Winners and losers

Oct. 1, 2007
Coming off the highs of the past few years, the current soft freight markets probably feel worse than they really are, but there's no denying the downward pressure they're exerting on rates and profitability. And the economy, especially the housing market, is delivering more unwelcome news. Analysts had expected to see volumes pick up by the end of this summer, but now some are saying we shouldn't

Coming off the highs of the past few years, the current soft freight markets probably feel worse than they really are, but there's no denying the downward pressure they're exerting on rates and profitability. And the economy, especially the housing market, is delivering more unwelcome news. Analysts had expected to see volumes pick up by the end of this summer, but now some are saying we shouldn't expect to see significant recovery before the third quarter next year.

Given that gloomy near-term outlook, it's understandable if some lose sight of the long-term opportunities for anyone moving freight by truck. This might be a good time to be reminded that compared to very strong 2005 numbers, trucking's freight tonnage is expected to grow an astonishing 30% or more by 2017.

Other modes will see growth constricted by their lack of flexibility compared to go-anywhere trucks, while our nation's tractor-trailer fleet will increase by nearly a third over that period, expanding from 1.9-million vehicles to 2.5-million, according to forecasts from the American Trucking Assns. And overall, commercial vehicle registrations of all sizes are predicted to grow by 40% over the next 10 years.

Unless you're nearing retirement, numbers like that ought to pick up your spirits.

Of course there's a catch. Those numbers certainly represent opportunity, but will you be able to capitalize on that opportunity?

The major obstacle you — and trucking in general — will have to overcome is capacity. Manufacturers will happily build as many trucks as it takes to handle all that new cargo, and you can probably find the money to buy them even with expensive new emissions technology. But who will drive them and who will fix them?

And if we solve those problems, how do we keep our currently overload highway infrastructure from descending into crippling gridlock with all that added traffic?

Those are just the first issues that come to mind. Any industry as heavily dependent on petroleum as trucking has to consider both the escalating cost of that fuel and a rapidly growing green social consciousness driving a push for alternatives. What will it cost to move all that additional tonnage if we solve the other capacity-related problems?

And while we're considering the big issues, the rapidly expanding economies and populations of China, India and other formerly underdeveloped regions have to impact trade patterns and freight movements.

We shouldn't be expecting that tonnage growth to come from traditional sources or to follow familiar distribution routes. Traffic lanes, lengths of haul, and all those other operational characteristics of your current fleet are going to need to be re-examined and re-engineered if you're going to participate in that growth.

Given trucking's history of rapid response to change, there will be winners who figure out how adapt to all the changes ahead and losers who cling to business as usual practices and outlooks. Just because it's a cliché doesn't mean it isn't true — the future belongs to those who find big opportunity in big challenges. I'm sure you know which category you want to be in.

E-mail: [email protected]
Web site: fleetowner.com

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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