This is one of my favourite times of the year. In addition to some wonderful moments with family and friends, it is a time to read and reflect on the past year and think about the “big picture.” The life of a freight transportation consultant is a busy one. Other than some vacation time, there are few opportunities to look at the world we live in and take stock of where it is going. The past few weeks have afforded me this opportunity.
I have finally made a dent in the pile of business and transportation publications that pore into my office on a weekly basis. I also had the chance to read Richard Tedlow’s biography of Andy Grove, a very interesting book. Here are some of my take-aways.
The year 2008 is going to be a very tough year, possibly the toughest we have seen in decades. An increasing number of economists and financial analysts are predicting a recession, or if not, a very bumpy year. This is based on a number of factors:

o The US housing slump
o The US sub prime mortgage mess
o Declining consumer confidence
o The high cost of fuel
o The expectation that we have not hit bottom in terms of foreclosures, personal bankruptcies and job losses

Here in Canada, Prime Minister Harper and Finance Minister Flaherty have already started to downplay expectations for 2008. While the Canadian economy has been outperforming the US economy the past year and the Canadian dollar has soared in value against its US counterpart, the close linkage between the economies will serve to diminish Canadian growth.
The forecasts on how long the economy will limp along ranges from the first third of this year, the most optimistic scenario to the first quarter of 2010, the most pessimistic scenario. The experts point to the following set of forces that may help dampen the effects of the economic downturn and facilitate a rebound. They include:

o The current and expected future interest rate cuts by the US Federal Reserve Board
o The projected increase in demand for US goods as a result of the decline in value of the $US
o A financial stimulus package from the Bush government, during this election year, to help Mr. McCain or Mr. Huckabee’s chances of being elected
o A consumer driven push to spend their way through and beyond this period of economic slowdown.

So what will it be? Will the forces of decline result in a Recession or will the forces of economic stimulus result in Resilience? If my crystal ball had the answer, I would probably be writing this blog from the beaches in Turks and Caicos rather than snowy Toronto, Canada. My guess is that we will see a downturn this year and that as the year progresses, we will pull out of it, probably without a recession. The strong, diversified and resilient economies of the US and Canada will help us rebound from these tough times and facilitate a turnaround of which we will see signs in the latter part of this year. In the next blog, we will discuss some strategies for transportation companies to weather the storm of 2008. Have a happy, healthy and resilient New Year!