During these recessionary times, much of the discussion in the freight industry is on falling freight rates and excess capacity. There has been much less talk about the current state of the real estate market, specifically as it pertains to freight terminals and logistics facilities.

The fact is that the investment that a trucking or logistics company makes in plant and facilities can be one of the most important decisions of a CEO. Purchasing a building that is overpriced or does not meet the needs of the business and its clients can place a company in financial jeopardy. Conversely, the purchase of efficient, well-priced facilities can enhance the profitability of a logistics enterprise.

To learn more about the current state of the real estate market in Canada, I spoke with Mark Cascagnette, Vice President, Industrial Global Supply Solutions at Cushman and Wakefield Ltd. Brokerage, located in Toronto, Canada. Mark has been in this business for many years, having previously worked for CP Rail before entering the real estate industry.

I began our discussion by asking Mark how he would characterize the real estate market at this time. He replied that the market is “in a state of decline. There is less volume of freight moving. As a result there is less door density and more vacant doors.” Mark commented that a year or a year and a half ago, the capacity wasn’t available. Now “there is a glut of space with 500 cross-dock doors available in Toronto and even more in Montreal.”

I asked Mark to comment on some of the trends that he is seeing in the real estate market. He responded by stating that in “these recessionary times, low volume is putting downward pressure on price with no relief in sight. There is an increase in sublet activity and in sliding or lateral deals.” Mark labelled these “blend and extend.” Companies are asking their landlords if the can extend their stay (e.g. until 2016) in return for a reduction in rent or several months free rent.

This led to a discussion on the risks associated with this strategy. Mark acknowledged that this short term cash flow approach may place some companies in a difficult position if they are “leveraging their future” to stay in business in the coming months. With respect to the demand for freight terminals and logistics facilities, Mark commented that many companies are “trying to downsize.” He stated that “the demand for new space is marginal.” Some U.S. based companies with Canadian operations are looking at closing their Canadian facility in order to bring down costs.

Looking ahead, Mark expects to see a glut of terminals as the industry goes through a consolidation in 2010. “There is high demand for buildings under $5 million while there is poor demand for facilities over $5 million. He also mentioned that pricing is critical. “Facilities that are priced well will sell while overpriced buildings will not sell.”

This led to a discussion about obtaining credit in the current market environment. Overall Mark indicated that it is “very difficult.” However, he mentioned that the Business Development Bank takes an enlightened and informed approach to trucking company investments. They tend to look at “cash, the number of tractors and trailers in the fleet and the available land” in order to obtain leverage for financing. The charter banks tend to be more focused on cash and cash equivalents (A/R and A/P) and EBITDA.

I then asked Mark if he could offer some advice to the readers of this blog. He suggested that both landlords and tenants “should align themselves with strategic real estate specialists. Don’t try to go it alone. It is all about leverage, leverage, leverage.” This reminded me of the old adage that “he who has himself for a lawyer has a fool for a lawyer.” The same adage fits the procurement of real estate services.

Leading realtors can provide “value added advice.” It is particularly important to align yourselves with folks who understand the real estate business and the freight business. A good realtor in the freight industry will know the right questions to ask (e.g. height of ceiling, the carrying capacity of the dock levellers, the ability to move 53 foot trailers in and out of the facility etc.). Mark believes his company's transportation industry experience coupled with its real estate expertise provides them with a competitive advantage. He also commented on the value of his real estate tax advisory group that are equipped to help companies minimize their realty taxes.

To wrap up the discussion, I asked Mark to look into his crystal ball and tell us where he sees the real estate market in the next year. His response was realistic if not a bit discouraging. He expects to continue to see downward pressure on rates. The market will deteriorate further. “Realtors will be challenged to get better deals.” Mark expects to see some improvement in the spring of 2011. “Many companies don’t have the cash. This is probably the best time to renegotiate a lease or buy a building."

