“It’s the economy . . .”
A phrase from more than a decade ago is the most pressing issue in our industry today. No surprise there. It was the dominant issue in November’s election.
Bankruptcies are increasing. Credit is tight. Retail sales are off. The auto industry sold some 3 million fewer units last year than in 2007. Unemployment is at its highest level in years.
As a result, cargo volumes are falling. Service loops are being downgraded in size or canceled altogether. Vessels are being laid up. Rates are in a free fall in the Asia-Europe trade and heading down in the trans-Pacific and trans-Atlantic trades.
With this as a backdrop, a new administration starts in Washington. “Change” is the defining word of that administration. How the new administration responds to the economic situation will be the driver of our industry. Obviously, the success of domestic stimulus policies will be a major force in the recovery of our economy. Where will the administration be on trade? How will it use that economic engine to drive the recovery? These are significant questions that remain unanswered.
In our industry lies much uncertainty with the future. A phrase I hear repeatedly is, “We are hunkering down.” Cost-cutting, reduced spending and less investment are the orders of the day.
A down cycle is not new to our business. The depth of this one, however, may be uncharted territory for us all.