“We Did What We Had to Do”

November 23rd, 2020

Virtual meetings are no longer a novel idea. In fact, most are quite painful. 

 I walk in a grocery store and see plexiglass at the check out counters.  I wonder if it makes a difference.

Our son’s school just went to remote learning.  I want to scream.

Like everyone, I am suffering from covid fatigue.  We are social beings and crave interactions with others.  Government officials are again telling us to limit social interactions.  It feels like this pandemic will never end.  It will.

I am reminded of a message my grandfather delivered to me time and time again.  He was truly a special person.  At the age of 19, he started flying “the hump” during World War II.  From the description of “Flying the Hump: Memories of an Air War” by Otha C. Spencer on Amazon:

Noted historian Theodore White called it “the most dangerous, terrifying, barbarous aerial transport run in the world . . . the skyway to Hell.” This is the story of the air war over the Himalaya Mountains, in World War II, when Japan and China were locked in a death struggle. China was completely cut off from the world, and the transport planes of the Allies flew day and night missions for three and one half years over the Himalayas to keep China supplied with the needs of war. This was called the Hump. Gen. Claire Chennault’s Flying Tigers crossed the Hump to outgun the Japanese Zeros in some of the most spectacular air battles of World War II. More than one thousand airmen and six hundred transport planes were lost, flying air routes that were so dangerous they were called the “aluminum trail.” The B-29 Superfortress flew four-day missions across the Hump to bomb the Japanese mainland. The Hump was the epic of World War II in the air. 

Fortunately (and obviously), my grandfather survived World War II.  As I got older and would converse with him about life, I would ask him about his experiences in World War II.  He would usually start a story with tales of the snakes in India or about how he thinks he contracted malaria.  Occasionally, he would talk about how cold it was in the B-29 and how lonely he felt.  When he would get to emotional topics, he would say, “Brian, we did what we had to do.”  I knew then the conversation was getting difficult for him.  Usually, the war conversation ended and we moved on to another topic. 

Generation after generation deals with its challenges.  Coming generations will deal with their challenges.  Rather than wallowing in self-pity, let’s take a lesson from The Greatest Generation.  Let’s do what we have to do. 

Happy Thanksgiving.  Take a moment to be grateful for the generations that came before us.

Supply Chain Challenges and The Great Jobs Disconnect

November 16th, 2020

Virtually every company has experienced supply chain disruptions due to the pandemic.  Material delays and shipping delays are common.  Even more common now are production and shipping delays related to a lack of personnel.  Yet unemployment rates have gone up.  What is going on?

Every manufacturing company I have talked with has open positions.  As a result, orders are delayed.  Many companies (including ours) will train people.  If you show up every day and have a decent attitude and aptitude, there are plenty of jobs that can lead to careers.  These positions remain unfilled.  People who were laid off from service jobs are not interested in manufacturing jobs. 

Over the last several decades, several factors led to the situation we now must resolve.  Prior to 2008, most recessions started in the manufacturing sector.  Those recessions led people to seek careers in other fields.  Companies moved manufacturing overseas to cut costs.  The education lobby exploded, encouraging everyone to go to college.  Manufacturing jobs became more scarce and taboo to take.

This recession, driven by the pandemic, has decimated the service sector.  Will this service-led recession change attitudes towards manufacturing jobs?  In the short run, that is unlikely to happen.  With the right governmental policies and right approach from manufacturers, I think we can change the attitude towards manufacturing jobs.  Trade schools should be supported like colleges.  Manufacturers need to market career opportunities, not just jobs. 

In the meantime, expect delays in the production and receiving of your goods.  Manufacturers and shippers are doing the best we can but without people, we cannot make and ship things. 

The Sun Rose November 4th. Thank a Veteran.

November 9th, 2020

Despite the rumors of massive unrest after the election, the sun managed to rise on Wednesday morning.  And Thursday morning.  And Friday morning.  I’m pretty sure it will continue to rise.  Even after Joe Biden was announced as the next president, there have been no major riots that have been reported.  Should we be grateful we live in a country that allows us to PEACEFULLY protest and demonstrate?  Yes. 

It is fitting that Veterans’ Day falls after the November elections.  (It is also fitting that 2020 has a crazy election.)  Exercising our rights to vote can be an ugly process.  It is quite sad how ugly we can make it.  But it pales in comparison to the ugliness many of our veterans have experienced.  I wish we could honor them by being civil towards one another, even if we disagree politically.