As expected, there was much doom and gloom at the recent Ontario Trucking Association Annual Meeting. The highlight of the presentations delivered by Meny Grauman, the Canadian Economist and John Larkin, the American Financial Analyst was that the economies of North America appear to have hit bottom. In fact, Mr. Grauman from CIBC entitled his presentation, “Baby Steps” to reflect the slow pace of recovery that he expects to see in 2010.

The executives on the afternoon Carrier Panel highlighted many tales of woe that we have been hearing for months - - the rate cutting, the focus on cost cutting, the need to have a plan to carefully think through which equipment to park, the support that some trucking companies are receiving from their banks that is keeping some non-performers in business and a host of related topics. What struck me as interesting is that during the day of presentations and panel discussions, there was no mention of the value of sales people.

Does this mean that during a recession, sales people are simply a drain on a company’s bottom line? Since there is nothing they can do to prevent the customer defections and rate reductions, are they an expendable resource, a non-essential block of employees that should be purged during bad times? Based on purely anecdotal information and the lack of any mention of sales at the OTA, many companies appear to support this view.

This brought to mind the famous Warren Buffet quote, "It's only when the tide goes out that you learn who's been swimming naked." This appears to be exactly what happened to many trucking companies. The “me too” trucking companies that did not have a strong value proposition and a solid sales team were caught with their pants down. Moreover many companies compounded the problem by paring back on sales personnel as part of their cost cutting efforts.

To me this is ironic and disturbing since the fact is that if a company reduces its sales staff, it does cut costs but it also places its existing revenue base in jeopardy and limits its ability to add new revenue. This is not to suggest that companies should not be purging their poor performers if the poor performance is due to personal (e.g. lack of motivation, poor work ethic) rather than company related (e.g. lack of training, poor service) issues. The fact is that there is a great deal that a company can do during a recession to boost its business development efforts. These include the following.

• Don’t Give Up your Competitive Advantage During Tough Times

So many trucking companies appear to adopt a “bunker” mentality in a recession. They go into a defensive shell and blame everyone for their difficulties - - unreasonable customer expectations, competitors that quote rates below costs or a lack of customer loyalty. However, what you often find is that too many trucking companies offer commodity services. They are easily replaceable. They have not been able to differentiate themselves from their competitors. The lack of loyalty is a direct result of the fact that their customers have no compelling reason to stay with them when the going gets tough.

While shippers have had the upper hand over the past few years, the enlightened ones, and there are many of them, realize that the “good” carriers are hard to find and hard to replace. The superior carriers provide better service than their peers. Shippers realize that they may hurt their operations and jeopardize their customers if they migrate to the substandard carriers. The bottom line is that it is essential to protect your franchise in a recession.

• Create and Implement a Well Focused Business Development Plan

There is freight moving in a recession - - just less of it. Yes, there are fewer loads of auto parts or paper than there were during the good times. But people need to eat and buy pharmaceuticals and toiletries. Some markets hold up reasonably well.

At the same time, other markets open up. As some companies falter, cut sales personnel or step away from certain markets, this opens up opportunities for the companies that “stay the course” to attack new markets and provide good service. The quality sales people that become available may have a following of accounts that are looking for a new home. Similarly, some new accounts become available as their current carriers cheat on service to save a few pennies. They key is to develop a plan to identify and capitalize on the opportunities that present themselves.

• Build a Revenue Retention Culture and Strategy

In tough times, everyone is looking for security. This includes your customers as well. Therefore, as one of the executives at the OTA conference pointed out, it is important to educate your customers on the value your company provides and to ensure they understand the risks in moving to a competitor. Carrier sales people should be trained to seek out opportunities to provide added value to existing customers.

This can happen in a multitude of ways. Are there more lanes of traffic that your company can take on to replace traffic lost to rate cutting or to grow the business? Are there other services that can be provided such as short-term warehousing or freight brokerage?

• Make sure “All Hands are On Deck”

Many trucking companies need to realize that building the business is a “team sport,” not just something left to the sales team. Everyone should be selling, including the entire executive team. The fact is that the executive team is often in the best position to understand the full scope of the company’s operation and to make pricing deals on the spot. They are in a great position to lead by example, to train the rest of the team. However, people in dispatch, customer service or collections also interface with customers. Now is the time to get “all hands on deck” to protect and grow the company’s revenue base.

