newsworthy
After two-year storm, SMC3 attendees
enter 2011 with high hopes
ON A COLD JANUARY DAY IN 2009, ATTENDEES AT THE
SMC3 annual winter meeting gathered around a big-screen
TV in an Atlanta hotel to watch the swearing in of Barack
Obama. They then trudged home to resume the struggle to
survive the worst downturn most had ever seen.
Last January, the same group came together in Atlanta
again, battle-scarred but somewhat more hopeful about
what the next 12 months held in store.
Last month, the group of shippers, carriers, 3PLs, and
assorted vendors brought a far different attitude to Atlanta.
For the first time since the financial crisis unfolded in the
fall of 2008—and for many, the first time since a miserable
freight recession took hold in 2006—optimism was clearly
evident and for the most part, untempered.
When asked at a general session how many expected at
least 10 percent revenue growth in their businesses in 2011,
an overwhelming majority of audience members raised
their hands. One notable exception was Chris Lofgren,
president and CEO of truckload and logistics giant
Schneider National Inc. Lofgren forecast 5 percent revenue
growth for his company and voiced concerns that a slew of
new government regulations—Lofgren listed 16 of them in
a presentation he gave at the conference—would have a
dampening effect on Schneider’s prospects.
“There are more regulatory changes now than we’ve ever
faced before,” Lofgren told the audience. “Until we see the
outcome of this, we are not going to add a single truck.”
Other speakers painted a much brighter picture of the
year ahead. Thom Albrecht, transportation analyst for
BB&T Capital Markets, said in a presentation that 2011
“could be a great year for freight” as companies aggressive-
ly ramp up their capital spending programs and as indus-
trial production—which Albrecht said “creates freight”—
grows at two to three times the rate of the U.S. gross domes-
tic product (GDP). Albrecht said he sees the current upcy-
cle lasting until 2014.
Even the renowned economist Donald Ratajczak, whose
voluble presentation style belies a cautious, prove-it-to-me
attitude toward economic cycles, waxed bullish. Ratajczak
was particularly optimistic about the second half of 2011,
when he expects that states that are now struggling with
budget deficits will get their fiscal houses in order and the
economic drag resulting from the belt-tightening will be
offset by a reduction in the employee-paid portion of the
social security tax. Ratajczak said the 2 percentage point
reduction should add $250 billion in economic stimulus
during 2011, the lone year the cut is to be in effect.
Ratajczak said the recovery could be derailed by a continuation of “bad policy” coming out of Washington. He
added, though, that most of the policy directives that sowed
so much uncertainty in corporate America have already
been implemented and that future moves, if any, will be
more benign for business.
Ratajczak also cautioned that China’s potential inability
to control inflation could lead to a dramatic and damaging
upward spiral in prices. “But I see that as a 2013 problem,”
he added.
RATES ON THE RISE
The fly in the transport ointment appears to be the prospect
of rapidly escalating carrier costs and rising freight rates for
shippers as carriers look to recoup ground lost during the
freight recession, recover the costs of current and planned
investments, and brace for the impact of new regulations on
their operations.
G. Tommy Hodges, a trucker for 45 years and now president of Goggin Warehousing LLC, a 3PL based in
Shelbyville, Tenn., said various environmental directives
since 2003—including diesel engine retrofitting directives
in 2007 and 2010—have added $35,000 to the cost of the
