Recession and Prosperity

[ATeam]

Because of his success and proven wisdom, Warren Buffett enjoys high credibility in Wall Street circles. A recent Reuters article reports Buffett's views. "The United States is already in a recession and it will be longer as well as deeper than many people expect,...." Alan Greenspan and other financial bigs also hold this view.

Still, growth is not illuding certain expedite carriers and contractors.

A Panther II executive told me last week that Panther II has produced growth in both revenue and volume over the last year. A Bolt Express executive reported strong growth in it's fleet size and run count. Being publicly held, Express-1 issues detailed financial reports. It's May 8, 2008 news release presents some eye-popping financial results. (I've been making calls, company visits and doing research in my new role as Expedite NOW editor.)

While trucking publications report on companies like Jevic that go under, owner-operators parking their trucks, a freight recession, and initiatives in Congress intended to provide relief to truckers, there are those who are not waiting around.

The above-named companies are among those those that are threading the needle through difficult times, provding their own relief, and moving ahead with agressive business plans, innovative approaches, confidence and optimism.

Individual expediters can do the same, but as with carriers, it will not happen by simply jumping into the business and hoping for the best. For readers now researching the expedite opportunity, the more you can develop your business skills today, the better off you will be if you jump in tomorrow.

 

[greg334]

Hey Phil,

Am I wrong but weren't you the one saying just a few months ago we are heading for a recession and it won't happen until the numbers show it? Or am I thinking of someone else?

I don't think the fed's numbers show it yet with still a positive GDP growth, but we have been in a recession for a while.

In reality we are heading for a depression - something that the experts seem to be saying, like the ones who compile the CPI at U of M. Of course they will not say that publicly, read my comment below.


Mark Feldstein (Harvard) said back in March we were in a recession and by the end of the summer it will become a severe one.

Then Greenspan (the real cause of the recession) said early April "There is more than a 50 percent chance the United States could go into recession."

Then you have Merrill Lynch (Investment Bank) back in the beginning of May that we were in a recession as early as September.

Oh and then you have Moodys (Investment Ratings company) who have down rated several states including mine considering them in a recession since third or forth quarter ’07.

What is it?

Are we or are we not?

No don't answer that because you don't know either.

As far as Buffet, he lives in a different world and a lot of people don’t listen to him. He knows better to say we need to increase income taxes because he pays no income tax, he can say that.

I really think a better point was made with an economist who works for U of M who said to me privately “we don’t really know what to think about the present economy because it is not acting like anything we have seen before”. I have heard this several times with the word depression thrown in to the comments and learned that a lot of these economists don’t want to admit to not knowing what is going on because they don’t want to lose their status as ‘experts’.

The point is we have been in a recession for a while and many don’t see it, you were one who said a couple times that your numbers are right on target where mine were slipping more and more – so who was effected by the recession back in September?

I know what I seen at a company I worked for, they planned for recessions all over the world and I see the same thing at FedEx. FedEx has been adjusting things internally, they will and can absorb a long recession unlike Panther and Express-1, don’t know about Bolt. FedEx has the money and assets to keep rates reasonable while at the same time keeping trucks rolling but not for long.

As far as the advice I give to others, it is simple – if you are making money, stay where you are and wait. If not carefully consider this work and don’t go out and get indebt without some independence and being able to be on a tight budget. AND what ever you do don’t try to become an RVer expediter.

 

[Turtle]

Anyone interested in this stuff should find this site fascinating.
Shadow Government Statistics » Home Page

The links to the right for Primers on Government Economic Reports is a must read.

And if you read nothing else, read this:
Shadow Government Statistics » 5. Gross Domestic Product

 

[Humble2drive]

Which question is more important:
1) Are we in a recession?
or
2) Are we going to increase or decrease our bottom line this year?
If you are like most people, you are much more concerned with the 2nd question.
I was at FedEx CC HQ Friday and the mood was very upbeat. While freight in general was down compared to last year, the expediting division was actually beating last years figures for May and that trend is expected to continue.
WHY?
2 reasons were put forth:

1) FedEx has aggressively diversified into areas that tend to be recession resistant such as pharmaceuticals.
2) Companies are implementing drastic cost cutting measures with one major effort being aimed at inventory costs reduction.
High warehousing and inventory costs are coupled with the inability to accurately forcast sales. This makes it more cost effective to expedite the product on an "as needed" basis. The truck becomes the rolling warehouse.

Great for FedEx but what's in it for me? That question remains to be answered.
Will competition among the many expediting companies force the sales staff to offer deep discounts in order to maintain major accounts?
Will the expediting companies continue to recruit unlimited drivers resulting in express centers filled with desperate drivers willing to take the "cheap freight".

Who knows? Any opinions?

