Cliff Lynch's annual letter to Santa

It will require some artful dodging and weaving, says Lynch, but we need your help getting us a comprehensive highway bill.

By Clifford F. Lynch

Dear Santa,

Well, this has been a tough year for many of us. I'm sure you have seen hard times reflected in the more modest toy requests you've received for this year. We certainly have seen the stress reflected in the supply chain through bankruptcies, closed facilities, job losses, and excess capacity. While we all hope for a quick turnaround, it has become clear that it will be well into 2010 before we see any major relief. Because of that, I've scaled back my requests a bit this year. Even so, they may prove tough to fill. All I can ask is that you do the best you can.

I don't know whether you're a Democrat or Republican, but whatever side you're on, my first request will require some artful dodging and weaving.

I think we all agree that we need a new, comprehensive highway bill, but what we don't agree on is how to pay for needed improvements. There are huge differences of opinion between House and Senate, Democrats and Republicans, and heaven knows who else. Will you please see if you can bring some cohesiveness to the situation and get everyone on the same page with a well-funded plan for improving the nation's transportation infrastructure? I realize this is a tall order—you might want to consider a threat to ban scotch and brandy in congressional stockings.

Last year, I asked for access to U.S. highways for Mexican truckers, and as you well know, the situation is even worse now. Because of our stubborn refusal to abide by the terms of NAFTA, the Mexicans have fired back and slapped tariffs on $2.4 billion worth of products we export to Mexico. Maybe this year you could assign a couple of your smartest bilingual elves to the project. We really need to get this fixed.

Another thing I wish you would look into is the new "cap and trade" legislation. While I'm not clear on all of the details, it does seem that the legislation will raise carrier (and other) costs. I am not opposed to protecting the environment, but the last thing we need in the industry today are increased expenses. Please make sure Congress understands the impact of its actions on the supply chain.

This next one is a repeat from last year, but it's nonetheless important. Right now, fuel prices are down from the historic highs of July 2008, due to the economic slump. But even with all the pricing volatility of the last few years, the overall trend has been undeniably upward. For example, today, diesel fuel is running between $2.30 and $2.50 per gallon. While this is far better than, say, $4.00, in 2003, it averaged about $1.60. Certainly, more emphasis is being placed on hybrid and other fuel-efficient automobiles, but we need some work on trucks and tractors. Alternative energy sources are the only real solution to the problem. The elf who has been working on this has made some progress, so keep him humping.

There is a bill lurking in the Senate that could restore some of the rail regulation that was removed in 1980. Proponents of the bill argue that some rail carriers are exercising monopolistic power over shippers that are served by only one railroad and engaging in other predatory practices. Please keep an eye on this one. We have 100 years of proof that rail regulation doesn't work, and since 1980, when many restrictions were lifted from the railroads, rates have declined, productivity has increased, and there has been a tremendous amount of capital investment.

I am for fair treatment of all shippers, but we must be very careful not to restore the stifling regulation that existed for so long. There are good arguments for both sides, but please keep this on your watch list and move in if it starts to get out of hand. This is a tough list, Santa, but I feel certain you can have some impact.

A very Merry Christmas to you, Mrs. Claus, and all the elves.

Cliff Lynch

Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.
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