Sunday, January 19, 2020
The other day I took one of those “Who You Should Vote For” surveys. They ask questions about a wide variety of issues including education, science, electoral process, crime, immigration, social, economic, domestic policy, the environment, national security, transportation, foreign policy, healthcare, local politics/elections. My score ended up with a tie between Michael Bloomberg and Donald Trump at the top followed by Joe Biden and Amy Klobucher. Bernie Sanders, Elizabeth Warren and the rest of the free stuff fun bunch lagged way behind.
I just happen to be one of those independents who refuses to believe that either party has all the answers. I tend to consider myself more of a pragmatist than an idealist when it comes to politics. I am also inclined to question anything that is said by those on the extreme ends of the political spectrum. I know where Fox News is coming from and how it slants its reporting and commentary. Same thing for MSNBC and CNN. I gave up on the networks years ago.
My positions on taxes, climate change, gun control, welfare, same-sex marriage, abortion, immigration and most issues are a mix of conservative and progressive. If weighed out, the scales tip more toward the conservative side for sure. But I am not 100% on either side on most issues. Just a few examples:
_Taxes. I think we should reduce the size and cost of government. There is way too much waste in government, especially in the federal government. So check me as a conservative there. However, I also think we should increase taxes on the wealthy. I’m ok with carrying National Debt and when necessary over-spending for a year or two. But, we are out of control and need more revenue to bring things back in line. Plus we know that we need to spend more on education, healthcare and infrastructure.
_Right to life. I am pro-life. But I am also a pragmatist. Women will have abortions. Always have and always will. So we should make it as safe as possible. However, there should be more done to counsel, support and encourage women to go ahead and have that child. Then give it up for adoption if that’s the best option. But, if the woman chooses abortion, so be it.
I am also a pragmatist when it comes to end of life issues. Terminally ill patients should have the option of ending their lives via assisted suicide. Some will ask how I can claim to be Christian and support such an idea. I honestly do not see how you can be a Christian and not support it.
And then there is the death penalty. I am generally opposed to it, because we know that sometimes juries get it wrong. But, in certain situations, for certain crimes, I think it is justified and I support it.
So when it comes to these life and death issues…am I conservative or progressive?
_Immigration. I am not for building a wall and I think we need more immigrants, not less. So does that make me a progressive? I am also for tighter border security and more restrictions, so I guess that makes me a conservative. I am for establishing a streamlined pathway to citizenship for illegals who have been in this country and stayed out of trouble for some period of time. And we need to move quickly to grant citizenship to “Dreamers” who were born here. So I guess that makes me a progressive. But wait, I think immigrants should be required to learn the English language and the history and culture of America. I suppose that makes me a conservative.
_Guns. I own guns. I have a permit to carry. I am a gun guy. That’s about as conservative as it gets. However, I don’t think civilians need high-capacity semi-automatic weapons. Certainly not military type assault-rifles. And we need tighter regulations on buying and selling guns. So maybe I am a gun-toting progressive.
_I tend to lean left on same sex marriage, but don’t think churches should be forced to perform such marriages. Perhaps I am more of a “civil union” conservative. Live and let live. Move on.
_I am all for renewable energy, clean air and clean water. But I am also a realist and fossil fuel still offers the biggest bang for the buck. I do believe the climate is changing and we have been in a warm cycle. We have been in warm cycles before and it’s not all about C02, although CO2 is probably making some contribution. Overall, I am a skeptic when it comes to the “science is settled” dogma that CO2 and human activity are the primary forces driving climate change. That makes me about as stone-age conservative as you can be these days.
Therefore, I have become a Party of One. If you have a brain and are willing to use it, feel free to join me.
Thursday, December 26, 2019
Every December I make predictions for the coming year. But unlike most people who make predictions, I actually go back and review the predictions I made the prior December. Usually I do ok. A few of the predictions are spot-on and some are close. Two or three are total misses. 2019 was mostly all misses. I mean I was way off the mark on most everything. But like a gambler who doubles down to catch up, I will make my predictions for 2020 and hope for the best.
But first, how far off the mark were my 2019 predictions? Judge for yourself.
