The Traffic Club of Memphis kicked off the new year by welcoming Marshall Witt, senior vice president of finance for FedEx Freight, as the guest speaker at its monthly luncheon, held earlier this week at The Racquet Club of Memphis.
This year marks the 100-year anniversary of The Traffic Club, which is led by 2013 president Mason Wilson. The goals of the club are to promote greater knowledge in the traffic, transportation and logistics field, and to offer college scholarships for those interested in the industry.
Witt spoke to the group about economic growth, the current state of the less-than-truckload (LTL) industry and collaborations to benefit supply chain management.
Witt has more than 25 years of experience with publicly traded transportation companies, and he has worked with FedEx for 14 years. His first role with FedEx was in California at a trucking company that it purchased, and he has since been promoted four times.
Witt’s most recent promotion gave him all financial responsibilities for FedEx Freight, a $6 billion company. As senior vice president of finance, Witt is responsible for directing and overseeing all of the Freight segment’s financial activities, including the preparation of all financial reporting, accounting, forecasting and business analysis. He sits on numerous committees providing guidance over pricing, costing, operational efficiency improvements and strategic acquisitions.
To highlight the financial climate of the country, Witt pointed out that real U.S. GDP growth was projected at 2.3 percent for 2012, 2 percent for 2013 and 2.6 percent for 2014.
“The numbers are modest, not strong, but certainly reflective of confidence in industrial production and our ability to come out of our post-recession recovery,” said Witt, who showed that the recovery from the most recent recession has taken much longer than any other recession in the past 70 years.
This past recovery period took 10 quarters to return compared to only as many as three quarters after any recession since the early 1940s. Real GDP took nearly four years to return to pre-2008 levels.
“It just goes to show how much different this recession recovery period is than past recessions have been,” Witt said. “There’s still a lot of recovery to be done, and still a lot of growth to be had.”
Modest economic growth is being supported by recovery of the housing market, where home affordability is near an all-time high.
“Housing starts, new home permits and new home sales are all showing signs of life and are leading to the stabilization of the residential supply, recovery of residential pricing and the improvement housing is giving to GDP,” Witt said.
The full recovery of the LTL industry is also taking several years. Pre-recession, the industry generated $34.8 billion for fiscal year 2008 but fell to $25.6 billion the following year. Recovery began in FY 2010, as the numbers rose to $27.9 billion in FY 2010 and then $31.1 billion in FY 2011. Witt expects an increase of only a couple of percentage points for FY 2012.
Witt also expressed concern over further restrictions for truckers regarding hours spent on the road; primarily at issue is a 1 a.m. to 5 a.m. rest period.
“We absolutely believe in the safety and security of our drivers,” Witt said. “The intent is to improve and promote safety, but what’s really happening is that this will require us collectively to have more drivers and more trucks on the road to handle the same amount of freight. So it just compounds the issue, we believe, and puts more congestion and traffic into the infrastructure.”
Witt stressed the importance of truck and rail collaborations, which FedEx utilizes for some of its economy offerings. He expects local intermodal carriers to continue to benefit from the trend.
“The reliability of rail has been fantastic, and the service requirements have been incredible,” Witt said. “It’s been a great partnership.”