Viewpoint: 2011 Rate Outlook: Going up!

I’m certain that the current economic environment has found many logistics professionals somewhat conflicted.

Dribs and drabs of positive news continue to surface on logisticsmgmt.com, showing a slow, but steady improvement in consumer confidence along with indications that manufacturing is finally gaining some momentum. And while savvy shippers may be breathing a sigh of relief based on this data, many are quietly fretting over what an improving economy could mean to their logistics operations.
As we expose in our 2011 Rate Outlook (page 28), the concerns that had been mounting—volatile fuel costs, constraining capacity, higher rates—are certainly justified. This month, Executive Editor Patrick Burnson has done an exceptional job of reporting on how the current economy will affect transportation prices across the modes over the coming 12 months.
Well, the consensus across our panel of analysts has never been more clear: Continued volatility in oil and diesel, evaporating capacity, along with near-debilitating regulatory uncertainties facing the nation’s motor carriers, will almost certainly force rates up in every transportation sector.

In my estimation, it’s that regulatory limbo that should be sending the coldest shivers through the shipping community. As we’ve been reporting, the specter of a “natural capacity crunch” driven by a simple economic uptick could be greatly intensified depending on the outcome of unresolved hours-of-service (HOS) and Comprehensive Safety Analysis (CSA 2010) regulations.
The numbers could be staggering. As John Schulz recently reported, during the last great peak in trucking (2004), the industry found itself about 150,000 drivers short. According to analysts interviewed for the 2011 Rate Outlook, the current uptick in volume could find us 100,000 drivers short this year.

However, depending on any changes to HOS or CSA 2010, that number could reach 300,000 or more out of the driver pool by 2012. “The hardest hit in 2011 will be the truckload sector which has more severe capacity restraints on drivers and equipment than the LTL side,” trucking analyst John Larkin tells Burnson.
Concerned? Larkin and a host of transportation analysts will join Burnson in our annual live Rate Outlook webcast on Thursday, January 27 (logisticsmgmt.com/2011outlook). The panel will walk through rate predictions in each mode and will be available for a live Q&A period designed to help shippers get a better handle on what to expect in terms of rate fluctuations over the coming year.

Editors Note: Readers will notice a colorful image on our cover and throughout the pages of Logistics Management (LM) over the course of 2011. This issue marks the beginning of our 50th year of publishing LM. And while the founding editors—who got things rolling under the title Traffic Management—might be pretty impressed with how the Internet has revolutionized content delivery, I think they’d be comforted to know that many of the same challenges still face shippers today.