In late September I was fortunate to once again participate in Richard Lande's popular Transportation Conference. It was the 25th anniversary of the annual conference which, thanks to Lande's personal touch and eclectic tastes, has gained a...
In late September I was fortunate to once again participate in Richard Lande’s popular Transportation Conference. It was the 25th anniversary of the annual conference which, thanks to Lande’s personal touch and eclectic tastes, has gained a reputation for becoming a unique event in our industry. What other transportation conference can one go to and get educated on industry issues while getting a body massage or having his eyebrows flossed (yes, you read that correctly and I didn’t know such things were done either till attending Richard’s conference a few years ago.) Richard and his staff didn’t disappoint this year, hosting an opening dinner at the BAPS Shri Swaminarayan Mandir complex, a masterpiece of intricate design and workmanship of ancient Indian arts, traditions, philosophy and Hinduism. The one day conference was held the next day at the Woodbine racetrack and many of us spent the conference breaks watching the thoroughbreds training on the sun drenched track.
Like the jockeys riding those thoroughbreds, carrier executives have been eager to race ahead and start their companies back on the road to growth. But the steady stream of negative news about the economy has left them pulling back on the reins. In fact the morning of the conference we woke to even more sobering news of the global economy as stock markets suffered another meltdown on fears of a return to recession.
It seems no conference can be without an economist these days and Kenrick Jordan, a senior economist from BMO Capital Markets, was one of the first speakers at the conference. Jordan confirmed the global economy is growing much slower than anticipated even just a few months ago and the North American economy in particular has lost momentum and is expected to grow less than 2% this year. Other speakers, such as George Magliano, an economist with IHS Global Insight, provided perspective on what the slowdown means for key motor carrier markets such as automotive. The average US automotive production from 2000 to 2007 was 17.2 million vehicles. It’s only expected to get to 12.5 million in 2011 and Magliano figured it could take till 2014 till production levels climb back to 17 million. That’s in part because Magliano fears it could be till 2014 or 2015 before the North American economy gains back all the jobs lost during the Great Recession and consumers get back to spending the way they used to.
Such forecasts grounded the executives attending the conference in the root reality of the moment: there are tough times ahead and more tough decisions to be made. But the messages from the conference included both roots and wings. And it’s important to pay equal attention to the words of those who give us wings, such as Silvy Wright, president and CEO of Northbridge Financial (parent company of Market Insurance) who advised committing to building customer loyalty. Studies show that only “excellent” service translates into customer retention. And also Mike Riggs, chairman of automotive hauler Jack Cooper Holdings, who swears by making decisions based on a 20 to 30-year window rather than on what is expedient for the moment.
For those of you still concerned the negative indicators being trumpeted by the network news signal a return to recession, I would like to share with you some economic numbers I read the day after the conference.
After all we’ve heard about the economic slowdown you would think it goes without saying that factory orders, which provide a gauge of coming production, should be on the decline. Yet, they are not.
In the US, the pace of orders that slowed in the spring has regained strength and is now up 15% at annual rates. And it’s not just the US where this phenomenon is being witnessed. Orders in Germany are up 11% since the beginning of the year. France is up too and in Italy orders are up an annualized 18% so far this year. Spain leads the pack with an annual average growth in order of 20%. And right here at home, new orders are up 12% on an annualized rate since January with growth showing impressive gains in June and July.
Unlike the speculation going on in the markets, the trend for new orders provides a firm indication of what to expect in coming months and it suggests things are improving.
So as the opening speaker from the conference, Stephen Leopold, a Canadian entrepreneur who bounced back after losing millions during the terrorist attacks of 9/11, advised, let’s continue to think ahead, think big and not shy away from risk. If we all do that we may just avoid needlessly worrying ourselves into an economic downturn.
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