Sunday, March 11, 2012

"Take Me Home, Country Roads"

Last month I was privileged to participate in a simulation run by Wikistrat which tags itself as the worlds first Massively Mulltiplayer Online Consultancy that creates scenarios that provide real time analysis of geopolitical and economic issues. That simulation entitled North American Energy Export Boom or NAEEB examined four possible master pathways that energy development might follow in the coming years. One of the areas examined was how fraking of oil and gas might lead to an economic renaissance in a part of the nation named the "Rust Belt." The title of this post, "Take Me Home, Country Roads", is an acknowledgement of the title of a scenario developed by a son of the region, and fellow Wikistrat colleague, J Ross Stewart, who's passion for this project was boundless.

 After the scenario ended, the chief analysis for Wikistart, Thomas PM Barnett has continued to post follow-up pieces, North American energy boom attracting Chinese investment, The Displacement effect of all that new US natural gas, and /The oil Renaissance in the Western Hemisphere. This past week, in the face of rising gasoline prices, the Administration quietly moved to approve the building of the southern portion of the Keystone pipeline. This appears to be the beginnings of the foundation to better the energy resources to fuel a meaningful return to a manufacturing base that has been the cornerstone of our economy.

But, as we begin to front-load our return to a booming economy with new energy sources, other areas, equally important standout and threaten to retard that return. I happened upon two articles written by Steve De-Angelis on his excellent blog Enterra Insights. Steve's posts are troubling in the face of the economic downturn and the fact that so many are claiming it hard to find work. His post addresses a little know, but real shortage.
Mark Yonge, vice chairman of the Marine Highways Cooperative, told the editorial staff at SupplyChainBrain that "the continuing driver shortage in trucking and ever more congested roadways argue in favor of using marine highways." ["The Importance of Marine Highways to Cargo Transportation," 13 October 2011] That may (or may not) be true (for a more thorough discussion, see my post entitled Upgrading America's Maritime Infrastructure). The point is that a number of analysts continue to insist that a shortage of truck drivers could have a significant negative impact on supply chains in the months and years ahead. For example, Lora Cecere writes, "We have always assumed that supply chains can keep on trucking, but has all this changed? Supply chain applications matured based on the assumption that manufacturing was a constraint and transportation was abundant. Transportation is now anything BUT abundant."
Steve goes on to deconstruct the linked articles and expand on the shortage and how to address it.
Read more:
Trucker shortage continues to garner headlines

Continuing on that thread, Steve wrote a second post.
Yesterday's post entitled Trucker Shortage Continues to Garner Headlines, focused on what most analysts consider an acute problem -- a growing shortage of truck drivers. But the driver shortage is only half of what is causing the capacity crunch. There is also a shortage of equipment (i.e., tractors and trailers). This shortage must also be addressed. To address the driver shortage, trucking company executives believe that driver pay must be increased some 30 percent in order to attract new drivers into the sector. Such an increase would likely mean an 11 percent increase in freight rates. To address the capacity shortage, companies need to buy more trucks. But it doesn't make sense to buy trucks if there are no drivers for them. Nevertheless, let's look at the capacity challenges.
Read more:
Coming to grips with the shortage of trucking capacity

The above posts came as somewhat of a surprise to me, since in past downturns, people often turned to truck driving as a way to make a living when things were rough. I spent a good part of my previous life in the transportation industry both in traditional trucking companies and as a logistics company that contracted drivers and small truckers to move goods. Many of those driving were doing so out of necessity, and hailed from parts of the country where jobs were scarce. Others, were immigrants, who began to flow into  the country from Eastern Europe after the fall of the Soviet Union. In fact one of my truckers, had to hire a Polish speaking dispatcher to handle his long haul drivers. Today, opportunity beckons for those looking for work to join the ranks of an industry destined to see even better work conditions and higher wages that ever before as the industry realizes what is needed to expand their services.

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