_1. Alabama wins another National Title.
Grade C: They made it to the championship, but Clemson kicked their ass.
_2. The economy continues to slowdown, but we don’t go into a recession until 2020. The tariff wars cool off which helps stabilize the economy for now.
Grade B: I was right about the slowdown, but I don’t see a recession in 2020. The tariff wars have finally cooled off, but too late to avoid a significant negative impact on 2019.
_3. Oil prices remain relatively low.
Grade A: I think this one was fairly accurate
_4. The Democrats will spend most of their time investigating Trump and Trump’s associates, but they won’t pursue impeachment. They will talk about it a lot, but it’s not a battle they can win. (Unless of course Trump does something really crazy…which is always a possibility.)
Grade: F: While I was right about the Democrats investigating Trump, I was wrong in predicting they would not pursue impeachment. I guess you really can’t fix stupidity.
_5. Trump gets to fill another Supreme Court seat. Get your popcorn ready.
Grade F: Maybe this was more of a wish than a solid prediction.
_6. LA Rams beat the LA Chargers in the Super Bowl. Super Bowl television ratings are in the toilet.
Grade C: Well the Rams got there, but what was I thinking picking the Chargers to make it?
_7. Red Sox and Dodgers meet again in the World Series. This time the Dodgers win.
Grade F: Total miss
_8. I think we will get an infrastructure bill and immigration reform passed this year. Both parties realize that they have to get something done with the 2020 election coming up. I know it’s hard to imagine anything getting done in Washington, but it might just happen this year. Whatever gets passed it won’t be great, but maybe a step or two in the right direction.
Grade D: Of course I should have known Congress would accomplish nothing. They did pass a last minute highway bill which is better than nothing I suppose.
_9. Russia will continue to push the boundaries in the effort to expand its influence in the Middle East. They will take advantage of the lack of leadership in the West.
Grade B: I think this is sort of correct. I thought it would be more eventful, but Russia is taking every opportunity to play a larger role in that part of the world.
_10. The Best Movie award will go to another movie I have not watched, nor will I ever. (Unless it goes to Crazy Rich Asians…really good movie, two thumbs up)
Grade F: Green Book won and it is a great movie…which I did watch.
So now for those 2020 predictions…and you can take these to the bank.
_1. LSU wins the National Championship. Head Coach Ed Orgeron becomes spokesperson for the National Stone, Sand and Gravel Association.
_2. Oil prices will remain stable. If there is any significant movement I think it will be downward.
_3. Climate Change Hysteria will increase. In this election year, it’s a popular drum to beat. Greta Thunberg wins a Nobel Prize.
_4. The Irishman wins the Academy Award for Best Movie. Robert De Niro's acceptance speech turns into a rant about Trump.
_5. I am picking the Houston Astros and Los Angeles Dodgers for the World Series match up. Astros win in six games. This is a lock. Bet the farm. Now.
_6. 49ers face the Ravens in the Super Bowl. Ravens win. No one cares.
_7. I am going to lose weight, again. 10 lbs minimum.
_8. Truck capacity tightens considerably. While freight volumes are likely to increase slightly, the major factor will be the exodus of smaller fleets from the industry. Insurance costs will be the final nail in the coffin for a lot of carriers. Expect rates to go up 5-7%.
_9. In the wake of Brexit, the U.S. and the U.K. reach an historic and HUGE trade agreement. Scotland decides to stay with the U.K. so they can sell more whiskey to Americans.
_10. And the Big One: The Democrats impeachment efforts will fail and then Trump will announce that he is NOT going to run for re-election. He won’t resign, he will just say he’s decided not to run. Mike Pence will be the Republican candidate with Nikki Haley as his running mate. It will be a close race. Once again, the Democrats win the popular vote, but lose on the electoral votes. I have no clue who will be on the Democratic ticket. It won’t matter. Trump will ride off into the sunset saying that he was responsible for the win and if he had run, it would have been a landslide…. and that he really was the greatest President ever. The Democrats will spend the next two years unsuccessfully trying to convict him of something….anything...there must be something…everyone knows it…right?
