Despite the bad news, there are reasons to keep going
The news just keeps getting worse. Housing starts and permits continue to fall. Manufacturing production was down 13 percent in January from January 2008. The U.S. economy lost just under 600,000 jobs in January. The American Trucking Associations’ seasonally adjusted tonnage index in December 2008 was down more than 14 percent from a year earlier. And inventory-to-sales ratios are at highs not seen since 2001. Pick any economic indicator, and you can bet it is negative.
Given these factors as well as temporary plant shutdowns in December and January, it’s barely surprising that the for-hire trucking industry on a seasonally adjusted basis lost 24,900 jobs in January, according to preliminary Bureau of Labor Statistics data. That’s 1.9 percent of the trucking industry’s total payroll lost in a single month. Since October, trucking employment is down 3.8 percent as percentage declines in November, December and January each were the highest recorded as of that date except for April 1994 during a Teamsters strike.
As the old joke goes, there must be a pony somewhere in all of this. If you are still in business, you undoubtedly have taken many painful but necessary steps to survive a prolonged recession. But as the months pass with few signs of a broad recovery, you might be starting to wonder if it is worth continuing the battle. In the current environment, you probably have little choice as shutting down is unthinkable and selling out might be unworkable. But also recognize that there are some positive developments, however small. Here are a few:
Freight opportunities probably are available. It may not all be the best freight for your network, but given the number of trucking companies going out of business, many shippers must need new carriers even if their own shipments are down. According to Avondale Partners, more than 3,000 trucking companies failed in 2008 – the most since 2001. If the BLS employment figures for January are accurate, carriers still are failing or downsizing in droves. Finding these opportunities requires constant awareness and networking, relying on your drivers as well as your managers to provide intelligence from the field.
Diesel prices continue to drop. In the 32 weeks from the peak in mid-July to Feb. 23, the retail average diesel price dropped $2.63 a gallon to its lowest level in four years. Plummeting diesel prices helped boost cash flow as surcharges from higher prices came in to cover fuel purchases weeks later. And an overall reduction in transportation costs likely postponed pressure from shippers on freight rates. With prices apparently settling, those benefits may go away, but at least lower diesel prices give you more flexibility to take freight that involves more empty miles.
Relief for motorists at the pump has to help. Gasoline prices nationwide are up about 35 cents from their low at the end of December, but they still are more than $2 a gallon below their high in July. Recent lows aside, prices haven’t been this low since early 2005. Economists say that a 1 cent drop in the gasoline price adds about $1 billion a year in disposable income.
The federal government is about to spend another $787 billion. You certainly could debate whether the economic stimulus package will be as effective as it could have been and whether this level of spending is a good idea in the longer run, but it surely beats doing nothing in the near term. And research the details; perhaps you can do business with a company that stands to benefit.
Drivers shouldn’t be a problem. With a 2 percent drop in payrolls just in January, you have a rare opportunity to upgrade your driving force. Get tough on your poor performers and reach out to the best of those idled by the slump.
None of these factors will turn a bad year into a good one, but perhaps they can help you hang on until the next trucking boom that lies just around the corner.