• Make sure that Cross-Selling is an Established Principal

In multi-divisional trucking companies,”turf wars” and egos can get in the way of sound business development practices. Some companies fear that by engaging in cross-selling, this will dilute the sales effort in their core divisions. In other cases, there is a concern that the other division may not perform as well and put the sales person’s existing business in jeopardy. This is where the senior leadership team needs to come together with well thought out plans that ensure revenue retention while capitalizing on its existing customers and business relationships to generate more business. Certainly it is easier to secure business through cross-selling existing accounts as compared to cold calling on new ones.

Business Development is an art and a science. It takes planning, training, managing, and tracking. I wonder if the story of this recession might have been a bit different if some companies had put as much effort into business development as they did into cost cutting.

As the year comes to an end, it is time to reflect on the major events that shaped the transportation world in 2009. Many of the stories were directly related to the economic downturn. They are not listed in order of importance.

1. The YRC Soap Opera and its Aftermath

YRC was the freight transportation soap opera of 2009, the “Desperate Housewives” of the Freight Industry. The story played out each week as the company renegotiated the wages of its union employees, sold terminals, sold businesses, extended debt repayment terms, restructured and purged staff, all in an effort to survive. At one point YRC even proposed seeking TARP money and then backtracked. The story stayed in the news as the company posted huge quarterly losses. In the latest instalment, YRC is seeking to convert debt into equity in the hope of reducing the bleeding. There has never been a trucking company that has gone through as many cost cutting measures over such a prolonged period.

While this was playing out, YRC’s competitors were pricing very aggressively or as some called it, engaging in predatory pricing to run them off the road. This, along with low volumes and excess LTL capacity, made this a year to remember for LTL shippers.

2. Warren Buffet purchases BNSF

The “Sage of Omaha” made a strategic move by not just buying shares in one of America’s premier railways, Burlington Northern Santa Fe, but by offering to pay $26 billion for the entire company. While some may question the decision to make such a large investment in a railway, this is a very wise move. BNSF is a well managed company that is positioned to take advantage of its energy efficiencies as compared to truck and its favourable location adjacent to the key ports of Los Angeles and Long Beach. As fuel prices rise, more and more truckload business will switch to intermodal transport. BNSF is a “cash cow” that will provide Mr. Buffet’s shareholders with an attractive income stream for many years to come.

3. Shippers in the Driver’s Seat

This was the “Year of the Shipper.” Freight rates came “tumbling down” in 2009. With carriers hungry for business across all modes, it did not take a lot of skill to obtain rate concessions. In some cases rates reached levels that defied logic and good business sense. All shippers had to do was ask, or even better, name their rate and they got it. Shipper loyalty became somewhat of an oxymoron as Transportation Managers across North America were “under the gun” to reduce costs.

4. How Low can Revenues Go?

As a result, carrier revenues sank by 10, 20, 30 or 48% in the case of YRC. The speed and depth of the revenue declines was often staggering. Freight companies had to learn how to restructure their companies to bring expenses in line with the big drops in revenue.

5. The Fall of the American Dollar

At the beginning of the recession, the greenback firmed up against other world currencies. As the severity of the recession in the United States became apparent, its currency hit a 15 month low against many of the world currencies. This had a major effect on trade. For Canadian companies, a $0.95 dollar made their goods less competitive to American purchasers, driving down NAFTA trade. Overall U.S. containerized exports dropped almost 15% in the first nine months of this year, despite the drop in the value of the currency.

6. China becomes America’s Largest Trading Partner

After many years as America’s number one trading partner, Canada finished in second place after China. The decline of the dollar has had little impact on U.S. containerized trade in both directions with China. Since China has kept its Yuan fixed close to the U.S. dollar for the past year, the impact on the general dollar decline has not inhibited U.S. imports from China.

