Future Is Bright

Future Is Bright

Copyright 2002, Traffic World Magazine

You might not know it from reading the rest of this issue of Traffic World, but I think the worst of this recession is over and total recovery will be on the way by summer.

Whenever I speak with readers or advertisers, I am asked my predictions for the economy. In the last month I have seen an increase in our advertising and that bodes very well for the transportation and logistics industries and the economy in general. Trucking companies and other transportation and logistics firms are among the first to feel a recovery under way.

USFreightways Chairman, President and CEO Samuel K. Skinner says he is cautiously optimistic about a mid-year economic recovery (see Associate Editor John D. Schulz's story on page 27). Many other trucking company executives are more pessimistic, mainly because they are too busy managing their way through a rough first half of the year to dream about the prospect of recovery in four or five months. The air cargo side faces tougher going (see Associate Editor Kristin S. Krause's report on pages 24 and 25).

There also has been plenty of negative economic news in Traffic World in recent months. We've had stories on the effects of the Enron bankruptcy on its intermodal subsidiary, and the bankruptcy of Computrex Inc., which probably will cost shippers $25 million. Now comes the bankruptcy of WorldPoint Logistics, which does business as RISS Intermodal and USSI (see Associate Editor John Gallagher's report on page 9).

But all three of those cases have less to do with the economy itself than with management of the companies. Enron's bubble burst when its inflated stock was pricked by revelations of misleading accounting practices. The problems at Computrex were years in the making and by one estimate the company had not been profitable for 12 years. As we get our first look at WorldPoint's problems, it appears that while the economic downturn that started last spring hurt them as much as the next company, its core problems had more to do with its aggressive expansion and poor management of acquisitions.

In all three cases, the bankruptcies were long in the making and said more about the individual companies than the economy in general.

The National Association of Manufacturers keeps close tabs on economic development and reported at month's end that the fact that "personal income surged 0.4 percent in December after remaining nearly stagnant for four consecutive months is another positive sign that the economy may be on the rebound," said NAM President Jerry Jasinowski.

"The most welcome news ... is that manufacturing payrolls basically held their own in December, declining just $0.2 billion for the month. This is a major improvement from the past four months during which manufacturing wages and salaries declined on average by $6 billion per month. While it is too early to say that the decline in manufacturing is over, the news on personal income reinforces other early signs that manufacturing has bottomed out," Jasinowski said.

Other recent economic good news includes a rise in orders for manufactured durable goods. That 2 percent rise in December "suggests modest economic growth in the first quarter is likely," said Jasinowski. That's "credible evidence that the investment-led recession may be behind us. ... New orders for nondefense capital goods increased for the third month in a row - a reliable sign that a break from the year-long decline in business investment is at hand."

Ready for some cold water? "It would be a mistake for policy makers to assume our economic difficulties are over," Jasinowski said. "Right now the signs point toward an anemic and uneven recovery. The international situation remains precarious and our export sector under extreme stress." I am convinced though that we will see a strong recovery by mid-year.