Since I don't have the answers and lack experience. My strategy is to do everything to make our team and equipment eligible for a wide range of load offers. We are driving a late model E class DR unit with lift gate, drop axle and pallet jack. We have Hazmat, applied for DOD clearance and we are willing to run anywhere (Canada, NY city, etc.).

We are attempting to follow all of the good advice we have received on this forum and wish for the best.

 

[x06col]

humble, at least you have your priorities right as far as equipment, and, likewise you seem to have it right as far as work ethic. If you are "lucky" to be in the right place when someone needs to ship a "hot one" then it'll be a good thing. Myself, I tink things'll be good nuff to get by.

Phill, Warren will be the first to admit he has been"lucky" in many instances. Dunno about his estimate of tings to come, but, remember, luck is..... when preparation meets opportunity. Without prep, ya got nutt'in. An that's what we in the not "top tier" carriers have been doing, also. Sooo... what'll happen? lets wait and see.

 

[layoutshooter]

I guess I just don't see things the same way as some do. This is NOWHERE as bad as it was in the mid - 70's and not even close to 1958. Depression? I don't see it. There are problems but unless we have massive tax increases things will work out on there own. Everyone just needs to turn off thier radio and tv's( except for Red Wings Hockey) and work harder. I get fed up with all the scare tactics, news hype etc. Nothing new here under the sun. I lived thru the past bad times and most likely will this one. We are ALREADY seeing signs in the Detroit area of things turning around. Real Estate have now dropped so low that re-investment is starting to occur. Wish I had a ton of extra money. Great economic opportunitities like this don't happen very often. I see nothing but a great chance to move forward. Layoutshooter

 

[davekc]

Oh no.....there is that "L" word again.
But so true in that being prepared will likely bring more luck.

I don't think things are as tough as they have been in times past. There is a variety of reasons I think for that.
But with any trend, ones misery usually is someone else's fortune.

 

[greg334]

Doom and Gloom again?

I don't think things are as tough as they have been in times past. There is a variety of reasons I think for that.
But with any trend, ones misery usually is someone else's fortune.

Dave,
Really that's part of it, we are not seeing the problems we have in the past. The point I was trying to make is that no one really knows. The economist are puzzled, the news people are leveraging the doom and gloom for the election and we are on the edge of things that can go either way.

As layout mentioned massive taxes but it won't be massive taxes but any real significant increase in taxes may push us over the edge. His example of Detroit is not all that true, yes there is cheaper real estate but there lacks a real infrastructure that other states and areas have already. Michigan is a great example of what is going on, we have a significant increase in taxes and business are leaving or closing up because of the triple digit tax increase they see. I can see this happening in the country if we continue to go down this political path.

Humble pointed out a couple things, one is a fallacy that Pharma companies are recession proof, they ain't - they only appear to be. If FedEx is chasing this, they know that it is shrinking not expanding on our shores. I heard a month ago that Pfizer may use another company to move stuff around - rumor? yes it may just be but knowing that Pfizer is not loyal to anyone except their bottom line, I can see FedEx being pushed out and another company picking up the contract if there is a good enough saving for Pfizer.

The depression part that I bring up is due to what some are pointing out that we are parallel of the late 1920's. Lower interest rates, very high debt load, housing on the down turn, foreclosures, etc... A few are in fear that unless there are some serious changes to move the economy forward instead of slow growth, a depression may be what we end up with.

 

[Moot]

This is NOWHERE as bad as it was in the mid - 70's and not even close to 1958. Layoutshooter

I was only 3 years old in 1958, but I can't recall any bad times economically. Maybe I slept through it. I do recall, or at least have scars from a fall into our window well.

I do agree that this recession, depression or fart in the economy offers some great investment opportunities. Especially for first time home and truck buyers. I tried to convince my daughter to buy a suburban house instead of signing another year lease on an urban warehouse apartment. I struck out!

Hang in there and let's see where this takes us.

 

[layoutshooter]

Greq, yes Detroit is lacking in infrastructure. I do know that there has been an upswing in housing sales due to the low prices. Investers are buying up cheap houses, uses them for rentals for now intending to sell them when prices recover. Which they will. There are also some high tech companies looking at the area due to the low real estate prices. Taxes are what is scaring them off. The housing market problem is being blown way out of porportion. over 96% are still in thier homes and making payments. Many who have left homes vacent were speculators who lost. There are some areas, like Detroit, that are not doing good. But they will. Since our taxes are already too high I consider any increase to be massive. Like what uncle Jimmy did in the 70's. I remember when I lost my job at Great Lakes Steel in '74 I spent 18 hours in line at unemployment to get my first check. Things are not that bad yet. MIght happen, might not. I feel some want it to for political reasons. I am not scared. I will make it no matter what, I have before and I will if forced to again. I just wish that we could just get on with it and make the good times roll. It will only crash if we let it. Layoutshooter