Look back over the past, with its changing empires that rose and fell, and you can foresee the future, too.- Marcus Aurelius, Emperor of the Roman Empire 160-181 A.D.
Saturday, December 14, 2019
The results of this week’s election in the United Kingdom seems to have conservatives here in the States feeling much better about their chances in the upcoming Presidential election. If the Brits have had enough of The Left, surely this means a big win for Republicans here in November.
I wish. Indeed, I am a moderate conservative and would be inclined to vote for almost anyone representing my side of things, including Trump (which I did in 2016, not in the primary, but as a last resort on election day). So I am encouraged to see a big conservative win in the old country.
But, the U.K. is not the U.S. The process is different, the number of parties represented is different, the Brexit issue has become a defining issue for many voters and, most importantly, a key demographic is different. While the United Kingdom isn’t as “white” as it used to be, it’s still pretty white. Like 85% white. The United States is just over 60% white. I realize this is a highly charged issue. I also realize that there are a lot of white liberals here and in the U.K., and that not all blacks and Hispanics vote Democrat. But, the Republican voters in this country are mostly white and most people of color vote Democrat. That’s just how it is. And the Republicans are struggling to get their message to resonate beyond their traditional base.
The U.K. population is also a bit older, 30% over 55 compared to 25% over 55 here. I think that matters. In addition, many of the “social” issues that divide along party lines in the United States are less divisive among the Brits. And the citizens of United Kingdom, all of Western Europe for that matter, have had more time to experience the negative effects of liberal policies. The idea of moving even further to The Left is no longer acceptable, even to those who would certainly not be considered “conservative” value voters in this country.
So, I am not persuaded that the splash created over there by this week’s big conservative victory will have much of a ripple effect on our election in this country. If anything it may motivate the Democrats to move more toward the middle while the Republicans keep playing their same old sad song, hoping to get just enough electoral votes to sneak across the finish line one more time.
By the moon that shines above us in the misty mornin' night
Let us cease to run ourselves down but praise God that we are white
And better still we're English, tea and toast and muffin rings
Our ladies with stern faces, and the captains and the kings
-lyrics from the song "The Captains and The Kings" by Brendan Behan
Thursday, December 5, 2019
We are less than a year away from the 2020 Presidential Election. And right now it’s a mess. Trump is not going to be impeached. So he will be the Republican candidate, like it or not. The Democratic candidate will probably be Joe Biden, like it or not.
For Trump to win, the Democrats will have to ride the crazy train all the way to the left. I don’t see that happening. Even IF a left-leaning candidate should somehow get the nomination, by the time we get to the real race in the Fall of 2020, they will have walked back much of the extreme rhetoric and focus on more realistic ways of addressing healthcare, climate change, immigration, college tuition and maybe even talk about ways to pay for some of it. But they won’t let up on attacking Trump. And Trump will fight back. The 30% that love him will love him even more for that, and their votes are in the bag. But, the back and forth will motivate even more Democrats to vote, which is always a challenge for that party.
So the Democrat will win. And it won’t be based on Trump’s performance as President either. And by performance, I mean results, how the country is actually doing. And in that regard we aren’t doing all that bad. I’d give him a B+. (Probably higher if not for the tariff war). If by performance, one means acting Presidential, then he’s an F. He’s just not going to be that guy. And most Americans dislike him because of it.
The Democrat win won’t be based on policy either. In some cases Trump’s actions have not been well-thought out or well-executed. But directionally, his policies probably make sense to over half of likely voters. If one were to take Trump and party affiliation off the table and just look at policy objectively in terms of the strategic direction for the nation, I believe most people would favor Trump and/or Republican policies. But objectivity evaporated long ago. If a Democrat President deports illegal immigrants, he’s protecting America. If a Republican does it, he’s crushing dreams and destroying families.
