Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So you gotta let me know
Should I cool it or should I go?
-The Clash

Prior to the recession, introductions at industry events always included the question, "How many trucks do you have?" The prestige one garnered in the industry was based on your size. This was a residual phenomenon which stemmed from deregulation. During the 1980's and 1990's trucking was the wild frontier. Most of the familiar names in trucking prior to deregulation went out of business; and many of the big names we know today were born, went public and grew like crazy during the time.

The world is a much difference place, since the Great Recession started in July 2006. We have learned that one can go broke regardless of fleet size. As the recession hit with all its force, for the first time carriers shrank their fleets. As volumes dropped 25 per cent, most carriers scrambled to right size their fleets in a desperate effort to survive the blast. Many who did not were blown away by inadequate utilization and pricing. The storm started to abate in the forth quarter of 2009 and the survivors have spent 2010 and 2011 rebuilding from the ashes.

Historically, carriers are their own worst enemy. Under the top line mentality, they resumed growth after a recession. Rates, adjusted for inflation, have continued their downward trend since 1980 as carriers provided an ample supply of trucks. Is it wise to return to the "Grow, Baby, Grow!" mentality that existed before the longest recession in trucking history? We have hit the reset button in trucking. Regulation is returning as the FMCSA is raising barriers to entry, issuing regulations which cut utilization, and weeding out unsafe drivers and carriers. The survivors are hard tempered by fire. Recent surveys show that about half of the carriers have no plans to grow their fleets. The other half, plan to growth through adding owner operators (meaning they do not plan to invest in power units). Those owner operators who survived are fewer in number, without good credit and running trucks at the end of its life cycle. As a result, adding owner operators requires investing in tractors for a lease purchase program and taking on the debt associated with that. Analysts are forecasting that the severe driver shortage will act as a governor on growth. Driver training schools, shuttered during the recession are very expensive to put in place. So there is real doubt that those who want to grow, can.

Assuming you could find a way to grow your fleet, should you? Before deciding, consider the current economy and murky future. As in the past, trucking went into the last recession before the economy at large and is coming out of it early. We are the proverbial "canary in the coal mine."  We are painfully aware that when the next recession occurs, we should have the least amount of debt and the maximum liquidity possible.

Is a double dip or W shaped recession around the corner? The warning signs are there for all to see. A double dip occurred after the 1980 recession, the other worst recession in memory. The drivers of the trucking economy are consumer spending, manufacturing, housing and government expenditures. Growth in one of four is not too exciting. A typical recovery results in a boom of 5 to 6 percent GDP. That is not happening today. GDP flat lined in first quarter 2011 and was anemic, at best, in the second quarter. Economists are downgrading their overly optimistic GDP forecasts.

Today, unemployment stubbornly hovers over 9%. Real unemployment is around 17%. Employment is vital to a recovery because consumer spending is the 71% of GDP. Even if job growth was healthy (it's not) it would take years of strong growth to make a meaningful change in the employment numbers. Consumer spending is adversely affected by unemployment, rising gas prices and inflation. Weak dollar policies are causing inflation to rise rapidly. This will result in increased interest rates next year as raising interest is the only way to combat inflation. The Federal Reserve Bank raised interest rates to combat inflation in the 1980's triggering a double dip recession.

The recovery we have is lead by manufacturing assisted by exports due to the weak dollar. The Purchasing Managers Index which predicts future manufacturing has dropped from 60.4 in April, to 53.5 in May, to 55.3 in June to 50.9 in July which indicates that we are on the border between growth and decline in manufacturing.

Home building is essentially on life support for the foreseeable future. Real estate values have dropped and consumers can no longer tap equity to support spending.

Governments are out of money and are cutting expenditures at all levels. Governments are the largest contributor to job losses. As governments shed jobs to deal with their budgets, business has found ways to make money without adding jobs. Taxes have only one way to go... up.

We are clearly in very uncertain times.

There are two inputs into the trucking business; drivers and freight. Capacity is currently at equilibrium. We optimistically look forward to the time when demand exceeds capacity. But the reality is this could go either way.

Wise carriers are focused on the bottom line, more than the top line. If you analyze the profitability of your freight and the productivity of your drivers, you will find that both are on a bell curve. For the freight ahead of the curve, service that business well and thank the customers for their business. For the drivers ahead of the curve, lavish praise on them and go out of your way to retain them. For freight behind the curve, improve the rates or replace that business with more profitable freight. For the drivers behind the curve, coach them to improve or look to replace them with a better driver. This exercise results in continual bottom line improvement by pushing the bell forward. If you were to just add freight and drivers first you would likely dilute your mix, push the bell backwards and experience poorer financial performance. You might ask yourself, "What would my profit be if I shed the bottom ten per cent of my drivers and freight?" The result would likely be lower top line results and higher bottom line results.

Are you happy with your rates, time and mileage utilization, dead head and driver performance? Do you have low debt and high liquidity? If so, you could consider incremental growth. If you are not happy with these basics, then I recommend you stick to you knitting until you are. At future events, the sign of prestige will be the growth in the bottom line.