The glass is half full

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Stir in 100 million extra people to the population of the U.S., each of whom requires 30 tons of freight per year. That’s the definition of opportunity.” –John Lanigan, executive vp and chief marketing officer, BNSF Railway Co., speaking at the recent State of Logistics report press event

There’s been a heavy spate of not-so-encouraging news from the economic and freight fronts of late. Indeed, Ben Bernanke, chairman of the Federal Reserve, presented a rather gloomy outlook for the U.S. economy this week and verbally shrugged at why things are suddenly not going so well.

“We don’t have a precise read on why this slower rate of growth is persisting,” he said. And those aren’t exactly heartening words to hear uttered by, for all intents and purposes, the nation’s chief economist.

[If you have an hour or so to kill, you can watch Bernanke’s entire press conference below.]

For the freight market in particular, the annual State of Logistics report didn’t offer much to cheer about either.

“Now that I have seen a full five months of data for 2011 … it appears the [U.S.] economy is stalling,” said the report’s author, noted transportation analyst Rosalyn Wilson. “Key indicators show that the economy is beginning to unravel in some sectors. The economy has been in a fragile state for close to four years now and the highly touted recovery in some sectors have not generated enough momentum to cascade into other less robust sectors.”

[You can view some of Wilson’s remarks from her presentation below.]

Yet, in an interesting twist, the moderator for the “State of Logistics” event – Adrian Gonzalez (pictured below, at the podium), president of Adelante SCM Corp. – threw down an interesting gauntlet for a group of panelists (Wilson included) assembled to debate the report’s findings.

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From their perspective, he said, after reviewing all of the data before them, did they believe the industry’s future prospects represented a glass “half full” or “half empty”?

Six out of the seven panelists (Wilson being the exception) all took a “glass half full” view of the transportation and logistics industry’s future.

And perhaps John Lanigan, executive vp and chief marketing officer for BNSF Railway Co., explained that line of reasoning best via his quote at the beginning of this post: “Stir in 100 million extra people to the population of the U.S., each of whom requires 30 tons of freight per year. That’s the definition of opportunity.”

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Lanigan (at far left in the photo at left) is referring to the U.S. Census Bureau’s projection that the U.S. population will add 100 million extra residents between now and 2050 – a little over 2.5 million extra souls over the next 39 years. And with each person in the U.S. roughly representing 30 tons worth of annual freight demand, you’re talking about some serious market growth for all modes of transportation.

Now, assuredly, those are but projections, and even if only a portion of that freight materials, we’ll be dealing with enormous challenges moving it all via a transportation system that’s suffered from underinvestment and heavy wear and tear for decades. For trucking in particular, add to it growing traffic congestion, high fuel prices, more restrictive regulations, plus the ever-harder chore of recruiting and keeping good drivers, and you’ll easily recognize that carriers have their work cut out for them.

Yet Lanigan also touched on another positive development: the greater willingness among all the modes to work in partnership with each other. “I spent 16 years in trucking [with Schneider National] and I’ve never seen more modal cooperation than what’s going on today,” he said. “And this is not just where railroads and trucks are concerned – we’re talking cooperation between those modes plus ocean and air as well.”

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“These are just opportune times for well-logistics and transportation companies,” added Joe Gallick (at left in photo at right), senior vp-sales for Penske Logistics. “We’re all susceptible to reacting to day-to-day indicators, but the challenge is to really take advantage of the future opportunities that are taking shape. There are always going to be bumps in the road, but barring anything unforeseen and major, there are a lot of positives to be found in the supply chains spanning the world today.”

That’s a healthy attitude, from where I sit, in terms of how to view all of the uneven near-term economic and freight data we’re seeing. And it’s just such an attitude that usually ends up separating the winners from the losers over time.

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And on that note, I’ll be taking a break from posting stories in this space until early July. So I’ll take this opportunity to wish everyone a happy and safe July 4th holiday!

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Trucks at Work: Sean Kilcarr comments on trends affecting the many different strata of the trucking industry.

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