A Changing World

A Changing World

Copyright 2003, Traffic World, Inc.

Today the world is being shaped by events that were unimagined just a few years ago. We hear of wars and rumors of wars and waves of pestilence.

The war in Iraq is winding down but still has great influence on the future of trade. There is rumor of a new war of mergers in the railroad industry. And pestilence threatens the global supply chain.

Take the speech that David Bradley gave recently to the Toronto Transportation Club. Bradley is chief executive officer of the Canadian Trucking Alliance, the ATA''s counterpart north of the border, and represents seven trucking associations and 4,000 motor carriers.

Canada, the United States'' longtime ally, sat on the sidelines while Great Britain and Australia, another remnant of the British Empire, joined the coalition that disarmed and deposed Saddam Hussein. France, Germany and Russia are facing economic retribution of some kind from the United States for opposition to the war in Iraq, and that undoubtedly has Bradley worried.

"It is imperative that our political leaders take immediate and meaningful steps to repair relations with our best friend and largest trading partner," the United States, he said. "This is the No. 1 issue facing the Canadian economy. If direct investment in manufacturing flows south of the border, there won''t be much need for trucks, trains, boats and planes, and Canada''s ability to generate wealth through trade will be choked off," Bradley said, noting that his association''s industry hauls 70 percent of Canada''s trade with the United States.

One way to fix its relationship with the United States is to "assure our U.S. neighbors that our border is secure" and to cooperate to the utmost in U.S. Customs'' new cargo security initiatives, he said. Political and diplomatic fallout from the war in Iraq will continue for years. Not the least of that fallout will be the effect that Germany''s opposition to the Bush administration will have on U.S. treatment of Deutsche Post''s acquisitions of DHL and Airborne Express.

Shippers are understandably concerned that another Class 1 railroad merger is being considered. Recent events may suggest that CSX is exploring a possible merger with Union Pacific to create a transcontinental railroad in the United States (see Associate Editor John Gallagher''s story on page 27).

The evidence suggesting this is circumstantial and CSX denies it has any plans for a merger. But looking much farther down the steel road, beyond speculation about events over the next several years, there are three points that are unavoidable:

-- Some day there will be an all-U.S. railroad stretching from the Atlantic to the Pacific.

-- A transcontinental railroad merger will offer some real benefits to shippers.

-- The railroads that choose to merge will have to work very hard to prove that those benefits will be forthcoming and to avoid the service degradations caused by previous mergers.

"In many cases single-line service could lead to shorter and more reliable transportation times on West Coast to East Coast shipments," one Wall Street analyst said. It''s that kind of prediction that makes a merger inevitable.

And finally, Traffic World reported weeks ago the threat that Severe Acute Respiratory Syndrome poses to international trade. The deadly new disease emerged in a province in China that is the source of many electronic components and products used and sold by U.S. manufacturing companies.

Although the damage that SARS caused the passenger airline industry has been immediate and obvious, the disease threatens a much more profound effect upon the global supply chain. And the sad truth is that even when SARS is tamed, it will be only a matter of time before another previously unknown virus breaks forth, as did Ebola and HIV before it. That is the nature of those microscopic beasts. Have a nice week.