I liken it to how our industry: once universities saw an opportunity to become involved we were “morphed” from being simple freight forwarders moving boxes from point A to point B to where today just about every forwarding company has the word logistics in their company name! Warehousing and distribution which perfectly describes its purpose has for the last twenty years been known as 3PL or 4PL! I am not denying technology has made transportation a little more sophisticated from those not so long ago days when all the forwarder needed to be in the business was a small warehouse, a truck, forklift and a pokey little office, with a couple of phone lines, desks, a telex machine. The only difference today; the computer and all its accoutrements!

Thirty years ago the measuring rods for determining the state of the economy were pretty simple. First and foremost were the unemployment numbers, secondly international trade, thirdly savings and maybe fourthly inflation. Today’s economists claim we have mastered the ability to contain inflation (over the last fifteen years lower wages for the masses and cheap junk from China) so that no longer becomes a factor, in-balance of trade has become no concern for economists even though our trade with China is 6-1 in their favor, economists today care little about more consumer debt created by unbridled spending, leaving only unemployment as a factor of old in measuring the state of the economy.

Here is my list of indicators that I believe matters in knowing where the economy stands;

• Unemployment
• GDP growth
• Airline passenger numbers
• Hotel occupancy rates
• Home foreclosures
• Retail sales
• Advertising sales
• International trade by volume and value
• Car sales
• Bank lending

The above is pretty basic stuff and if those ten factors were used to determine the state of the nation then the simple answer to, “Are we out of the recession yet?” would be an unequivocal “NO!” When will we ever return to the good old days? Not for many years to come is my prognosis. But who am I? A simple bloke who managed to finish high school, failed at University and has spent a lifetime trying to succeed but never being able to declare himself a winner.

Third party logistics, that magical name that replaced warehousing and distribution is a “science” created by universities and practiced by large forwarders and integrators. Two issues that have never been addressed until now is; one, does it save the customer any real money and two; no integrator/forwarder has ever made any money themselves expanding into this arena. I believe 3pl, 4pl and any other version of warehousing and distribution is on the way out. FedEx and UPS have huge investments in this sector of the transport industry. My prediction is many corporations will take back the warehousing and distribution functions and many forwarders/integrators will exit the business or considerably downsize their operations.

For many years to come, UPS and FedEx will rely upon the support of the forwarding industry as the base load for their international service. It’s odd that four years ago FedEx proclaimed they no longer needed the forwarder because direct customers filled every flight. Today they need the support of the forwarder as they never have before. The only problem is rates need to be at levels that can sustain the costs of flying cargo aircraft. If that point is not reached FedEx and UPS will do the same as the passenger/combination carriers and reduce capacity to meet demand.

Both FedEx and UPS are huge employers and because their business used to be a license to print money, they are bloated with people from executives down to drivers. This recession will see FedEx trimmed down and very quickly they will become lean, mean and hungry. I can’t say the same for UPS. Like GM and the Auto Workers’ Union, UPS and the Teamsters will head for another confrontation, exactly what happened eight or nine years ago. UPS could come out of this recession, wounded, never to regain where it was in 2008. Quite frankly with the arrogance they have displayed over the years, this recession will bring them back down to earth.