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PalletCentral • January-February 2023 39 and timing of such changes is very tricky and leads to dissatisfaction from managements ignorant of the difficulties of such forecasts. In 2008, Noël correctly forecasted a flat year – but only warned of the possibility of worse outcome in 2009. When the economy collapsed late in 2008, his management (different company) criticized him for the error in my flat 2009 baseline forecast, ignoring the verbal warnings of the chance of a bad recession. at was despite the fact that most other economists forecasted a recovery in 2009 after the "soft landing" of 2008. inking back on that experience, he realized that his error was in communication, not forecasting. Here is better communication…you will remember 2023! 2023 is one of those rare years with the possibility of substantially different results from the previous year, in this case, differences in the negative direction. Will they happen? Maybe, maybe not. Will most companies be ready if 2023 is different? Definitely not, especially after the comfort of the recent favorable years. What to do? e answer lies in five steps. Step One: e great management thinker Peter Drucker gave us the right place to start. He said, "Make sure you know where the market is when the forecast starts." is seemingly simple advice is important because most management teams do not know where their markets currently are, living as most humans, focused on the recent past. We are in debt to Dr. Drucker in 2023 because his advice encourages us to do the homework that shows a trucking market remaining well above its long-run trend. at is a market state with major implications. Step Two: e next job is to act on the things one knows for sure. As 2023 starts, we know two things for sure: First, markets well above trend inevitably regress toward trend. Knowing that, we can conclude two valuable things about truckload activity in 2023. For contract freight markets, still well above trend in pricing, we can confidently expect a continuation of the weakening that appeared late in 2022. Contract prices are regressing to trend. Second, for spot freight markets, which already are priced back at trend, further reductions are unlikely unless the economy weakens. Seems simple, doesn't it? Except such easy answers stand out in a year otherwise dominated by uncertainty. Step ree: Having dealt with the "knowns" in the above steps, it is time to turn to those troubling uncertainties. Usually, as pointed out above, this is easy, since the uncertainties are modest compared to the comfortable margins for error in most years. Not so in 2023. is year we have to recognize the chance of recession, with the extra risk of a major recession. e chance for recession is well established, given the drag of inflation and much higher interest rates. Noël says there is a "chance" of recession because there remains a chance that the economy will stay near its 2022 2% growth – as most years do. e consensus bet is on recession, so I handle no recession as an upside exposure. iStock/carloscastilla

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