7. The Major Transportation Companies Survived

There was much talk of the 3000 road carriers that disappeared from the marketplace this past year, along with the capacity that came off the road. This statistic misses a key point. There were virtually no business failures among the tier 1 trucking companies in Canada or the United States. While a few mid-size companies disappeared, most companies read the warning signals in the fall of 2008. Trucks were parked, staffing levels were reduced, wages were cut, bonuses were eliminated, expense reductions were made (and rates were cut). While most trucking companies suffered revenue erosion of varying degrees, they survived to live another day. That is one of the big and most underreported stories of 2009.

8. Keep Those Inventories Low

The inventory to sales ratio is a major KPI for many manufacturers. As the recession took hold, inventory levels remained chronically high since many consumers reduced their purchases. Excess inventories coupled with low production and excess truck capacity was a recipe for freight transportation disaster. The well-know phrase of “too much capacity chasing too little freight” became the norm.

9. Logistics and Transportation Professionals hit the streets in Record Numbers

Logistics and Transportation professionals were not spared from the cold winds of downsizing across North America. Unprecedented levels of high quality, experienced logistics professionals entered the ranks of the unemployed. The lead time to find a job was also extended making it a difficult situation for many families. The number of resumes circulating and the number of job postings on social networking cites was remarkable.

10. Capacity Leaves the Market

This was the worst of times for truck manufacturers. Trucking companies across North America parked equipment. FTR Associates estimated that 38,000 trucks were scrapped during the first half of 2009. This resulted in an estimated 20% reduction in North American truck capacity. The capacity reductions also transcended trucking. Rail locomotives and ocean shipping fleets were also placed in mothballs.

11. Wal-Mart Steps Up Its Green Initiative

Wal-Mart has been described as “a supply chain company masquerading as a retail company.” The sheer size of their operations is staggering. They operate 7,900 stores in 15 countries, they run 228 DC’s, and have a fleet of 7200 tractors making them the 5th largest fleet in the United States. Wal-Mart’s stated goal has been to double fuel efficiency between 2005 and 2015. By 2008 Wal-Mart had achieved a 20% improvement in fuel efficiency and was moving forward towards its 13 mile per gallon goal. They are currently testing heavy duty commercial hybrid and alternative fuel trucks. In addition to these initiatives, Wal-Mart also has a program to hold inventory growth at less than half the rate of sales growth.

The company is continuing with their packaging design initiative. As an example, they redesigned milk jugs improving the cube utilization of refrigerated trailers by 50%. They have been experimenting with a product sustainable index similar to the nutritional index we see on many product labels. Wal-Mart continues to be the market leader in supply chain efficiency and their every move is closely watched.

12. Selected Industries were Hit Hard

There were certain industries that received disproportionate punishment from the recession. Lumber shipments plummeted as the housing industry tanked. Automotive shipping was severely contracted as famous brands (e.g. Pontiac, Saturn) were terminated and factories were closed. This had huge impacts on transportation that specialized in these industries.

13. The Year of the Big Intermodal Deals

In 2009, J.B. Hunt inked a long term deal with Norfolk Southern while Pacer reached an agreement with Union Pacific. Hunt moved over 837,575 loads last year and already has a long-term contract with BNSF Railway in the Western U.S. They are the largest box customer for the largest intermodal railroad. The new deal with NS, the trucker said, gives both partners “a platform to accelerate the conversion of traditional truck traffic to cost effective, environmentally friendly intermodal transportation with service that is competitive with truckload moves.” One key item of the Pacer deal includes a nearly $250 million in wholesale intermodal traffic that will transition from Pacer to UP by end of the first quarter of 2010.

14. Global Sourcing Shifts Direction

During the past year, a number of discernable trends took place in global sourcing. Increased labor restrictions and rising material costs have produced shifts to Vietnam and other emerging markets beyond South China. Near-shoring to Mexico took flight due to the country’s proximity to the United States and Canada, its low cost labour, its NAFTA participation, its new intermodal corroders and terminals, its time zone alignment and the ease with which goods can be returned. Central and South America (Brazil) also became important near-shoring locations with their quality labour pool and manufacturing expertise.

