months? Logic says they'll stay high, if not climb higher, but logic seems to have little to do with the global petroleum market. And there are always those wild cards waiting in the wings. This year, for example, the courts should have a ruling on hours of service. Will that decision help, hurt or be irrelevant to fleet productivity?

Of course the old standards aren't going away this year. It's not too difficult to predict that congestion will continue to grow, drivers experienced or otherwise will be hard to come by for many types of fleets, and the push for safety will require new investments in training and technology. But that's not telling you anything you don't already know.

We also know that equipment prices are going up to pay for new emissions controls. And that's bringing it's own set of uncertainties for the industry's truck builders and component suppliers. But there again, no one is sure if the drop in truck sales is going to be steep and long or moderate and temporary, largely because no one knows were the economy will drive freight demand and fleet profits.

I guess the only solid prediction I can make this year is that you need to be ready to respond to whatever the next 12 months bring, and respond quickly. Not much help, I know, but it's the only realistic forecast I can offer in good conscience.

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About the Author

Jim Mele

Nationally recognized journalist, author and editor, Jim Mele joined Fleet Owner in 1986 with over a dozen years’ experience covering transportation as a newspaper reporter and magazine staff writer. Fleet Owner Magazine has won over 45 national editorial awards since his appointment as editor-in-chief in 1999.

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