Usually the press out of this conference is designed to scare the shippers into paying higher rates than they need to but, at least within this summary, it appears they are becoming more realistic. Here are some key points:
- 2% GDP growth for the next two to three years (A number I have used for many years now). This is significant because virtually all the transportation executives I know say the real capacity crunch comes at 3% GDP growth.
- Eric Starks states the industry will flat in the foreseeable future. Flat means leaders tend not to know what action to take; what bet to make.
- Mark Rourke, President of Schneider claims they have a 4% to 5% productivity decline due to electronic logging devices (ELD) and they have not recovered from this since. This I will never understand and wish someone would explain. How can ELD's cause a productivity decline unless you are not already following the Hours of Service (HOS) laws. I would think this would make them more competitive as it will ensure everyone follows the laws.
I also think one of the biggest issues facing the trucking industry is just the nature of the "new freight". With freight now going to central and very large DCs and then parceled out to the consumer, the entire leg of freight going to the store is being eliminated. Think of this: Rail gets it to the DC and the part that was truck (DC to Store) is being eliminated. As leases run out, more and more retailers will close stores and go to on line. This will have a huge impact to the trucking market.
Perhaps this outlook (grim as it is) is what is driving the Schneider IPO?