Nov 1
2011

U.S. Trucking Industry – Can its Future be Predicted?

Transportation SwamiIs the ability to forecast the state of affairs of the trucking transportation industry simply unpredictable?  Are there just too many economic and regulatory factors to know what to expect?  Are we in a period of economic influences and political changes that prevent history from being an indicator of what the future will look like?

Given the content of many white papers and articles presenting the forecast of the industry, I think so. Forecasts used to be fairly consistant for 12 to 24 months at a time. Now we see forecasters constantly tweaking their predictions up or down in a much more frequent cycle.

Certainly, expert forecasts are a necessity, but no one knows how the global and economic environments will evolve over the short term given so many multi-national debt issues and political actions that will be taken to address them, the future is only a guess. We will certainly know once the future becomes history.

A Review of Recent Transportation Forecasts

I present the following recent forecasts on transportation volumes, capacity, costs, and rates and an overall forecast commentary (from various sources) simply as the recent state of affairs. We shall all be watching closely to see how it actually unfolds.

Transportation Volumes

About 92% of carriers are expecting freight volume increases in the next 12 months, according to the latest Business Expectations Survey by Transport Capital Partners (TCP).

April 11, 2011: Today’s Trucking @ www.todaystrucking.com/news.cfm?intDocID=26085

Noel Perry, FTR managing director and senior consultant (FTR economist), is pessimistic on volume growth due to the weak housing industry outlook. Housing ownership is down and housing starts will remain low for many years to come. Construction and housing, which accounts for 14% of trucking freight, represents 37% of trucking’s decline since 2006.

Perry also states that trucking stands to prosper in the next few years as manufacturing growth outpaces nonmanufacturing and contributes to freight increases for trucking and other transportation sectors for as long as long-term interest rates remain favorable.

Perry predicted that the economic performance for the next 13 quarters “could be stronger than a lot of people think” in part because of recoveries in the auto industry and perhaps housing. He estimated a 5% trucking tonnage growth through 2013.

April 20, 2011: Successful Dealerhttp://successfuldealer.com/ftr-forecast-%e2%80%98make-hay-now%e2%80%99

Trucking freight volumes are still on course for growth around 4% during the second half of 2011, but recent weak economic reports are a growing cause for concern, Noel Perry states.

He also states that there is still a possibility that freight growth later this year and next could slow to 2% and lag behind the modest growth in domestic product.

June 20, 2011: Transport Topics

Trucking Capacity

An earlier white paper by TCP found capacity reduced around 15% during the past two years. With the improving economy, freight tonnages coupled with only replacement demand of equipment, capacity will remain tight for the next couple of years.

April 11, 2011: Today’s Truckingwww.todaystrucking.com/news.cfm?intDocID=26085

FTR’s economist predicted there will be far fewer people available to meet trucking’s demand for new drivers. He said the ‘regulatory drag’ to meet new federal safety requirements could lead to a shortage of 250,000 drivers quarterly in 2012. Add to that a shortage of replacement drivers, and the industry could be searching for 400,000 drivers quarterly in 2012 and 2013 by his estimation.

Perry predicted that upcoming changes in shipper productivity could impact trucking. “We’re on the cusp of a major change in how customers look at trucking” he said. If these favorable changes take place, it could reduce the impact of the truck and driver shortage by about 100,000 units.

April 20, 2011: Successful Dealerhttp://successfuldealer.com/ftr-forecast-%e2%80%98make-hay-now%e2%80%99

The FTR economist forecasts a steady increase in the current shortage of drivers by 100,000 to at least 400,000 by the end of 2012. That would top the record shortage of 270,000 drivers in 2004.

The shortage will be triggered by rising demand, federal driver regulations and the smaller supply of potential drivers entering the workforce, Perry states

He continues to state that he believes that productivity improvements by shipper who forces long waiting times on drivers are the key to offsetting the workforce pressure.

June 20, 2011: Transport Topics

Transportation Costs

Fuel costs rising due to the recent run-up in oil prices are not based on a tightening supply but the market’s fear of what might happen to supply, Perry expects oil prices to decline through the summer unless Middle East unrest spreads to Saudi Arabia. If it does, expect $5-a-gallon fuel to follow.

April 20, 2011: Successful Dealerhttp://successfuldealer.com/ftr-forecast-%e2%80%98make-hay-now%e2%80%99

Perry described the current economic and commercial situations as “a very great test of nerve for business” as forces such as weakening housing markets, the damage caused by disasters in Japan and rising oil prices have hurt growth.

Perry also said that he believes that oil prices aren’t likely to remain where they are because of large crude inventories and available unused production capacity.

June 20, 2011:  Transport Topics

Transportation Rates

91 percent of carriers said they anticipate rate increases in the year ahead.

April 11, 2011: Today’s Trucking @ www.todaystrucking.com/news.cfm?intDocID=26085

Forecast

Transportation companies should take advantage of today’s economic recovery because it will be relatively brief by historical standards, and then the economy will fall back into recession Perry predicted on April 19, 2011 during a CCJ online seminar.

According to Perry, the market will remain volatile due to the high level of federal debt and its impact on long-term interest rates.

April 20, 2011: Successful Dealerhttp://successfuldealer.com/ftr-forecast-%e2%80%98make-hay-now%e2%80%99

Perry raises the prospect that an economic downturn could begin as early as 2014 after the current recovery runs out of steam.

June 20, 2011: Transport Topics

Accolades to Noel Perry for attempting to help all of understand where we might be headed!

Given the political will and forthcoming decisions of the various world governments and of our own branches of government in the U.S., it is certainly difficult to really know what will happen.

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avatar About Craig Behrens

AKA The Silver Fox. I’ve been in transportation for 34 years with 28 of them in management roles. Managerial experience includes operations and sales management for four offices, regional quality assurance for 30+ offices and national trucking operations in the air freight industry, general manager of a trucking company, logistics and distribution manager for two manufacturers and project manager for the last four years at TransCorr National Logistics. My strength is in developing systems and processes that focus on productivity and efficiency improvements. Riding my hog is my infatuation. Playing with the grandchildren is my passion. What else matters?

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