News & Articles

I heard a wonderful panel discussion at the Truckload Carriers Association annual meeting. The panel was led by Bob Costello, the chief economist of the ATA (American Trucking Association) he had four different segments of our economy represented on the panel. I am definitely not a journalist, but did my best to capture their thoughts.

Bob Costello, Chief Economist for the ATA

• He said, ask eight carriers how they are doing right now and you will get eight different answers.
• Sees growth in 2010, but not “gangbuster growth”. After two horrible years, he believes this is a transition year. He believes 2011 will be very strong.
• Many good carriers have been slammed the 1st two months of the year.
• He doesn’t see inflation because companies are being so efficient.
• Warren Buffet buying the Burlington Northern caused a rail renaissance.

Bruce Carlton- President of NITL (National Industrial Transportation League)

• He is cautiously optimistic about this year. He thinks, the Great Recession is a “life changing moment” for many families. He thinks, buying patterns will be forever changed.
• Many shippers are nervous that carriers won’t want to pick up and buy more equipment, when their freight picks up.
• Many members have gotten “insane rates”.
• When talking about investing in our highways, bridges and infrastructure, he said his members are willing and ready to pay their fair share of taxes. He mentioned congress is using the additional tax revenue to pay down the deficit instead of using it where it was intended to go too.

Casey Chroust- President of Retail Industry Leaders Association

• His members range from Target, Best Buy, big box stores, to technology companies like Apple.
• It seemed to me, his members are a mixed bag. He has many discounters like Bj’s and Costco that have done extremely well. The high end stores are not building any new stores right now.
• His members have become very proficient with their supply chains. They have no extra inventory and their carrying costs have dampened.
• He mentioned Lowes will not setup up a carrier that is not Smartway certified.
• The international shift in manufacturing isn’t changing. He is seeing many companies finding new sourcing away from China to Thailand, Cambodia, Vietnam and possibly Africa. Companies are finding even cheaper labor in these emerging markets.
• The Panama Canal is making a wider and deeper canal that will serve the biggest ships. These big ships can hold 8000 containers. Once the canal is built, the US east coast ports will take off.
• Told a great story about Wal-Mart and their power. Wal-Mart demanded that all of their laundry detergent suppliers sell them the concentrated liquid instead of the big bulky containers. By Wal-mart doing this, it saved the United States water supply the equivalent of 100 million showers a year. It also took thousands of truckloads off the road because you can get more product on a truck and saved millions of tons of plastic tonnage a year.

Kirk Pickerel-  President and CEO at Associated Builders and Contractors

• He has mixed signals about economy, but tends to be optimistic. When he looks at all the data, it doesn’t seem good.
• Backlogs have been at 20%.
• Banks have to lend more, getting financing has been a struggle.
• He has seen data that suggests the unemployment in construction is at 24.7%.
• The power sector & highway sector have both fared well. The commercial building has been nasty, companies are losing money on projects to get business and keep employees. Margins have been slashed on every job.
• Doesn’t think the stimulus money created any jobs, but saved some.
• Congress doesn’t have the “guts” to invest in infrastructure like China and Brazil. We have to find a way to fund a long-term transportation bill.

Stephen Sibert- Senior Vice President of Industry Affairs of Grocery Manufacturing Association

• They have members that range from Nestle all the way down to small companies that produce their own soups.
• He sees a lot of consolidating in his industry. The big boys are gobbling up their smaller competitors.
• Seeing major growth in private labeling.
• Higher end restaurants have suffered, but Mcdonalds and Taco bell are way up.
• Who would have ever thought Starbucks would sell freeze dried coffee? Companies are trying new things to improve sales.
• % of costs of goods for transportation have dropped from 6.9% to 6.5%! Carriers have cut costs to keep their business.
• Packages have gotten smaller, because the United States is on a healthier eating trend. He has also seen some companies have gone to square packaging to minimize claims.