When it comes to Presidential elections, performance matters, up to a point. Policy matters, up to a point. But what really matters is Personality. Picking Presidents is largely a personality contest. This is a big problem for the Republicans. We have a growing population of voters whose Presidential Personality frame of reference consists of Bill Clinton, George W. Bush, Barack Obama and Donald Trump. For most people under 40, maybe even under 50, Bill Clinton and Barack Obama are viewed much more favorably than Bush or Trump. The media plays into this narrative as well. The hard-cores on the left and the right listen to their preferred networks and mostly follow writers and bloggers with whom they agree. But most Americans aren’t paying that much attention. And it’s all the other messaging in music, television, movies, late night talk shows, etc. that sets the tone and creates the image. Clinton and Obama are portrayed as cool and smart. Bush, a nice guy, but not very cool and certainly not very smart. Trump is the worst of all, a self-absorbed narcissist. The bully no kid wants to play with, the boss no one likes to work for, the customer you avoid dealing with and the jerk you don’t want living next door. The Orange man who can’t be trusted with the nukes. This is how Trump is viewed by the majority of Americans and the rest of the world. There may be threads of truth here, but the image is decidedly one-sided, shaped and widely-shared by liberal media, entertainment and social networks.
The only Democratic candidate who could ever lose to Donald Trump, did just that. Hillary Clinton isn’t going to win many personality contests. And she had some questionable performance issues of her own as Secretary of State. Performance or policy can hurt you if your personality isn’t great. So Democrats stayed home, handed the White House to Trump and have been trying to snatch it back ever since.
Frankly, even if Trump somehow pulls off the win in 2020, Republicans have a personality problem that will continue to turn off voters who were born after 1980, and that would be most of the voters. When young and middle-age voters think of Republicans they think not only of Bush and Trump. They think of Dick Cheney, Ted Cruz, Sarah Palin, Rush Limbaugh, Pastor Robert Jeffress, The Five on Fox, The Wall, Katrina, The Koch Brothers, Fracking and Golf. Think about it. When Clinton or Obama play golf it is a much needed break from the stress and hard work of being President. When Bush or Trump play it is akin to Nero fiddling while Rome burns.
This is the world we live in and it’s not likely to change. Certainly not for the next 40 years. We’ve got at least two generations who have no good memories or images of Republican leadership other than maybe John McCain. It’s a problem for conservatives. Maybe it’s time to create a new party and just start over.
Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country.- Franklin D. Roosevelt
Saturday, November 30, 2019
So back to the questions: Where did the freight go and when will it come back?
Where did it go? First of all, 2017-2018 was a perfect storm of goodness for carriers. Demand driven by low interest rates, tax cuts, affordable energy and new purchasing power from millennials who finally started experiencing enough career advancement to move forward with household formation. Take away the freight bubble of this short period and 2019 doesn’t look much different than other dips we’ve experienced. Secondly, e-commerce is driving freight into different channels with different providers, disrupting truckload and LTL carriers. Third, we’ve been in a long-running consumer driven recovery for almost a decade. Fatigue is setting in. People can only buy so much stuff for so long. Fourth, the pain of 2019 was exacerbated by the carrier response to “the boom”. Driver pay was increased dramatically. The driver quality and productivity did not increase. Carriers are stuck with the new higher pay levels. Fifth, a lot of one-way TL freight has shifted to dedicated fleets or private fleets.
When will it come back? First quick answer, not in 2020. It’s not going to get worse, but it’s not going to get better. We may get a bump IF the tariff war gets settled (and I think it will). So when will it come back to last, at least for a year or two? Best case 2021. Regardless of who wins the election. It will get better. Why? First, capacity is going to get very tight. Insurance costs alone will drive a number of carriers out of business. Secondly, we still have a few good years of consumer driven economic activity as the millennials play catch up on household formation. Third, by 2021 we will certainly be past the tariff war issue and goods will be flowing. In addition we’ll see more near-shoring with production moving to Mexico and even some into the States. Fourth, I think we finally start to get some real movement on infrastructure which will create more freight opportunities.
I did say that things will get better regardless of who wins the election. But let’s be clear. If we end up with a Democrat in the White House, especially a far left Democrat; the recovery will not be as robust. And I think it is likely that we will end up with a Democrat. However, even if they run on a far-left agenda, history says they will move toward the middle. So will the freight come back in 2021? Probably. Will it be like 2017-18? Not even close.
