According to Bob Costello, Chief Economist of the American Trucking Association (ATA), the economic outlook for North America’s transport industry is “muddled at best, with the industry facing softening demand and rising costs.”
During the ATA’s annual Management Conference in Dallas, Texas, a panel of economic experts said that while economic growth in the US will remain slow, a double-dip recession is unlikely. “Right now, freight demand is moving sideways, rather than falling off a cliff like it did in 2008,” Costello says. “That indicates to me that we might just skirt by another recession.”
In general, Costello says large fleets see stronger volumes than smaller ones, likely because of their relationships to larger shippers. “No one is doing great, but it feels like larger companies and shippers are outperforming small businesses right now,” he says.
In addition, Costello says that cost pressures on fleets are “significant” at the moment, with the inflation rate for items like fuel, equipment and driver wages exceeding the inflation rate for the broader economy.
But, despite higher costs, Costello says that both truck and equipment manufacturers should continue to see solid sales figures “because there’s a significant amount of pent-up demand for new trucks to renew aging fleets.”
Even set against this backdrop, Costello says fleets should continue to see solid revenue per mile as capacity stays tight. “There has been some growth in capacity, but supply and demand remain close to equilibrium,” he concludes. “However, fleets did a good job ‘right-sizing’ during the recession, so capacity should remain tight – and continue to tighten as the driver shortage worsens.”