recall a climate so unfavorable to truckers as the one we
have today?
AOne man’s pain is another man’s gain. All of the issues cited put a crimp on capacity additions. The surviving
carriers that are able to effectively deal with all these challenges will benefit from the improved pricing that accom-panies tight supply and demand. But we are in uncharted
territory when it comes to the quantity and magnitude of
the challenges facing the trucking industry.
QDo you foresee all this resulting in significant rate pressures for shippers over the next two to four years?
Or will shippers—the larger ones at least—be able to drive
down increases to levels that mimic the annualized inflation
rate?
AI strongly believe the driver-driven capacity shortage will be dramatic and that shippers will have to pay up
for high-quality capacity over that time frame. The fly in
the ointment would be a severe downturn in the economy.
Under those conditions, rates could fall again.
QDriver retention today appears to be a bigger chal- lenge than driver recruitment, with driver turnover in
the third quarter running at an estimated 90 percent compared with 40 percent a year ago. What can companies do
to hold on to drivers?
AThey can pay them more, get them home more fre- quently, keep trucks rolling to maximize productivity
under the current hours-of-service regulations, offer economic incentives to safe drivers who are almost always on
time, and sensitize those who come into contact with drivers to treat them like the valuable resources they are.
We think the economy will continue to grow at a sluggish
1- to 2-percent rate through the elections. High unemployment, a high savings rate, uncertainty regarding tax policy
and health care costs, and the anti-business rhetoric coming
from the White House have slowed new hiring, risk taking,
and capital formation.
Slow growth is probably the best we can hope for, and I
would not rule out a mild double-dip recession. But it
would be mild due to the leanness of inventories.
QYou’ve worked in transportation since before deregu- lation. Between inflationary pressures, driver shortages, and aggressive government intervention, can you
QRail intermodal stands to benefit from the challenges facing truckers and truck shippers. Yet if rails want to
be competitive, they will have to deliver reliable service over
the shorter distances traditionally served by a solo trucker.
Are the railroads really capable of playing consistently on
the shorter hauls?
ALength of haul is relative. By “short haul,” the rails are talking about 500- and 600-mile lengths of haul. The
railroads in the East will continue to improve their service
in lanes of that length that are anchored by big cities such
as Chicago, Atlanta, and New York. Otherwise, only a few
shorter lanes are dense enough to make economic sense,
such as Savannah to Atlanta.
