The backbone of successful international trade and improvement of lives everywhere has been logistics. Mine coal, oil, precious minerals, iron ore, and send it to where it can be used to manufacture cars, housing materials, farming equipment, so we can get around, eat, build houses, play on our smart phones, make more stuff and provide services like medicine, education, and accounting.
Even before the U.S started to move manufacturing off shore, it was the movement of raw materials and finished goods between countries and within countries that created increased efficiency and productivity in the 20th century. It is not highly efficient for each state to produce all the products it consumes. And, not everyone has the resources to make everything they consume even if it were efficient to do so.
We have a problem.More than 70% of goods in the US are shipped by truck. I keep hearing this question from one Vistage Member to the next: got trucks, drivers?
“The driver shortage stems from several factors, according to Sky Harbor’s Director of Research Michael Salice. Those factors include an aging workforce, high driver turnover rates (above 90% at present), reduced capacity as a result of regulatory changes, increasing freight demand, inflationary pressures, and “lifestyle priorities” that make competing industries more attractive.” *
Oops, we didn’t pay attention to all the changing conditions. We expect a phone or a computer to be manufactured in China and delivered to our front door in 48 hours. We order vitamins on Amazon and expect to get them later in the day.
But material costs are going up, availability is going down. There are fewer people looking for work. We have to pay higher wages. Time to market is going up, demand for faster delivery continues. There is a squeeze on corporate profits coming as we all get anxious about a downturn.
So? Pay attention to the basics. Buy well. Execute well. Look for opportunity in the market but don’t overextend. Watch your cash. Maintain good relationships with vendors and customers. There will be winners and losers in the shake out.