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When the Big Recession hit (2007) I was driving a truck. My job wasn't affected, but I got assigned a run into Ft Worth where I had to be there at midnight.
It was a ghost town! Really. It looked like Christmas Eve, there were so few vehicles on the road. I used to live in the Fort Worth area, and I had never seen it like that. It was months before the traffic built back up, and several large trucking companies went out of business during that period.
Yes, in general many areas are booming now, like here where high tech and aviation are keeping the new $800k homes selling along with luxury cars. The problem is that those trucks are carrying a lot of products made in China that have come into the west coast ports, and get trucked to retailer warehouses in western states or by rail east and then trucked to the central and eastern states. While that's good for the longshoremen, truckers, and those able to buy less expensive items at the stores and online, it's not good for those that used to work in manufacturing in the U.S. and have no other job skills.
What you are overlooking, is a lot of those trucks and rail cars, are going West, or on the other side of the country to the East for export. Our exports have had a big part in this recovery.
Just think 11 foreign companies have manufacturing facilities in the U.S. to build automobiles. Only 2 of the auto manufacturing companies in the U.S. are American owned and managed. We did have 3 companies, but the Obama administration sold one to Fiat an Italian company.
Most jobs shipped out in outsourcing were low pay, highly labor intensive, and low priced. It was found they could not compete with imports in price and quality. By outsourcing the manufacturing, they could keep about half of the employees in this country working. It was either outsource or go out of business and lay everyone off, not just half the people.
The insourced jobs, are mostly much higher paid jobs.
Who said the economy was doing poorly? I think you are confusing the labor market with the economy. Sure, the labor market sucks, but we are producing, moving and selling product. One way or another, people are buying. Another strong gauge of the economy is manufacturing PMI, which has been accelerating for about 22 out of the past 24 months. Depending on how you define the economy, things are moving along very nicely. Where things get murky are the causes for this, which I will leave for another debate.
To be sure, the rest of the globe is not doing so hot. Emerging markets and Europe are not shining bright at the moment. In many ways, I think the U.S. is learning how to be more self sufficient, which is terrible new for the emerging markets...
^^^Too many are racking up their credit cards. That is where the next bubble is. Wait until interest rates go up and watch what happens. No one is saving, people are financing happiness and the federal government condones it.
Another thing to consider is that by and large, rail just cannot compete with trucks.
Considering that trucks are easier, faster, cheaper, and more flexible than rail. They can get between any two points basically on an "on demand" basis. Not to mention that trucks have almost 100% of their infrastructure subsidized for them. Plus, shippers and consignees can and do play off the different companies bids to beat down and trash the rates market. A few phone calls can get a 40k same day 200 mile P+D done for $200 or less. It IS financial suicide but there are owner ops out there who can and will do it for that.
Railroads on the other hand must pay for upkeep and upgrades themselves.
Rail *IS* fine if you want to drag 100 carloads of oil or coal from one coast to the other. But 99% of business simply does not ship in that kind of volume. The one pallet to full trailer freight is where the action is. Throw in the "just in time" paradigm and rail simply cannot touch it.
For moving general freight, railroads have been mostly irrelevant and obsolete for many years now. And I expect that to be even more so in the years to come. All of the railroads have been pruning back their local 'switching' operations, where they pick up or drop off a few cars along the way. That type of service is too slow, too onerous, and not very profitable. Grabbing a hundred car string, dragging it 2000 miles, and dropping, with trucks doing everything else is the way to go.
Now let vehicle and user taxes be pegged to GVW?
THAT would be a game changer and all bets would be off. But I'm pretty sure that the howls of protest from both the truck manufacturers and companies alike will assure that any such scheme will never see the light of day.
Even with diesel prices at extreme lows, many thousands of tractor-trailers are moved by rail every day. Let fuel prices go up again, and the number of trucks riding by rail will increase again.
I drove a few hundred miles on a few days this week. I was on the interstate which had more big trucks than I have ever seen. So I get to thinking, "If all this product is being shipped around the country why is not our economy booming?" I mean, shipping all this around is only because people are buying it right? I think we might have an economy that is to large to expand.
We have a lot of truck traffic because roads and transportation are heavily subsidized, to support large centralized production and international trade.
Convenient, reliable, and economical transportation networks are part of what keeps our standards of living high and also maintains the US as such a desirable and attractive place to produce goods. It's in many ways a classic public good.
Speaking from the viewpoint of both a logistics graduate and a person with both rail and trucking experience, there are a lot of factors at play here.
Rail freight traffic is especially subject to distortions in interpretation because of how it's measured; carloadings are still considerably fewer than in the peak years of World War II, because the average freight car now has nearly twice the capacity. But ton-miles (one ton of freight carried one mile) are at least 50% greater than that war-induced peak. And intermodal container) traffic continues to set new records, on an absolute basis nowhere near as subject to differences of interpretation due to the size of the vehicle.
To cite a well-known example, shipments of dressed meat from the Plains states to the East Coast deserted the rail carriers almost completely upon the completion of the Interstate Highway System, but much of that traffic has slowly found its way back; however, refrigerated trailers or containers on flat cars, with "beef in boxes" rather than full sides suspended from overhead hooks, have become the rule, and freight forwarders, who specialize in consolidating and delivering smaller shipments, have taken a larger role.
Pictures of New York harbor prior to about 1960 usually show "car floats" being moved by tugboats from freight yards in New Jersey to small yards in both Manhattan and the outlying boroughs. But again, the practice quickly dried up after the reconstruction and expansion of the superhighway network. And the end of dirt-cheap oil that began in the early Seventies led to the expansion of intermodal-based systems that take advantage of both modes. Containers, either from the U S interior or transshipped from West Coast ports now tie up at "distribution centers" close to the same communities (Albany, Harrisburg, Richmond) that used to have large warehouses "breaking bulk" from carload shipments. Unfortunately, this does not reduce the impact of congestion caused by the need for local pickup and delivery, and there is very little incentive for reducing car size in order to serve our local shopping malls and "big box" retailers.
The picture is about to change again in the very near future. Completion of the PANAMAX project (widening and deepening of the Panama Canal), originally scheduled for 2015, but pushed back by a year or so, will encourage containerships to move directly from the Pacific to East Coast ports. New York-area harbors will require improvements, which will likely raise environmental concerns, but Hampton Roads, Charleston, Savannah and even Florida are all making a play for the prospective traffic. And that may aggravate, rather than reduce congestion along the Eastern Seaboard.
And as for the railroads, the much-smaller number of major carriers made large improvements in operating efficiency once regulatory and work-rules reform allowed them to seek new markets after 1985. If PANAMX reduces the congestion which has been an obstacle on the Western transcontinental main lines for over twenty years, I don't expect them t waste any time in seeking new business to fill that unused capacity. Unlike in 1975, they now have something to sell which many shippers actually want to buy.
Last edited by 2nd trick op; 10-09-2015 at 11:20 PM..
^^^Too many are racking up their credit cards. That is where the next bubble is. Wait until interest rates go up and watch what happens. No one is saving, people are financing happiness and the federal government condones it.
That is inconsistent with published data. The peak in consumer debt was in 2007. Today, it's up a bit since the low in 2011 but it's still well below the nutty 2007 number.
Of course, it's not clear how much of the drop can be attributed to people paying down consumer debt and how much can be attributed to credit card companies writing off defaulted accounts.
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