15. The Western Hemisphere Travel Initiative

While truck traffic from Canada to the United States has experienced major declines, security rules for truckers went up. The Western Hemisphere Travel Initiative that took effect on June 1 requires all travellers, including truck drivers, to have a valid passport and a special frequent traveler card or special driver’s license to enter the United States. This along with tougher U.S. emission standards for diesel truck engines and the “Buy America” provisions under the American Recovery and Reinvestment Act made doing business in the U.S. that much more difficult for Canadian companies.

16. Raising Cash – Everything is For Sale

Transportation companies in all industry sectors sold businesses, shipyards and terminals to raise cash. Maersk shut its historic Odense shipyard in Denmark while YRC sold freight terminals on a sale-leaseback arrangement. Singapore’s Neptune Orient Lines, parent of APL, raised nearly $1 billion in a rights issue. Carriers have turned back ships at the end of contracts rather than renew the contracts or deferred orders for others. Cash was king in 2009.

17. Maersk’s Direct ChassisLink

Maersk, the world’s largest ocean container line launched Direct ChassisLink on August 3. Instead of providing chassis free of charge, as carriers do in the United States, Maersk plans to lease chassis in its national trailer pool to truckers at a rate of $11 a day. The intent is to bring the U.S. market in line with other world markets. It is seeking to alter the seemingly untouchable economic and operating relationships that have been built over decades of inland goods transport. Maersk’s 90,000 unit chassis fleet is the largest in the world. It launched its program with 5,000 chassis in the New York/New Jersey area and plans to roll out the plan in other market areas.

18. Truckers Expand Beyond their Traditional Markets

The recession of 2009 brought out the entrepreneurial spirit in some truckers and acts of desperation in others. As demand dropped, this made shipping full loads more problematic for some shippers. Truckload carriers launched LTL divisions. Some went on the spot market looking for large, or at least multi pallet shipments to fill their capacity. A number of national truckload carriers expanded their regional networks.

Many carriers sought out or expanded their geographic footprint beyond North America. YRC, FedEx, UPS, J.B. Hunt (and Matson) and Con-Way (and APL) had previously made moves to build trans-Pacific freight businesses. Old Dominion formed a partnership with Hanjin Shipping to provide consistent, competitive transit times between major Chinese ports and North America.

19. Trucking Company Executives Relearn the Basics of Trucking 101

There are a number of truisms in freight transportation. One of the most frequently heard expressions is that strong revenues can hide a multitude of sins. Simply stated this means that the heavy business volumes of the mid-2000’s helped mask operational inefficiencies in many trucking companies.

In 2009, the reverse happened. As so well stated by Warren Buffet, “You only find out who is swimming naked when the tide goes out.” As revenues declined in 2009, many trucking company executives had to relearn the basics of trucking. They had to do a “deep dive” into their income statements and balance sheets. Decisions had to be made on which trucks to park, which people to cut and how much freight rates on certain blocks of business could be reduced. A back to basics approach become critical to survival.

20. Is your Company ready for 10 + 2?

On January 26, 2010, U.S. Customs and Border Protection will begin enforcing the Importer Security Filing or 10+2 rule. Noncompliant importers may face delays in the delivery of their goods, or monetary sanctions. This has been the year of the great ramp-up to 10+2. Apparently there are tens of thousands or potential foreign filers who don’t understand that they have this new obligation. Now is the time to get with the program.

A Last Look at the Great Recession of 2009

This was a transformational year. The Great Recession caused almost every C-suite executive in North America to deconstruct and reconstruct their supply chains. Almost every product, plant, DC and employee was re-evaluated. Major changes were made.

Transportation company executives were humbled by the severity and speed of the revenue declines. They had to park trucks, sell business units or terminals and reduce staff to survive and fight another day.

