Chris Ferrell, Associate Director of Tompkins Supply Chain Consortium, almost needs no introduction. He has written a few guest posts on the Go!Go!Go! blog, and he really knows his way around the transportation industry. Today, he has some insights for us on the new numbers from the DOT’s Bureau of Transportation Statistics that were just released on Wednesday.
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Last month the Tompkins Supply Chain Consortium published an Executive Briefing on the state of (U.S.) domestic transportation and its usefulness as an early indicator for the overall economy. As I say in that report, the first tangible signs of how things are likely to play out on a macro-level will show up in transportation.
For contrast, think about manufacturing and distribution networks – while less constrained than ever, they still require long lead times to fundamentally change. And at the same time, planning activities are company-specific and, by design, rarely available for public scrutiny. But for transportation, obligations are few and all the data one needs for analysis is publicly available.
Since the Executive Briefing was written, the DOT’s Bureau of Transportation Statistics has published two additional months of data, and the news is not promising.
The May 2010 number ended a streak of consecutive months with growth and, in fact, erased all the gains made in April and some from March as well. And the year-over-year gain of 4.4% is offset by the fact that May 2009 marked the absolute bottom of the Great Recession. Another month or two of decline and you won’t have to be an economist to see that the oft-predicted “W-shaped” recovery will already be three-fourths complete. (I’ve added the yellow W to TSI-Freight/GDP chart to show you the potential outline of events.)
If this potential scenario becomes a reality, a vulnerable transportation industry that has already been reduced considerably could be decimated (literally a 10% reduction in total capacity) just prior to a steep and sustained recovery.
Although I would like for everyone to remain optimistic, I encourage you to be aware of the numbers and plan for the future of your company. To that end, I’d like to leave you with a link to a recently published article in Logistics Today that discusses some of the long-term projections of the transportation industry and the different challenges shippers will be facing down the road.
So while your organization goes about the process of securing adequate capacity at the most favorable price for the forthcoming fall busy season, you may do well in the long run to verify your service providers’ financial health and to remember that we could be months away from the shoe being on the other foot – a robust economy being hampered by a capacity-constrained transportation industry for quite some time. But that’s just my opinion. What do you think?
-- Chris
More Resources:
Domestic Transportation Executive Briefing: The Industry is Moving Once Again
Transportation Sustainability Hot Topic Report