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JOC Guide to Trucking, August 2018

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6 The Journal of Commerce | August 2018 2018 JOC Guide to Trucking Cover Story IN 23 YEARS, I've never seen a situa- tion where the supply chain is at ca- pacity," the shipper said. "Trust me," the trucking executive said, "nobody is adding any capacity. Nobody is thinking of adding any capacity. And even if they were, they couldn't fi nd any drivers to put in the truck." Those comments may sound as fresh as yesterday's rejected freight tender, but they're not. They're from reports by then-Journal of Commerce subsidiary Tra c World in 2004 and 2005, during the height of the last extended, multiyear boom market for US trucking companies. Shippers who struggled through 2004 likely feel some déjà vu this year. Reading those quotes from more than a decade ago, they might think today's capacity troubles too shall pass, and conclude they can grit their teeth and press on until the economic cycle turns. They would be wrong. Economic cycles come and go, but transpor- tation experts say the deep-rooted problems underlying the tight capacity and high rates of 2018 aren't going to be washed away in an economic rinse cycle. Ignoring them will only make them worse. Are there lessons shippers may learn from looking back at the 2004- 2005 boom period and the freight recession and economic collapse that followed? Yes, those experts say. But despite their surface similarities, the boom freight markets of the 2000s and 2018 are quite di erent. "It's like looking back to the Stone Age," Satish Jindel, president of transportation research fi rm SJ Consulting Group, said of the last decade. "What was Amazon's stock price in 2004? Who was their largest competitor? We didn't have smart- phones, apps, no Uber or AirBnB." Truckers have upper hand Jindel and other transportation consultants and executives don't see this bull market for truckers coming to end and pricing power returning to shippers anytime soon. In fact, some see this period as unprece- dented and o ering a fundamentally di erent challenge to shippers. "This is a one-of-a-kind-not-hap- pened-before event, because what we're dealing with now are systemic issues, rather than cyclical issues," said Mike Regan, chief relationship o cer at TranzAct Technologies and advocacy chair for the NASSTRAC shipper organization. "Cyclical issues will cure them- selves based on where you're at in the economic cycle," he said. "Systemic issues require action to address. We're dealing with a much, much di erent situation than 14 years ago." For shippers, "the model is being reset right now as we speak." "This is a one-of-a-kind-not-happened- before event, because what we're dealing with now are systemic issues, rather than cyclical issues."

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