Logistically Speaking: Crystal Ball Gazing 101

Every year at this time, editors from coast to coast face the same looming challenge: Write a "what to expect in the new year" column for the January issue. If you ever wondered if we write these things because we have a special knack for prognostication, or because our keen insights into the industries we cover make us uniquely adept at knowing what will come next, you can rest easy: That's not the reason. No, it's generally because these things can be knocked off in a half hour or so, or roughly the length of a bowl game half-time show.

It's not just editors who like to write these "know it all" columns, either. You can pretty much be guaranteed that for the next couple of weeks, every analyst report and market projection you pick up will forecast "modest increases." It doesn't really matter what the modest increase is in, whether it's the cost of diesel fuel, pork belly futures or a cup of Swiss mocha latte. You can never go wrong if you predict costs are going to increase — especially if you've got a survey to back it up.

In fact, we do have our own survey: The latest Freight Pulse study undertaken by Morgan Stanley, the National Industrial Transportation League and Logistics Today indicates that shipping freight by rail will cost 5.6% more between now and April 2006. Truckload will cost 4.3% more over that same period, national less-than-truckload (LTL) will be up 2.9% and regional LTL will cost an additional 2.6%.

Having a survey makes doing these predictions a lot easier, but I'll let you in on a little secret: Basically, all you really need to do is pay attention to the news and extrapolate that if something happened before, it'll probably happen again. And if not, then you can just blame "changing market conditions."

So in that spirit, here are my Top Ten Fearless Predictions for 2006:

  1. Transportation will cost more. In particular, fuel prices will go up, and then they'll come down some, but then go back up.
  2. More U.S. companies will extend their supply chains into Asia, particularly China.
  3. Hours of Service regulations will become even more confused.
  4. Driver wages will increase, but not enough to head off a nationwide driver shortage.
  5. Warehousing costs will continue to rise, and as a result the number of shippers turning to third-party logistics providers (3PLs) will also rise.
  6. A major carrier will acquire a major 3PL. Or maybe vice versa.
  7. Retailers will step up their radio frequency identification (RFID) initiatives. Meanwhile, the number of companies adopting quick-fix "slap and ship" solutions will increase dramatically.
  8. A major storm will ravage an unprepared population, putting that region's supply chain proficiency to the ultimate test.
  9. The cleaner 2007 engines will cost more than anticipated, and will have extra maintenance issues.
  10. Capacity will remain tight, but not too tight.

Let me know how close I came with my predictions a year from now, okay? In the meantime, if you'll excuse me, the teams are lining up to start the second half, so I'll have to sign off now.

Have a happy and prosperous new year!

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