First, look for more unpredictability in the oil markets in 2009. That said, barring significant natural disasters or a catastrophic international incident in the Middle East, the average price of oil for 2009 will be significantly lower than in 2008, which means lower fuel surcharges for shippers. With respect to rates, the reduction in fuel surcharges will offset the rate increases, and shippers should see flat costs for 2009.
Beyond the issue of rates, we are extremely concerned about the impact of legislation, which will emphatically have a negative impact for shippers’ supply chains. With the election now over, a Democratic administration and increased majorities for the Democrats in the House and Senate will likely result in the passage of the Employee Free Choice Act, commonly referred to as “Card Check” legislation that could affect larger nonunion carriers and third parties.
With our predictions for 2008 being in line with actual results and with the 2009 outlook of market unpredictability, we feel shippers will increase their focus in their global supply-chain strategies to emphasize end-to-end integrated logistics solutions. Most shippers, manufacturers and distributors will be looking to improve their speed to market knowing that net transportation costs will likely be down, but that market demand for their products will also be down. This has a direct impact on reducing the need for capital and improving supply-chain cash flow.
Look for a greater shift to integrated outsourced solutions from point of overseas origin and consolidation to domestic demand points with end-to-end visibility, DC Bypass and business-to-consumer initiatives or direct consumer fulfillment.