Peter Bradley
Editorial Director
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Karen Bachrach
Executive Editor
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Toby Gooley
Managing Editor
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David Maloney
Senior Editor, Special Projects & eContent
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Mark Solomon
Senior Editor
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Susan Lacefield
Associate Managing Editor
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James Cooke
Editor at Large
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Steve Geary
Editor at Large
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George Weimer
Editor at Large
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Erica E. Mac Donald
Assistant Editor
Sean Maloney
Assistant Editor
Keisha Christopher
Director of Creative Services
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Jeff Thacker
Director of eMedia
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Columnists:
Clifford F. Lynch
Don Jacobson
Shelly Safian
Kenneth B. Ackerman
Art Van Bodegraven
Barry Brandman
bigpicture
ready to go? Maybe
Gary Master
Publisher
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Mitch Mac Donald
Group Editorial Director
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Jim Indelicato
Group Publisher
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WHILE THE ECONOMIC RECOVERY HAS BEEN SLOWER AND MORE
modest than hoped, it apparently is real. That’s good.
But as we arrive at the peak shipping season, shippers may still have to
contend with the recession’s aftereffects. During the worst economic downturn in our lifetimes, carriers in all modes made sharp cutbacks in order to
survive. As a result, shippers could be looking at a serious shortage of
freight capacity this summer and fall, just when they need it the most.
Some signs indicate that the nation’s freight transportation capacity is
already under pressure. In June, trucking officials speaking at a conference
in Atlanta warned that the industry could face the most severe driver shortage in its history as a result of increased demand and an aging workforce.
That same month, intermodal volume on the nation’s
railroads reached its highest level since late 2008, while
rail carloads posted solid gains.
The picture is much the same on the ocean side. In
May and June, import container volumes at the country’s top retail container ports showed double-digit gains
over year-ago levels, according to the National Retail
Federation. The group expects the trend to continue into
the fall. In the meantime, reports out of Asia suggest that
ocean carriers are facing a shortage of containers to
move goods to the United States. And when the goods
get here, shippers may have a hard time getting them out
of port. In a June story, the Journal of Commerce
reported that terminal operators at ports around the country
expected difficulty in handling the surge in imports.
All this means that shippers have a lot of decisions to make regarding
what carriers they use, what they’re willing to pay, where to source,
whether they should consider redesigning their networks, and more. But
one of the toughest quandaries of all may be the inventory/transportation
tradeoff: Do you build stocks in what some still consider a wobbly recovery in order to take advantage of transportation economies of scale? Or do
you keep inventory lean even though it will mean making smaller, more
frequent—and thus more costly—shipments?
The choices are not easy. But while the current experience may be
extreme, the dilemmas should not be a surprise to shippers who have paid
attention. A post-recession capacity crunch—and concomitant rate pressure—was almost a certainty.
A recovery of course is a good thing. But it has its challenges. The analogy that springs to mind comes from meteorology: A high-pressure system
that brings balmy weather is often preceded by a squall line of dangerous
storms. The key is to be ready.
A PUBLICATION OF
Editorial Director
