Industry figures discuss outlook for transportation at conference

FTR Associates held its annual Freight Transportation Conference in Indianapolis IN recently. This year's conference, “America's Freight Transportation Through 2011,” featured guest speakers and presenters discussing the current economic environment impacting freight movement as well as specifically addressing truck, rail, water, air, and intermodal. Highlights from the conference:

James Meil, chief economist, Eaton Corp; William Strauss, senior economist for the Federal Reserve Bank of Chicago; and Bill Witte, co-director of the Center for Econometric Model Research opened the conference by participating in an Economic Panel discussion. The majority opinion concluded that the near-term economic environment is uncertain with downside risks having risen significantly in the weeks just prior to the conference. The freight environment depends primarily on developments in the industrial sector; and, while the outlook for industrial production and manufacturing is more robust than prior outlooks, the housing situation is likely to hurt the transportation industry well into 2008.

James Miller, strategic planning for Con-Way Inc; Paul Will, CFO of the Celedon Group Inc; and Michael Holloran, equity research associate-transportation and logistics for Robert W Baird & Co Inc, presented material covering many of the elements affecting the trucking sector: hours-of-service rules and other government regulations, the driver shortage, highway congestion as well as factors leading to the current sluggish freight environment.

Larry Gross, president of Gross Transportation Consulting; and Patrick Casey, vice-president of fleet management for TTX Co, included these observations during their Intermodal Outlook presentations: The current reduction in imported household goods has had a negative impact on this sector resulting in 50-train sets sitting in storage not being used. Other factors mentioned affecting slowing intermodal growth were the ongoing inventory correction in the United States, the increased use of all-water services from Asia to the east and Gulf Coast ports, and the stiffening of truck competition in shorthaul markets. On the positive side, with imports picking up as the US economy rebounds, intermodal loadings are forecast to rise 3.6% in 2008.

A panel was convened to discuss the shipper/3PL perspective of the transportation environment including regulatory demands. Shippers on the panel assumed that freight hauling capacity will remain tight over the long term due to the driver shortage, increased levels of highway congestion, and ever more stringent government regulations affecting transportation. Shippers agreed that mode selection is key to good transportation management, and they indicated they continuously evaluate the best mode to use.

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