Buffett keeps sights trained on trucks

BIRMINGHAM, Ala. — Don’t get Warren Buffet wrong. The canny billionaire might have spent upwards of $35 billion buying into America’s rail system last year. But that doesn’t mean he has no faith in trucks.

In fact, Marmon Highway Technologies (MHT), the division of Buffet’s sprawling business empire Berkshire Hathaway Inc., is dedicated to trucking. And the people who run MHT have no intention of yielding any ground to the choo-choo set.

In a presentation to a select media audience last week, including todaystrucking.com, MHT President Kelly Dier put it this way: "I don’t believe the railway is over the next 10 years going to gain a disproportionate share of the transportation freight business."

MHT consists of 13 business units, most of which are familiar trademarks to people in the trucking industry; and Buffet completed the purchase of 60 percent of the formerly family-owned company in 2008.

Some of the familiar brands that fall into the MHT stable include: Fontaine Fifth Wheel and Fontaine Trailer, Webb Wheel, TSE Brakes, and Nu-Line truck fenders.

Dier was drawing on more than 40 years of experience when he made his comments about the future of trucking.

The higher price of energy and the increasing demands of the consumer will bring radical changes to the logistics business, he predicted. Plus, it’s getting harder to do business in some emerging countries, like China, than it was even two years ago, says Dier. 

As well, he said, railroads will experience an increase in domestic freight tonnage over the next 10 years. But trucks will continue to handle the majority of freight volume.

Additionally, Dier predicted that diesel fuel prices will soar, hitting the $6-to-$7 range within the next five years. As a result North American companies will be forced to manufacture and source materials much closer to home.

"We’re going to reach a point where the way we have been running our business logistics will no longer make sense," Dier said.

"Logistics costs are going to get so high that companies will have to develop much tighter supply chains. The competitive strategy of sourcing in China is going to go away.

"And this," he added, "will be a good thing."