World Trade - November 2008 - (Page 39)

SUPPLY CHAIN Trucking Gets a Double Whammy Higher fuel costs coupled with a slowing economy are making for tough times. BY LARA L. SOWINSKI A s peak shipping season winds down, transportation executives are less than gleeful this year. To sum it up, when peak season is a bust, you know you’re in tough times. “It’s slow for everyone,” points out Keith Lovetro, President and CEO of YRC Regional Transportation. “We’re not expecting to see anything in terms of a ‘peak’ this year. In fact, we may not even reach last year’s levels,” he says. In addition, it’s become more difﬁcult to predict when the current market conditions will turn around. “In a normal year, it wouldn’t be uncommon to look ahead twelve months to forecast. Yet, there’s been such a big degree of change in such a short amount of time, that making accurate forecasts has become almost impossible,” he says. “The speed at which things have been changing has also caused the public to take a very conservative approach.” However, one forecast that analysts are comfortable in making this year is that this ‘conservative approach’ will result in dampened consumption during the holiday season and into 2009. Indeed, even luxury retailers—a 2008 segment often times immune from broad retail trends— are warning of slower sales in the months ahead. Higher fuel costs are obviously a top concern for transportation executives and shippers alike. “We’re all seeing the wild swings in the price of oil. And, it has deﬁnitely changed how customer buy their transportation,” say Lovetro. “There was a time when fuel was just an add-on, just a surcharge, it was no big deal. But today, fuel has become such a signiﬁcant part of the total transportation cost that it has affected the way customers think about transportation. For some, that means changing their mode of transportation, maybe from LTL to truckload, or even from road to rail. And, customers are changing their distribution strategies as well,” he notes. Because YRC is such a dominant player in the LTL sector (controlling over 25 percent of the market), analysts watch the company carefully to see how it’s responding to the current conditions and for signs as to what may be further down road. Satish Jindel of SJ Consulting praises the company for its steps towards integrating its network. In September, YRC announced plans to combine its Yellow 39 WORLD TRADE NOVEMBER

Table of Contents Feed for the Digital Edition of World Trade - November 2008

World Trade - November 2008 Contents Unexpected Responses to Unanticipated Change Reading the States of Risk in Today’s Global Economy Supply Chain Watch Tradewinds Failed Promise: Mexico and NAFTA, 15 Years Later The Short Tale Marrying Trade Finance and Transportation into a Single Transaction Trucking Gets a Double Whammy Are We Safe Yet? Logistics Resurrects the Rust Belt Keep on Compressing

World Trade - November 2008

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