Friday, November 29, 2019
"Wealth is the product of man's capacity to think."- Ayn Rand
In Part 1, we looked at the current state of the industry and then asked what will this all look like in five, ten or fifty years. What’s the big picture telling us?
I would suggest that these are some of the most important issues to consider : Technological Advancements, The Environmental Movement, Demographics, Sociopolitical Factors.
The Digital Revolution will lead to more Automation, Optimization and Innovation.
Automation has already transformed distribution inside the four walls. We’ll continue to see advances in this regard which makes large scale order fulfillment extremely affordable. This type of massive distribution capability close to the customer will be THE BIG thing going forward. As more of our population clusters in metro areas it makes this model even more attractive to both companies and consumers. Small package and final mile or last five mile delivery will grow. This will be a business where volume and density are required to achieve required service levels and lowest costs. Fed Ex, UPS, maybe Amazon and one or two others yet to emerge will be the winners. I hold little hope for the USPS.
The optimization of transportation networks has much further to go. You can only optimize what you know and what you can control. As we employ more advanced technology in the tracking of cargo, assets and people; networks will achieve greater efficiency. Empty miles, wasted space and lost time will be steadily reduced over the next half-century.
While I don’t think we’ll see a lot of driver-less trucks on the highway anytime soon, I do see technology continuing to have a huge impact on transportation. Self-driving trucks with an “attending driver” in the seat for over-the-road trips is coming soon. These “attending drivers” could be third-parties who operate in a relay network and are contracted to “drive” for any number of eligible carriers. More experienced drivers, who are employed by the carrier, will handle pick-ups and deliveries as well as travel through certain highly congested areas or under extreme weather conditions.
And the highways will become less congested. Not in the next ten years, perhaps not in the next 20 years. But by 2070, absolutely. More lanes will be constructed, no question. But, the big impact will be fewer vehicles on the highways. The development of mass transit alternatives, expanding ride-share networks, the increase in telecommuting, the evolution of 3D print production and biotech advancements which will allow us to produce more food near highly populated areas will combine to reduce the overall level of transport activity.
Environmental activism is not going away. Regardless of what you think about climate change, this is a movement that has taken hold around the world and is growing in the United States. This has huge implications for transportation companies. As mentioned above, the movement toward food production nearer to consumers is certainly driven by environmental activism and will create new logistics opportunities while putting some companies out of business. It’s a game changer.
Of greater concern is the overall economic impact of the Green Movement. While I do not see the world completely caving into climate change activists, I do think there is already a shift toward more “sustainable” lifestyles and renewable energy alternatives. But it cost money to “save the planet” and to the degree this leads to higher taxes, higher energy costs, fewer cars, smaller homes with smaller closets and an overall reduction in consumption; the demand for transportation and logistics services will decline.
No one really knows what a Green New Deal will end up looking like, but that there will be one of some sort is inevitable. And that its impact on transportation and logistics companies will be unfavorable is almost certain.
News flash: The World is NOT going to become over-crowded. Global population predictions continue to be revised downward. The world's population may well peak within the next 30-50 years and then start to decline. Some regions will be in worse shape than others as populations decline and age out. Consumption is driven by youth and household formation. Investment and production by middle-age wealth-creators. Old people cash out, live off savings and die. If the United States is smart, it will push for more immigration, not less. We are still the number one destination for people seeking a better life. And we need them because we are not reproducing at rates to sustain, much less grow our population.
Population growth is certainly a wild-card factor. But anyone who thinks that the world’s demographic profile will not change dramatically between now and 2070 is just not paying attention. And where people live, how they live and how they work will create the need for totally new and different supply chains.
This gets very complicated because almost everything has a social or political component. But for the sake of simplicity, just consider where the United States is likely headed over the next 50 years with regard to Health, Education and Welfare. Raise your hand if you think “we the people” can avoid increased subsidization of health, education and welfare. Perhaps “investment” is a better word than subsidization. Call it what you will, but a higher percentage of GDP will be spent on goods and services related to these three areas. It’s unavoidable. Unless we find a low cost magic pill that cures most illness and disease, the costs for healthcare will continue to rise, especially with an aging population. We are already at the tipping point when it comes to education and training. There is no choice other than to provide better and more affordable education and job training in order to have a workforce that can just keep the lights on and the water flowing. And, the welfare safety net will only get larger. Whether it’s outright transfer payments or some other form of subsidy or tax credits, we will be faced with an increasing percentage of the population that is unable or unwilling to generate the economic value that would compensate well enough for them to maintain an acceptable standard of living.
