John’s Blog, 7-28-08

Dear Friends,

With the “dog days” of summer upon us there is still a lot to keep an eye on.

The Highway Trust Fund is getting a boost in funding to shore up the missing dollars caused by less gas being purchased.  As much as $8 Billion is being discussed to shore up the Fund and keep it solvent so road work can continue.  There is even a push to increase the Gas Tax, which seems odd since the higher the price of gas the less people will drive resulting in less tax revenue.

Several truckload carriers are reporting better earnings as capacity tightens and they are more aggressive in their pricing. Base rates and fuel surcharges are being adjusted as high as the market will allow.  Smaller carriers without the leverage the bigs have will try and do the same but it remains to be seen if they can get higher pricing to stick.

LTL carriers are reporting weaker earnings in the second quarter but the sense is that things are stabilizing for them.

The Senate Appropriation’s Committee is also making another push to shut down the Mexican cross-border trucking program.  Along party lines the Democrats and Teamsters are in a vigorous fight to remove funding for this program. If they succeed there will be strong repercussions from Mexico in terms of higher tariffs and lawsuits in that such a program is agreed to under the terms of the Clinton era NAFTA agreements.

There are several moving parts to our economic picture that are too numerous to get into here.  We have the banking issues (scrambling to retain confidence despite closures), durable goods orders (increasing), housing market (seems to be hitting bottom), inflation (growing), and oil prices (stabilizing after a drop).

Here at Wagner we maintain the flexibility to help our clients through these difficult times by offering solutions that convert fixed expenses into variable expenses.  Warehouses with moveable footprints, transportation without volume commitments, packaging services that can label, club-pack, and build POS displays on-demand.

Please let us know if there are any projects we may assist you with.