At a panelist discussion consisting of the American Trucking Association’s Bob Costello, National Association of Realtors’ Lawrence Yun, and HIS Global Insight’s Gregory Daco earlier this week, the ATA released their 2013 trucking forecast, calling for a slow, steady “GDP growth of about 2% for this year and 1.8% for next year” for trucking and the economy.1
THE FISCAL CLIFF
As Daco commented, “I think we’re in for a number of quarters of medium growth, a picture of good but not great,” at the same time explaining that “if the country goes over the fiscal cliff, HIS Global Insight is predicting two consecutive quarters of negative growth in 2013.” 1 The fiscal cliff Daco is referring to is “the simultaneous onset of tax increases and spending cuts that will be triggered on Jan. 1,” due to the Budget Control Act of 2011 going into effect, “that many believe would push the country back into recession and drive unemployment up even higher,” an issue that was brought up multiple times by the panelists throughout the session.2
VOLUMES
According to Costello, tonnage is up 3.7%, however, freight volumes are headed sideways. As he explained, volume is up 0.4% for large TL and LTL carriers while volumes for small TL carriers have decreased 4.6%. 1
Who will do well? Costello states that tank trucks (whose loads are up 6.6%), will do well due to fracking, as well as flatbed carriers (up 5.7%) due to housing.
HOUSING
Housing starts are expected to increase nearly 50% in the next few years, however, as Yun remarked, “Those will be solid gains, but we have to remember we need to increase 100 percent just to get back to normal. Home prices will increase 5 percent next year and another 5 percent the following year so that’s a 10 percent growth that means there will be fewer underwater homeowners and once they get above water they begin to move to newer homes.” 2
CAPACITY/DRIVER SHORTAGE
Another issue brought up by the panelists was capacity, which is expected to remain tight due to the shortage of trucks and drivers (with a current shortage of 20,000-30,000 which is expected to increase over the next year due to stricter regulations) to transport freight. The panelists suggested that carriers “ensure drivers have more time at home, provide reliable equipment to company drivers and offer pay incentives and bonuses” in order to prepare for the driver shortage and maintain/attract drivers. 3
“THE NEW DIESEL FUEL”
Along with driver shortage having an impact on capacity is the number (and with that quality) of trucks on the road. As more and more carriers are replacing older equipment (due to stricter regulations) they are reducing their fleet size by trading in two old tractors for one new one. In fact, on average, fleets have increased by 1% or less with “large truckload fleets off by about 5%, small truckload carriers down by about 9%, and less-than-truckload down by 11%.”1
This pressure on carriers to replace equipment (without building capacity) is what Costello deemed “The New Diesel Fuel.”2
ECONOMY
As previously stated, the economy is expected to grow 2% in 2012 due to factors such as housing. At the same time, there lie risks/uncertainties, which Daco pointed out being domestic, the debt ceiling, and foreign stating that “the U.S. could withstand a mild European recession, but could not withstand a full-blown financial crisis there.”2
What are your comments regarding the American Trucking Associations’ 2013 Trucking Forecast? Do you agree with Costello that replacing equipment is “The New Diesel Fuel?”
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1http://www.truckinginfo.com/news/news-detail.asp?news_id=78274
2http://www.thetrucker.com/News/Stories/2012/10/10/Trucking2013forecastnotgreatbutnotgloomy.aspx
