It’s as if they can’t connect the dots

I’m puzzled by the lack of awareness shown by many business media and journalists in their reporting these days.  One will report on this aspect of industry, while another reports on that aspect;  but they’ll seldom make the mental connection (at least in their reporting), to point out that there’s a cause-and-effect relationship at work.

Case in point:  the trucking industry.  There are many reports that, after a bumper 2018, it’s in the doldrums this year.  Here’s one example from Business Insider, earlier this year.

Last year, retailer after retailer sounded the alarm on the rising costs of transportation — and how those costs would have to be passed onto consumers.

. . .

Retailers expected the same issues in moving goods in 2019. The truck-driver shortage — the US could have a shortage of 175,000 drivers by 2026 — hasn’t lessened. Certain inefficiencies in the trucking industry, which moves 71% of the US’s freight tonnage, are still being resolved. And as for the trucks themselves, there’s a backlog of 300,000 that transportation companies have not received.

Despite all that, the cost to move goods has plummeted so far this year. Van trucking rates sank by 13% from January 2018 to January 2019, according to DAT Solutions. Freight rates were down last month by as much as 5.7% from December.

One reason for the sinking rates is that while transportation companies bought a record number of trucks in 2018, the amount of goods needing to be moved has decreased. Spot-market trucking capacity was up 49% in January from the year before, while the loads that needed to be moved were down 34%, according to DAT.

There’s more at the link.

From the same period (first quarter of this year), here’s a Bloomberg analysis of why imports from China are slowing.

Warehouses in southern California are full to bursting with Chinese goods rushed across the Pacific ahead of President Donald Trump’s tariff deadlines.

. . .

Those chock-a-block dockyards seen in mid-January are evidence of a phenomenon in global trade which economists are still struggling to capture the full extent of: “front loading.”

Customers for Chinese goods brought forward their orders in the expectation that duties would rise at the end of 2018, cushioning the blow from the trade war on China’s economy through most of 2018. Problem is, that forward buying means that fewer orders than normal are set to get booked now, depressing trade at the start of the year.

. . .

Robert Koopman, chief economist of the World Trade Organization, said recent data from China confirmed the slowdown in global trade that many expected was underway as the impact of Trump’s trade wars filters through the global economy. January trade data from China is scheduled for release on Feb. 14.

Again, more at the link.

I’m told by friends in the trucking industry that those piles of containers in US ports are still there, because some businesses simply haven’t had enough space in their warehouses and distribution centers to accommodate them all.  That’s hurting them, because they’ve got a lot of capital tied up in those goods, which aren’t selling as fast as they’d hoped.  Other businesses are selling less because they’re having to close outlets, or distribute the goods to customers who are closing outlets.  That means goods ordered to cater for a certain number of stores now have to be sold through a lot less of them, making for a bottleneck.  Essentially, the shipping containers are being used as additional warehouse space.  They’re being moved out of the ports only as needed . . . and, in many cases, they aren’t needed as quickly as before.

The crisis in retail is a prime mover in the problem.  USA Today reports:

The retail apocalypse isn’t showing any signs of slowing down.

Six months into 2019, there have already been 20% more store closings announced than in all of 2018, according to a new report from global marketing research firm Coresight Research.

Based on Coresight Research’s figures and retailers’ earnings reports, more than 7,000 stores are slated to shutter this year with thousands of locations already gone.

. . .

The “going-out-of-business” sales and liquidation of other brands is expected to continue. Coresight estimates closures could reach 12,000 by the end of the year, the report said.

More at the link.

This retail slowdown is having a big effect on major retail vendors.  Some of them are simply laying off employees.  Others are putting a lot of money and effort into retraining their work force, because they know the supply of skilled labor isn’t getting any better, and they know they’re going to need many more workers in skilled fields over the next few years.  They’re effectively investing in themselves, repositioning themselves for the “new economy” they see coming at them.  Amazon is a good example.

Amazon is slated to spend $700 million to retrain some 100,000 workers by 2025 in light of technology shifts, reports Chip Cutter for the Wall Street Journal.

The $7,000-per-employee initiative is voluntary for participants, Cutter adds, and the goal is to help employees move into new roles within or outside of the company, like fulfilment center workers retraining for IT support, or nontechnical corporate workers gaining technical skills.

This places Amazon as something of a first mover among large firms taking on large-scale retraining. Trendline suggests it’s a theme that will be increasingly urgent. A recent report from the hiring platform ZipRecruiter estimates that nearly 50% of all workers in the US could be displaced or forced to change jobs by 2030, largely driven by artificial intelligence and automation … It looks like Jeff Bezos and company are trying to get Amazon ahead of that curve.

More at the link.

(The corollary, of course, is that workers – you and I – need to be alert to what’s happening, and actively seek out opportunities for retraining, so as to move away from industries and services that are in decline and ensure they’re qualified for the more skilled jobs that will be opening up.  Anyone who isn’t already doing that is behind the curve.)

So, connect the dots.  Everything’s interconnected, with one problem or issue feeding off others and feeding into others in turn;  but the journalists concerned don’t seem to make the connection (at least, not publicly, in their articles).  I wonder why not?  Surely their parent media organizations should be able to put two and two together, and come up with something vaguely resembling four?  Or is that too much to ask these days?

Peter

6 comments

  1. The average "journalist" these days is a 20-something freelancer retyping press releases. Ben Rhodes wasn't joking when he said "They literally know nothing."

  2. Any update on next book…more looking if book 1 and 2 will be out soon in your post civil war books

  3. @Kevin: Both books are already uploaded to Amazon, and going through their approval process before going live. That should happen today or tomorrow, God willing. Book 3, "Gold On The Hoof", is awaiting that before being uploaded – it should be live by next week. I'll announce both events on this blog as soon as they happen.

    My latest fantasy novel, "Taghri's Prize", should go live in early August. I'm just finishing beta edits, and will have it ready to go by the end of July.

  4. Hey Peter;

    I also will add this, in my industry (Aviation maintenance), one out of 3 workers are eligible to retire in the next 5 years. This is skilled workers, AMT's Machinist, CNC, ete,ete. There is a huge glot of people that got routed for the past 20+ years into college by self serving guidiance councilors where they racked up debt out the ass and can't find a good paying job. My employer is hiring people as fast as they come out of trade school to backfill the pipeline. In my industry after an AMT is hired, it takes an average of 5 years to get them trained up to speed on processes and procedures that are not taught in school but is critical to maintaining an modern airplane fleet.

  5. Do you like to drink water? As a well driller and business owner, I can tell you there are NO young people coming into my industry. It isn't that the pay isn't good. I most commonly hear that the work is too hard. Funny, because of modern automation within the new drilling rigs, the work is easier than ever. You hardly even have to touch the drill pipe anymore.

    Watch for food shortages. With the flooding this year, crops haven't gotten planted. There are already empty shelves of certain canned goods in grocery stores.

    In anticipation of higher feed costs, farmers and ranchers are thinning herds. Getting some killer deals on beef in the grocery store, lately. Fill the freezer, because those deals are going to be replaced with higher prices due to less available stock in the future.

  6. As Sanders says. Around here, it might not have been outright flooding but the Spring was so very wet so very late that not all fields were planted (corn & soybeans, mainly) and those that were are taking a chance on starting late.

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