When studying a regulatory change or a shift in a macro trend, there are always a host of those in the marketplace who make predictions. Most of these prognostications are obvious, and sometimes the obvious is valid, especially in the short-term. Sometimes predicting the future is relatively easy and relatively accurate because most of the existing factors are well known. It is simply looking at the situation or facts as we know them, applying the new influencing factors or facts and reasoning out what the outcome will be.
You don’t even have to be right when you first attempt to predict the future. If you discuss your prediction with other educated minds they will point out the holes in your logic, the factors you failed to consider in your original analysis. You make a few adjustments, a few tweaks to your original prediction, and voila! You are right.
If you publish your prediction, a similar discussion happens. Others who publish their opinions put out predictions. Articles are published in different places and the conversation is held in public instead of private, but the outcome is the same. Faults in reasoning are pointed out. Other factors are brought into consideration and over time a consensus of opinion begins to form.
After the consensus forms about “the outcome of” and “the long-lasting effects of,” the marketplace begins to react. Participants in the marketplace begin to make decisions about investing, or not investing, in additional people, plant, and equipment. Marketing is added to tell customers about what to expect. Customers begin to make decisions based upon what suppliers have told them. The marketplace reacts and often makes the consensus prediction a ‘self-fulfilling prophecy’ as all the market participants react in the manner they were told that they should. This is often where the easy part of predictability ends, but that depends on what type of outcome we are trying to predict.
There are two basic types of marketplace predictions:
- Change will happen but it will not be too severe, or at least not severe for most of the market participants.
- Change is coming, and it is going to be a calamity. It is going to create large disruptions in the marketplace.
It is our experience that the predictions of calamity or large disruptions are almost always wrong. Why? It is a simple rule – calamity, well anticipated, seldom is. One of the most blatant examples of this in recent history was the Y2K panic. Because programmers hadn’t planned for the year input field going from 19 “99” to 20 “00” the entire world’s system of computers and everything that relied on those computers was going to crash. Airplanes were going to fall from the sky and cash could no longer be withdrawn from ATMs after midnight December 31, 1999. Instead, almost everyone in the free world upgraded their hardware and software, or learned to live with systems that told them it was January 1, 1900. Either way, the massive calamity that was widely predicted never happened because it was “well anticipated.” It is at this juncture we feel morally obligated to point out the obvious. Everyone who is even remotely aware of the trucking industry in the U.S. knows that the ELD rule goes into effect on Monday. Time will tell, but if there are not massive numbers of trucks parked on the side of the road, and shippers are actually able to find trucks to move loads, we will not be surprised. Why? Because, “calamity well anticipated, seldom is.”
The other way predicting the future is wrong is the failure to consider the law of unintended consequences. We expect that adoption of, and enforcement of, the ELD rule will initially lead to some constraints on trucking capacity. We also expect the unintended consequences to have an equal to more powerful effect on the visibility of equipment and the bad behavior of shippers and receivers. We will explain this part of our outlook in next week’s missive. Stay tuned…
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