2008, Part II

Brad Holthaus

Congratulations! You’ve made it halfway through a rough year. Freight may or may not be strong for you, but one inescapable negative is fuel. Even if you get a decent surcharge, the gap between its established rate and the prices you pay means you too often get the short end of the stick.

For the second half of 2008, it’s hard to say when you can pull off the rumble strip. I can give you a few hints, straight from Martin Regalia of the U.S. Chamber of Commerce, who spoke at the CCJ Spring Symposium 2008, produced by our sister publication Commercial Carrier Journal.

The remainder of 2008 will be weak, but not deadly, Regalia predicted. The subprime mortgage crisis appears to have bottomed out. Consumer debt has been static for a few years, so the public still can spend. Wages keep increasing.

“We’re still looking at an economy that continues to grow,” he said, and added that it should improve markedly next year.

As for fuel prices, Regalia said rampant futures trading has inflated what should be a “fundamental” $90 or $100 a barrel for oil into $120 or more. The bubble might pop in the fall, bringing some price relief, he said.

A long decline in the inventory-to-sales ratio means more and more trade has adopted just-in-time procedures. With that operating philosophy widespread, Regalia said, don’t count on trucking as an early indicator of a turnaround.

“You’re not going to see trucking and shipping picking up in advance of the economy,” he said. That includes this holiday shopping season. Retailers “more likely will get caught short than stock up in advance.”

Hardly encouraging words. But if you’ve survived this far, you can go the distance. Keep up the smart business practices. Above all, manage your fuel wisely. July 2009 is likely to find us all in a better place.