This will likely result in higher taxes in the more advanced economies that have some semblance of a social conscience and the flight of capital to those countries that are less concerned about such things or whose poor have lower expectations. Combine this with flat or declining populations in many of the more advanced economies and you have low growth or no growth GDP’s in those places where supply chains are the most developed. Only the best and most efficient service providers can survive under such conditions.
Am I painting a grim picture of the future or simply a reflection of the past into the future? I think more so the latter. This is how civilization has lurched forward for centuries. Two steps forward, one step back. Nations rise, nations fall. Industries are created, flourish, plateau and fade away. Whatever your enterprise or endeavor you must adjust, adapt and overcome….or face extinction.
So you PLAN and work with what you know. That would be the now and the near-term. But you PREPARE for the future...even if you’re not planning to be around.
I'll wrap this up in Part 3 with answers to the questions: Where did the freight go? When will it come back?
Saturday, November 23, 2019
"Amazon.com strives to be the e-commerce destination where consumers can find and discover anything they want to buy online." - Jeff Bezos
As a headhunter working in transportation and logistics, I have the opportunity to talk to a lot of people. I also follow economic and industry reports. Mostly I follow them to confirm what I already know is going on. I am seldom surprised by the direction of things.
I usually get a sense of where things are headed BEFORE the results are reported. We started hearing of softness in certain markets in Q3 2018. This was largely masked by surges as imports were pushed in ahead of the tariffs and carriers were still riding high on the rate increases they had gained earlier in the year. But the cracks were starting to appear and by Q1 of this year, everything had changed. Rates came down and trucks were sitting without freight.
So what happened? Sure Trump's tariff war has had a negative impact. Increased capacity in certain markets is also a factor, although I think it’s been overblown. I’m not sure that we really know how many manned working trucks are actually out there competing for freight. We still have a very low unemployment rate in this country and I just don’t think there have been that many more WORKING drivers added to the system. But, I’ll grant that in certain sectors, incremental capacity has been added and it doesn’t take much to swing the supply/demand balance in some regions. Weather, cold and wet weather, earlier in the year hurt some sectors as well.
The global economy isn’t great and that’s had an impact on freight. Oil and gas activity has slowed down which in effect pushes some of that capacity into other sectors. Chemical demand is a major leading indicator and it started trending down last year and the impact has been felt in the freight markets. Automotive is down and construction has been flat at best.
And then there is e-commerce. The surge in e-commerce has been a major disruption to TL and LTL markets. Products are getting to consumers much differently than they did just a few years ago. Trucks are still involved, but in different ways. Low interest rates have made inventory carrying cost less of a factor. More product is now moved to forward warehouses, often with schedules that are not as service sensitive as they were back in the day when truck networks were created to be an extension of the production line direct to the store shelf or other end user. The value of that sort of highway transportation has diminished as well as the demand for it.
And this really gets to the question of long-term trends vs. short-term trends. We all tend to manage in the now. We compare our results to last quarter or the same quarter last year. When things are good we think it will last longer than it ever does. And when things are bad we react, sometimes sensibly and strategically if we can afford to and sometimes aggressively and tactically if we are forced to. And that may mean cutting costs and people in order to live to fight another day. Painful but inevitable.
So we ride this roller-coaster of good times and bad times often missing the bigger picture. What are the next five or ten or fifty years likely to look like? First of all, I remain bullish on America. We have our problems, but we still have the best thing going. Given the level of foreign investment in U.S. assets, I’d say the rest of the world agrees. So we’re going to be ok. But, transportation and logistics are going to change dramatically.
In Part 2, we’ll take a look at the major factors which are driving us toward much different ways of transporting people and products.