The precarious health of the LTL industry. Weak volumes and
cut-throat pricing have taken their toll on the LTL sector, which continues
to struggle with inadequate earnings. YRC is the best-known example, but
there are others as well. Con-way, for instance, lost $110 million in 2009*.
This will not change without a significant improvement in the economy.
The price of diesel fuel. After a temporary dip, fuel prices are once
again on the rise. According to Department of Energy projections, the
average retail price for diesel this year will be $3.00 per gallon. Although
that’s way down from a few years back, it’s still high enough to be a
major factor in the cost of moving goods. And we still have $80-a-barrel
oil.
Rail regulation. A bill currently in Congress would eliminate
antitrust law exemptions for railroads and change the way the industry is
regulated. While captive shippers certainly deserve protections, I believe
this bill, if passed, could be a dangerous first step toward more
regulation.
The nation’s deteriorating infrastructure. In spite of stimulus
spending, we are making very little progress toward building the
infrastructure needed to keep up with our growing rail and highway traffic.
We need to think gray as well as green. If we don’t, we’ll pay the price
in congestion and delays. It’s been projected that at current construction
levels, highway capacity will have expanded by 9 percent by 2043. Traffic,
however, will have surged by 135 percent. This is not exactly a recipe for
an efficient national infrastructure.
The Mexican trucking dispute. We need to settle this once and for
all. After dragging its heels for 17 years, it’s time for the U.S.
government to stop making excuses and give Mexican truckers what we promised
under the 1993 North American Free Trade Agreement – full and free access
to U.S. highways.
Transportation capacity. As freight volumes recover, shippers may
find trucks harder and harder to come by. Many carriers sold off equipment
during the slowdown. And given their weakened financial condition, it’s
unlikely they’ll be able to rebuild capacity quickly as demand picks up.
Operators may be in short supply as well – many drivers lost their driving
jobs during the recession and moved on to other occupations. The result
could be capacity shortages more severe than we saw in 2005 – 2007.
The sustainability movement and industrial real estate. For all its
benefits, the green movement has the potential to create serious headaches
for at least one group: real estate investors. While most new construction
is "green," many existing, vacant buildings are not. The owners of
these buildings may be forced to invest in costly retrofits in order to
compete with new, eco-friendly construction.
Quality. Unfortunately, quality has sometimes been a casualty of the
economic decline. Many of us have cut corners to cut costs, but quality must
be restored in the system. This will be a challenge for 2010.
The weakened logistics service provider (LSP) sector. Like many other
service providers, LSPs have suffered during the past two years. While some
have responded by coming up with new ideas and processes, not all have.
Those who haven’t, must. If they succeed, the result will be a system of
improved, more creative providers – a plus for the entire distribution
system.
Vested outsourcing. I believe this concept – under which clients
pay LSPs for results, not processes – will establish a strong foothold
during 2010. In fact, it could change the landscape dramatically.