In the meantime, thank all the veterans you know.  Their sacrifices allow us to engage in the experiment we call democracy.  Let them know you appreciate the fact that you can vote and express your opinions.  Say thank you on November 11th.

Yes, It is the Most Important Election of Our Lives

November 2nd, 2020

I get a kick out of the pontificators that remind us that the 2020 Presidential Election is “the most important election of our lives.”  They have said the same thing in prior elections.  They will say the same thing in 2024, 2028, and on forever.  Each time the talking heads say that with their over the top gravitas and as if they are marking a profound statement, they are correct.  Why?  Because we cannot change what happened in the past, nor can any politician.  We can change what happens in the future.  Politicians’ decisions change what happens in the future.  Therefore, the next election is more important than the previous election. 

I have become a believer in the saying that the most important decision in your life is what you do next.  Yes, choosing a spouse is important.  Yes, choosing a vocation/career is important.  I am quite confident that many small decisions led up to those big decisions.  Also, once you make your big decisions, it is what you do next in your life that matters most.     

If you have not already, please take the time to vote.  Take a few minutes to contemplate what else you should be doing in your life.  The most important thing you can do in your life has not happened yet.  Make it happen.  Make your life worthwhile. 

Be Prepared for Shipping Challenges

October 26th, 2020

Last week, UPS and Fed Ex basically told their customers they are sold out through the end of the year and are essentially putting customers on allocation.  YRC Worldwide, one of the largest LTL (less than truckload) carriers is facing a “liquidity crisis” and is relying on the government to keep it solvent.  https://www.wsj.com/articles/trucker-yrc-has-drawn-about-a-third-of-its-u-s-coronavirus-aid-11603147756?mod=djemlogistics_h In a time of tight capacity, any issues with YRC will create tremendous challenges for other carriers that are struggling to meet demand.

For years, business freight has subsidized consumer freight.  That paradigm might be ending.  Business to business shipping has the advantage of route density (think of industrial parks and office buildings when they used to be filled) versus business to consumer shipping where houses are spread out.  As I have written before, consumers have gotten spoiled by free or low shipping rates. 

It does not take an economics major to understand that supply is tight and demand, particularly for direct to consumer deliveries, is accelerating.  This scenario will ultimately lead to higher prices.  My fear is higher prices are the least of our worries.  Shipping delays will wreak havoc on supply chains that are already challenged.  Start making contingency plans.  The holiday shipping season is going to be fun! 

You Just Have to Look Outside

October 19th, 2020

One day last week, my wife and I were up early.  We turned on the television and put on the news.  The weather forecast was on.  With confidence, the weather forecaster said, “It will be a great start to the day with rain moving in late afternoon.”  My wife looked out the window and said, “What is she missing?  It’s going to rain any minute.”  I left for work and, sure enough, within 5 minutes, it started to rain.  I called my wife and we had a good laugh about it. 

Later that night, we were talking about the weather forecast.  I told her I wanted to turn it into a blog but needed a hook.  She said, “Sometimes, you just have to look outside.”  I am sure the fancy weather models showed rain moving in late in the day.  It did not take a fancy model to look outside and see the dark clouds.  It certainly did not take a meteorologist to predict it was going to rain soon.

We are inundated with data and messages.  The amount of information available to us is staggering.  All that information can prevent us from seeing what is really going on.  We also allow so-called experts to guide us.  They suffer from information overload as well.  Take a trust but verify approach with experts. 

In this work from home environment, it can be tempting to rely on surveys to see how your customers and employees are doing.  They are a tool, just like radar.  But, just like radar, they might not tell the entire story.  If you do not look outside the spreadsheet and slide presentation, you might miss what is going on.  Don’t get caught in the rain. 

Reach Out to Someone

October 12th, 2020

I was recently in a store looking for something my wife needed.  Of course, the store I went to did not have the item.  I was in line and called my wife.  I got off the phone and an older woman in front of me in line (properly socially distanced of course) said, “Excuse me, I overheard your conversation.  You might want to try going to…”  We have a 3-minute conversation about the state of the world.  She ended the conversation by saying, “Thank you for talking to me.  I enjoyed our interaction.”

I know nothing about this woman’s life other than what I can speculate about.  I came to the conclusion that she was probably lonely.  We are entering into our eighth month of partial lockdowns.  I think we are all feeling a little lonely.  We are all grasping for hope for a treatment or vaccine, something that ends this pandemic and gives us our lives back.  It seems like that might be a long time away. 

