Slow Steaming

Slow Steaming

I see several business articles each week from the U.S., Europe and Asia reporting one optimistic piece of information or another, most giving the impression that we are at or near the bottom of the economic downturn. One noted the second consecutive month-over-month increase in trucking volume, with a 2.1 percent increase in August over July. Of course, volumes were down 7.5 percent from August 2008.

There are similar reports from the government — unemployment filings dipping this week from the previous week, for example. Of course, we are nearing 10 percent unemployment nationwide, led by California at more than 11 percent.

Most of the articles and government reports are trying to be optimistic, presenting a view that things are improving in one industry or segment of the economy or another.

I am solidly in the corner of those who view this as propaganda, and I have more than just a slight amount of doubt about where the economy really is and where it is really going. I’m particularly beginning to look at the ocean and motor carrier industries, and I see no light at the end of the tunnel.

Recent public statements about how the European Union has to ensure that three of the European-based ocean carriers are kept afloat until this economic storm passes, while the fourth European-based carrier already has governmental support, give clear indication of where things really stand.

Reports that several carriers have negotiated postponement of ship deliveries for up to four years offer another clear indicator of the real situation. One writer’s optimistic view — that the carriers hadn’t canceled orders, so things can’t be that bad — ignores the fact that if you cancel a shipbuilding order, you are out a lot of money.

While I don’t like to think pessimistically, I don’t see much to be optimistic about in the industry, other than knowing things will turn around sooner or later. The real question is when, and I don’t think it’s right around the corner. I hope I’m wrong.

For the most part, the U.S. economy is still the engine that drives the global economy, and I see nothing that remotely resembles a turnaround.

The government keeps trying to prop up the economy by pouring money into private enterprise, most of that to pay back political debt, and move on some infrastructure upgrades.

A lot more has been spent on saving private enterprise than on the infrastructure; apparently, it’s easier to give money to people who have ruined their companies than it is to upgrade aging, obsolete and neglected roads and bridges.

Our unemployment figures continue to climb, and 10 percent is not far off. Foreclosures continue to mount despite the hundreds of billions of dollars the government has sent to banks and other financial institutions that have been good enough to invest a lot of that outside the country and not help those who could use a rewrite of their home loans. And what has happened to our stock portfolios and 401(k)?

Our economy during the 2000-06 “boom” was based on low unemployment (recall under 5 percent?) and artificially rising prices in the housing market and a stock market that seemed to have no upper limits. All of these conditions had people buying things, lots of things, and not saving much other than in their 401(k).

So to those who say things are turning around, I hope you’re right; I just don’t see it. To those of you involved in the industry in one form or another, I don’t see a real turnaround for another 12 to 18 months, and when it comes, it won’t be at the double-digit increases we saw earlier in the decade.

I think we are in for a lot more hurt before the good times return. Until then, things are going to get a lot more interesting, and I think survival for some will be difficult. We’ve already seen it hit the retail and trucking industries hard. There’s more to come.

Gary Ferrulli is president of Global Logistics Consulting in Chandler, Ariz. He can be contacted at