Smart transportation company executives learned that the good times don’t last forever. They focused on assessing the value of every asset in their businesses and made the trade-offs they believed would maintain the viability of their companies. Hopefully many companies learned some key lessons on how to “recession proof” their firms for the inevitable downturns that occur every few years. In the next blog I will take a look at some of the forces that will drive the world of freight transportation in 2010.

Happy Holidays to Everyone!

As we say good bye to the ravages of 2009, here is a list of some of the trends that will have an impact on shippers and carriers in 2010.

1. Modest Economic Growth

There are many signs that the economy is improving. The consensus view among economists is that we will see economic growth in 2010 but it may not feel too buyout. In an economy where consumers drive 70% of GDP growth, high unemployment, a weak housing market and tight credit will serve as strong headwinds.

2. The Jobless Recovery of 2010

With tepid growth, companies will remain cautious about hiring staff. As a result, there will be continuing pressure on worker productivity. The quoted unemployment figure of 10% in the United States and less than 9% in Canada mask the true level of unemployment. There are millions of people who have given up, who are working part time, who have started their own businesses or are underemployed. The true unemployment figure of 16 to 20% will continue to be a drag on the economy and freight volumes. Some experts are predicting a “jobless recovery” that could take four to five years to replace the jobs that were lost last year.

3. Freight Rate Increases are Coming to Town

As volumes increase and capacity shrinks due to the industry consolidation, freight rate increases will become prevalent as carriers seek to reverse the revenue erosion they have suffered in 2009.

4. Frugality Fatigue is Setting In

There are signs that consumers are getting tired of holding off buying a new Smartphone, HD TV, electronic book reader or netbook computers. Frugality fatigue will likely set in as consumers begin to wade into the water and buy items that they have been holding off purchasing during the recession.

5. The Push for Pull

Ultra efficient retailers are developing supply chains that manufacture “fast-fashion” apparel in small batches and have information systems in place to obtain real-time feedback on their popularity. These nimble supply chains only stock items that consumers want, thereby maintaining below average inventory levels. The concept turns “push” manufacturing on its head by trusting buyers will “pull” a product into the market.

6. Inventories Start Growing Again

Low sales volumes in 2009 resulted in uncomfortably high inventory to sales ratios. Many companies spent the year drawing down their inventories. As business picks up in 2010, this will drive manufacturing which in turn will result in inventory replenishment.

7. 10 + 2 and You

The new 10 + 2 Importer Rules take effect in January 2010. For any importers that have not initiated a compliance program, they run the risks of monetary penalties and shipment delays.

8. The Freight Industry Consolidates

There are some major carriers sitting on the bubble. The banks have been reluctant to push trucking companies into bankruptcy since there is such a limited market for freight terminals and other trucking company assets. Look for the banks to make a move on carriers that have no chance of paying back their debts as the economy improves. As the weaker players depart, this will serve to consolidate the industry.

9. Get Ready for CSA 2010

The United States Federal Motor Carrier Safety Administration (FMCSA) plans to fully implement a new safety initiative known as Comprehensive Safety Analysis 2010 or CSA 2010. The goal of the program is to achieve a greater reduction in large truck and bus crashes, injuries and fatalities, while maximizing the resources of FMCSA and its State partners and it is expected to be fully operational by the end of 2010. The implementation of CSA 2010 will result in three major changes. The motor vehicle record or driver abstract will be changed. Individual drivers are going to be audited and each will be given a personal safety rating. An updated safety rating for each driver and trucking company will be issued every 30 days.

The personal safety rating will determine whether or not the driver is considered eligible to continue driving, requires some sort of “intervention,” or is deemed “unfit” to continue operating a commercial vehicle. Similarly motor carriers will face increased scrutiny under CSA 2010 and will face harsh fines, corrective action plans and even risk having their entire fleets placed out of service due to violations.

10. The Miniaturization of Freight Continues

This movement has been under way for years as MP3 players and mini computers replace the large stereo systems and desktop computers of the past. This movement continues to grow. Electronic book readers are the latest pieces of technology to gain traction. Over time, more and more people will begin reading newspapers, magazines and books on their electronic book reader. This will hurt the pulp and paper industry, the book publishing and newspaper industries and the transportation industry that carries the truckloads of newsprint and books today. Similarly the Smart Car and the Tata represent two examples of how the automotive industry is undergoing miniaturization.

