Back in the fall, the big buzz phrase in Washington and the media was “too big to fail,” as in AIG and the automotive companies. I wrote a posting at the time that questioned whether there were any transportation or logistics companies that were too big to fail (see “Too Big to Fail, or Death by a Thousand Cuts?“). My answer was no, there’s no single logistics company (not FedEx, not UPS) that’s too big to fail. But the industry as a whole is certainly too big to fail, and its death (if it happens) would come via a thousand cuts (more bankruptcies, increased taxes and fees, driver shortages, etc.).
The new buzz word these days is “stimulus,” as in spending almost $800 billion to get the economy growing again. Unfortunately, the main effect of the stimulus plan so far has been to stir up debate between economists, politicians, and talking heads. I’m not an economist, so I can’t analyze the merits and faults of what the government is doing from an economic theory perspective. But this weekend, I started pondering the concept of a “stimulus plan” for transportation , and I’m still suffering from the migraine I developed.
I’ve been arguing for weeks that there’s no better time than today for companies to invest in a transportation management system (TMS). But if a TMS allows companies to consolidate loads better, this means they’ll have fewer shipments (especially LTL shipments) to tender, which would result in less revenues for trucking companies, which might lead them to lay off drivers. And because TMS users will become more productive, they can manage their transportation operations with fewer people. So, from this imperfect line of reasoning, investing in TMS could lead to increased unemployment.
Also, fewer trucks on the roads, driving fewer miles, means less fuel tax and toll fee revenues for states and the federal government, which is why states are considering raising their fuel taxes (e.g., Massachusetts is considering a 19-cent increase) and the federal government is considering implementing other sources of revenues, such as a vehicle miles traveled (VMT) fee and a carbon tax. Therefore, could the broad adoption of TMS lead to increased taxation?
On the other hand, fewer trucks driving fewer miles means less CO2 emissions, which is the “smart way” to go from a global warming/climate change/Al Gore perspective. And if companies are able to reduce their transportation costs by implementing a TMS, they can invest that money to develop new products or to pay executive bonuses.
Okay, so this analysis is a bit “tongue-and-cheek,” but the point I’m trying to make is that sometimes it’s better not to over analyze things, especially questions that are too complex to answer, questions that don’t have clear right and wrong answers.
What would a transportation stimulus plan aim to accomplish anyway? Increased shipment volumes? More optimized shipments, perhaps across trading partners? Better coordination of shipments across modes of transportation? Increased collaboration between shippers, consignees, carriers, and logistics service providers?
Sounds like a stimulus plan that’s too big to fail…or succeed.
