Every day we run the Narrative Machine on the past 24 hours of financial media to generate a list of the most linguistically-connected and narrative-central individual stories. We call this The Zeitgeist and we use it for inspiration or insight into short-form notes that we publish a couple of times a week to the website. To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.
There has been a constant narrative undercurrent in the 2019 Zeitgeist we haven’t covered yet. The articles attached to the narrative have ranked highly nearly every day of the year, but never quite high enough to make our list of the top 5 most linguistically connected articles published by financial media on a given day. Today the topic broke through.
What is it?
The death of trucking.
An American trucking giant is slated to declare bankruptcy, and it may leave more than 3,200 truck drivers stranded and jobless [Business Insider]
Why did it finally break through to the top of our model’s attention? For a few reasons. First, a declared bankruptcy is a news event that will get mirrored coverage from multiple outlets. Second, the article links to prior pieces that covered an Amazon-specific angle, which it doesn’t take much prodding to discover is how, exactly, Amazon is the one killing it. But third, and most importantly, this article begins to shift the focus from a problem with the industry to a problem for workers. This transition alone, along with its attendant fiat news and affect-laden language, connected this article to all sorts of political articles, opinion pieces expressing concern about the rise of left-populism among Democratic primary participants and the projected impact on markets, etc.
I suspect our readers will have wildly different views on whether the rapidly increasing propensity to frame business problems in context of their impact on labor is a good or bad thing. What matters, however, is that you know that it IS a thing, and that it is absolutely not going anywhere any time soon. It is a feature of the widening gyre, we think, that left populist and right populist language will dominate the narrative structure of nearly every conceivable social, political, economic or cultural topic for the foreseeable future. That is exactly what we are observing, even from Business Insider, and even on a subject as outside the mainstream of most Americans’ discussions as the prospects of a largely unknown trucking company.
In full disclosure, yes, I did pick the #2 most connected article over the #1 article so that I could post this with a picture of Large Marge. Plus I didn’t have anything to say about the Peleton Ad response (the #1 article in the Zeitgeist) that Aviation Gin didn’t already say.
I’ve been watching this unfold thru the eyes of a friend who’s a Freight Waves correspondent. Then there’s the army of sell-side analysts giving their views. None of them Get It.
These economically uncertain times are causing companies to minimize inventories, make smaller and more frequent shipments, and use less long-haul freight. It showed up first with the near-demise of the long-haul 100-boxcar and is now working its way down to the 25-ton dry van.
Drivers are collateral damage. Consider: A two-person train crew can move 200 dry-van containers 400 miles in 8 hours. You’d need 200 drivers and their truck cabs to do that on the interstates.
But with distribution centers being placed closer together you need less long-freight of any sort. A container of Chinese coffee tables is off-loaded in LA, and drayed to a DC 100 miles away. There the container contents are sorted into smaller shipments to other DCs closer to the end market, which hurts the truckers doing the 1000-mile moves.
But it also increases demand for more SHORT-haul truckers, possibly increasing the actual size of the truck-driving universe. That’s a net positive for employment and something the populist-left can’t use in its us-vs-them arguments.
So, in time the smaller Amazon shipments actually create Short-haul jobs for the long-haul truckers whose employers go belly-up.
End of rant.
Really interesting color, Roy! Thank you!
The only thing I’m not sure about is whether the reality of improvement in short-haul jobs (which I also expect have a better quality-of-life in many ways) will have much influence on the success of narratives employed here. If the last few years have taught us anything, it is that a sufficiently strong narrative structure can keep in the presence of all sorts of facts that we might otherwise have expected to win the day.
The progressive Left Narratives are pointing to the plight of the long distance trucker who will need to find other employment. Labor wants to preserve the status quo because it keeps membership dues coming in.
My intent was not to dispute the Narrative but rather to say the displaced truckers will find other driving gigs if they’d just quit doing the woe-is-me routine and go out and look.
It is funny this should come up today as in a meeting a week or so ago we were discussing this exact topic. One point that came up in that conversation is that many trucking companies actually seem to be struggling to find drivers (and are paying fat signing bonuses to new hires as added incentive). The short-haul vs. long-haul dynamics you described help put this better into context. Obvious disconnect between narrative and “reality” here. A powerful case study in that divergence and what causes it, as well as what contributes to its persistence, I suspect.
Why am I still disappointed by the ease of narrative manipulation? Bloodbath! The Truckers! Freight Volumes! The brief mention at the bottom of accounting fraud without real details-- like it was some dunce CPA fat fingering expenses to revenues. It fails to describe the private entity owned by exec’s to purchase tractors and trailers and lease them back to Celadon. It also doesn’t describe buying small freight companies with flat earnings that once fed through Celadon’s financial wizardry machine come out as accelerating profits-- e.g. fudging depreciation, charging truckers full price for fuel and pocketing the negotiated discount, withholding comp, etc. I recall seeing a slide deck where they, ala Softbank/WeCo, projected accelerating profit growth from continuing acquisitions. And of course this fed healthy stock based exec comp. This should be a story of rich people going to jail and having their personal assets taken for FRAUD. KPMG investigated as auditor where CEO Paul Will was senior accountant. But it won’t be.
Beware the serial acquirer.
Continue the discussion at the Epsilon Theory Forum