11. The LTL Industry Reshuffle

The current state of the LTL industry in North America needs to be transformed and would be transformed with the possible bankruptcy filing of YRC. This would serve to move their 18 to 20% market share over to the remaining players. It would reduce the level of rate cutting. The good news for shippers is that additional freight density would improve the health of the remaining LTL providers. The bad news is that LTL freight rates would go up, in some cases significantly.

12. Smart Shippers Will Lock In Capacity

In 2009 shippers took advantage of their pricing leverage to secure freight rate reductions. As time evolves, supply will come into line with demand. Shippers will need to lock up capacity by signing multi-year contracts with the strong survivors to protect the integrity of their supply chains.

13. Intermodal Length of Haul is Decreasing

Schneider National, Pacer and J.B. Hunt will compete in 2010 to increase market share in the intermediate distance markets of 750 to 1000 miles. Schneider has paired with CSX while Hunt has inked a deal with Norfolk Southern. For Hunt this strategy will be a continuation of their 2009 strategy that allowed them to increase eastern network loads by 38% in April. Schneider’s efforts are focused on the Chicago-Florida, Chicago-Northeast, Florida-Northeast and St. Louis-Northeast routes. The lower fuel consumption levels using intermodal transport help shippers achieve sustainability objectives.

14. Wal-Mart’s Packaging Initiative

In addition to the miniaturization movement, Wal-Mart has been the leader in the green revolution. This initiative to reduce cube utilization through packaging changes goes hand in hand with their push to improve fuel efficiency. This will continue to be a major trend that will gain followers from other industries and companies.

15. China, India and Brazil

This is where the action is. The growth in these economies will likely outpace the growth in North America. Canada needs to diversify its economy away from its overdependence on the United States. It needs to harness and leverage the expertise of its large immigrant population. As an example, the Indian economy is expected to grow by 6 to 7 percent in 2009, significantly more than Canada. With more than 1 million Canadians tracing their family origin to India, and with skills in the high tech industry, there is immense scope for Canadian companies in India. India’s middle class of 300 million is roughly the size of the United States. Smart Canadian companies will move forward with their market diversification strategies.

16. Lean Manufacturing

This trend that has been around for years will continue to gain prominence. The elimination of waste and non-value added capabilities (for which a consumer will not pay) has proven to be a particularly effective way of reducing costs.

17. Smartway

Despite the limited outcomes of the recent Energy Conservation Summit, fuel conservation is here to stay. With limited supplies of fossil fuels and energy demand increasing, particularly in the developing nations, the drive for energy efficiency will continue in 2010. Hybrid vehicles are also an element of the energy efficient movement.

18. Oil Prices Only Have One Way to Go

The emerging markets and the Middle East are consuming 20 million barrels of oil a day. They are projected to consume 42 million barrels a day in 20 years. The reserves are not going up and the alternatives are going to take time to develop. As economic activity increases in 2010, the price of oil only has one way to go.

19. It is Hard to Fix It If You Cannot See It

Cash will likely still be king in 2010. Inventory management tools provide shippers with real-time data to see exactly where their products are in their supply chain, how much they have in stock and how much product their suppliers can provide. While these visibility tools cost money, they can provide shippers with the data they need to take excess costs out of their distribution networks.

20. Transloading will be revisited as a Strategy in 2010

Transloading in its most basic form is the transferring of cargo from 40-foot marine containers into domestic 48- or 53-foot containers or trailers to reduce inland transportation costs. The economic downturn along with significant reductions in warehouse rental rates and higher fuel costs are causing shippers to revisit the economics of transloading to see if it will now work. The stability of intermodal service and the additional cubic capacity of 53 foot equipment may make this a viable strategy for some shippers in 2010.

Thank you for supporting this blog in 2009. I wish all of you a healthy, happy and prosperous 2010.