The Dow Jones Industrial Average closed at 8,083 last week, up more than 23 percent in the past month. Is this a sign of brighter days to come, or yet another “dead cat bounce”?
Paul R. La Monica, CNNMoney.com editor at large, wrote an article last Friday suggesting that the Dow Jones Transportation Average, which is up almost 40 percent since early March, is an even better indicator of where the economy might be heading. Four companies in this group, including J.B. Hunt Transport Services, Landstar System, and CXS, are scheduled to report financial results this week. Their numbers and comments will certainly signal whether these stock market rallies, and talk of economic recovery, are warranted or premature. Stay tuned.
I came across another interesting article recently about how we now have a surplus of truck drivers. The economic slowdown has led to fewer trucks on the road, which translates into less demand for drivers. The fact that more than 3,000 trucking companies went bankrupt last year, coupled with laid off workers from other industries now seeking jobs as truck drivers, is also contributing to the surplus.
But as the article and the video above warn, it’s only a question of time until this surplus turns into a shortage again. As I’ve argued in the past, shippers and carriers should not sacrifice long-term success for short-term gains. The days of record fuel prices and capacity constraints (what some might call the “good old days”) will return, and it’s those shippers and carriers that use this economic slowdown to innovate the way they work together that will outperform their competitors in the future.
Finally, I’m glad the captain of the Maersk-Alabama was rescued this weekend. Last December, I wrote a piece called “On Terrorists and Pirates” that underscored the importance of supply chain risk management. “Until recently, piracy seemed so 19th century to me, so Disney and Johnny Depp,” is what I said at the time. “But pirates (and terrorists) are well equipped and financed for the 21st century, and walking the plank has far greater consequences today than being eaten by sharks.”
I’m afraid this story is far from over, and just like the movies, the sequel may be worse than the original.