When the lockdowns started, there was hope.  It was going to be a few weeks.  Then we had to wear masks for a few weeks.  In Ohio, the governor said there would be a mask requirement for 3-4 weeks in July.  It is October and we are still wearing masks.  Some areas are starting shutdowns again.  People are losing hope. 

Call someone you have not talked to in a while just to check in.  See how they’re doing.  Ask if you can help.  Give someone a little hope.  We all can use it. 

Don’t Miss the Boat

October 5th, 2020

I recently took boating classes.  (I digress.  I am not generally in favor of more regulations, but it boggles my mind that any yahoo can drive a boat with no training.)  I was talking to a good friend and experienced boater.  He told me the first rule of docking: “Never try to dock a boat at a speed faster than you’re willing to have your boat hit the dock.”  This time-tested advice is true in boating and is a good analogy where we are in the economic recovery.

I sense that fear is building in the economy.  Questions are being asked.  Is a second wave of coronavirus coming?  Will more lockdowns occur?  When will we have a vaccine?  Are there going to be more riots?  Are the elections going to be a disaster?  (If you’re not scared after the debate, you’re lying.)

Layoffs are increasing.  Banks are reluctant to lend to new clients.  All this adds up to an economy stuck in neutral that might even start to go backwards.  If your business made it through the first wave of coronavirus, you are being careful not to crash it in the second wave.  Everyone is proceeding cautiously.  Caution is good when you are docking a boat.  Caution is sometimes necessary when running a business.  But when every business is cautious, the economy slows down.  My gut tells me we are entering a period of being inundated with bad news and talk of a recession.  Persevere.  The economy might be heading towards the dock but it will eventually start to grow.  Don’t miss the boat.  We will have growth soon. 

Pay Attention to Freight

September 28th, 2020

I will again recommend you subscribe to the Cass Freight Index email.  It is a free subscription and a tremendous source of information on the economy.  From the latest issue: 

For carriers, revenue per shipment (simply the expenditures index divided by shipments) trends have reversed and are increasing due to rising trucking rates, as there are real constraints on driver and industry supply presently. We don’t see much capacity entering or returning the rest of the year, so as supply/demand remains tight, expect continued growth in the average freight bill. (Emphasis added)

I have espoused enough on inflation.  Every good we purchase is transported to us.  We have all been spoiled by “free shipping,” especially during the pandemic.  There is a cost associated with moving goods and it is going up.  Therefore, the cost of goods is going up at some point (and Amazon will again raise its Prime membership fee). 

As the Cass report indicates, freight volumes are going up.  That is a positive sign for the economy.   The report also notes that an “inventory dump” is occurring on the West Coast.  If businesses have learned one thing during this pandemic is just in time inventory does not work when shutdowns occur.  I am sure there are a slew of consultants promulgating the value of safety stock and providing executives with fancy spreadsheets that show the cost of inventory vs. the cost of a lost sale.  The inventory build will continue.  That trend, along with supply constraints, will support the trend of rising freight rates. 

We Obsess With Precision When Trends Are What Matter

September 21st, 2020

I had my annual physical last week. Because of family history of heart issues, I take my blood pressure on a regular basis.  I reported my home readings to my doctor. 

Of course, the first test when I walked in the room was taking my blood pressure.  It was high.  The doctor and nurse said they would retake it at the end of the exam.  After my exam ended, they put me in “time out” for 10 minutes.  I had to sit and relax by myself.  I kept my phone in another room.  Ten minutes later, my blood pressure was “excellent.”  My doctor explained that the 120/80 blood pressure that is now considered normal was taken from a study where people sat for 10 to 20 minutes prior to the blood pressure being taken.  I wonder if the companies that sell blood pressure medication talk about that part of the study’s protocol. 

From an early age, we are bombarded with the importance of precision.  There is one correct answer on a test.  Questions we are asked require yes or no answers. We applaud scientists and pseudo-scientists (economists) for giving us precise numbers on topics that are difficult to understand like climate change and economic growth.  We stand in awe of their confidence when they report numbers that have decimal points to us. 

Trends can get lost in our quest for specific, precise answers.  Isn’t it more important for my health to measure my blood pressure over time than once a year at a physical?  Isn’t it more important to focus on the trend for the economy than a quarterly number that is reported out 3 decimal points?  Can anyone, let alone the government, provide a real GDP growth number that is that precise?   

Over these next several weeks, we are going to be inundated with facts and figures about the economy and about coronavirus.  You will be better served focusing on trends rather than specific numbers.  Anyone who reports a specific number with confidence to you has an agenda.