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Is the Economy Hampering Logistics?

The industry plodded along in 2010 and is doing little more than that now, says Rosalyn Wilson, senior business analyst at Delcan. Job creation is weak and consumers are buying "needs, not wants," which translates into lower freight volumes. Wilson thinks it will be three to five years before the industry returns to normal.

In a conversation in which Wilson analyzes every transportation mode, she says her overall impression is that slow to no growth will be the norm for the balance of 2011 and likely for the next several years.

The realities confronting people today are not heartening: a high unemployment rate with weak job creation and "consumer sentiment" very much against buying a great deal beyond necessities.

Wilson says she doubts this is just a temporary hurdle to the economy. After all, the manufacturing sector had been the "bright star" in the economy through all of 2010, but orders are down, production is sliding, and manufacturing has begun to shed workers. "The underlying signs are not good. Before, we were getting a little traction, but I think the ground is too soft now to get any traction."

So how bad will it get? A poor economy translates into lower volumes and that in turn means "bad news for our industry," she says.

Analyzing just the trucking industry industry, Wilson says she feels the longer the economy is depressed the worse it will be for independents and marginal carriers. "They will no longer be able to keep up their payments or do the maintenance they need. Among other things, that means that trucking will continue to lose capacity." Imagine when things do start to recover, Wilson says. "There will be a perfect storm, if you will, because there will be an inadequate amount of equipment and number of drivers to keep up with the volume."

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