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Released: August 15, 2008
Transportation Indicators Shed Light On Current Economy
Most NASSTRAC Regular members (shippers and 3PLs) move a significant amount of their freight via LTL or truckload methods. Although the economic outlook in transportation can change dramatically over the course of the year due to a variety of factors, here are recent developments to consider:
- The U.S. economic stimulus package and inventory replenishment by customers powered a 5.4 percent rise in truck tonnage during June compared with last year, according to the American Trucking Associations. Tonnage has been rising since last November, after falling for eight of the first 10 months of last year.
- Some NASSTRAC Associate members say they are beginning to detect signs of a stronger market triggered by tighter capacity, which is confirmed by ATA’s seasonally adjusted index which recently increased to 116.5 from 110.5—a growth pace that has been the fastest since an 8.9 percent rise in January of 2005.
- If truck volumes turn out to be the leading indicator for the economy that they have been in many past cycles, that would speak to a longer but shallower than normal economic downturn, says Ed Wolfe, an industry analyst and founder of Wolfe Research who has spoken at the past at NASSTRAC conferences. “Both general macroeconomic and freight trends tend to point toward a continued weak — but no longer weakening — economy as recent monetary and fiscal stimulus have to some degree likely helped hold up demand thus far.”
Skyrocketing fuel prices have added to the current challenges in the trucking industry. In fact, rising fuel costs have been a factor in the high number of recent trucking bankruptcies, which has had a significant impact on capacity. Trucking company bankruptcies more than doubled in the second quarter of 2008, soaring nearly 120 percent from last year as high fuel prices pushed approximately 1,000 U.S. motor carriers out of business. However, with trucking companies and users of trucking services now in better balance, several industry experts have recently predicted that the trucking bankruptcy rate will most likely decline in coming months and that inflation-adjusted freight rates will increase in 2009 and 2010. Others say that motor carriers may benefit even if fuel costs stabilize with crude oil prices at $120 a barrel because the absence of price swings will allow fleets to adjust their operations and keep surcharge collections in balance with diesel costs. What this truly means for both shippers and carriers and remains to be seen.
Truck Tonnage Jumps 5.4% in June
The U.S. economic stimulus package and inventory replenishment by shippers charged a 5.4% rise in truck tonnage during June compared with last year, according to the American Trucking Associations. Tonnage has been rising since November, after falling for eight of the first 10 months of last year. “Trucking is a good leading economic indicator,” says ATA Chief Economist Bob Costello. “The fact that we are growing now and the U.S. economy is sluggish is not usual. This would indicate that things could improve for the U.S. economy down the road.” Several NASSTRAC associate members that are motor carriers also have announced second-quarter earnings have been more positive.
DOT Issues Transportation Plan
Transportation Secretary Mary Peters unveiled the Bush administration’s final major surface transportation policy initiative — a reform of the highway program that includes unlimited tolling and an increased emphasis on private capital. The plan was unveiled July 29, when Peters said that this “creates an easier and more sustainable way to pay for and build roads and transit systems.” She cited reduced receipts into the Highway Trust Fund, as well as extensive use of earmarks, as reasons why “no amount of tweaking, adjusting or adding new layers on top of things will make [the system] better.” The plan, she says, begins the “long-overdue process of weaning ourselves off the gas tax.” See more details at www.NASSTRAC.org.
NASSTRAC 2009 Conference and Logistics Expo to Take Place in Orlando next April
NASSTRAC announces that its annual conference and expo will take place April 26-29, 2009 once again at the Buena Vista Palace in Orlando, Fla. The event is tailored for logistics, transportation or supply chain management professionals who want to learn and network with leading veterans and logistics experts in the industry. “Orlando has been a positive venue for us for the past three years,” said Brian Everett, NASSTRAC’s Executive Director. “It’s easily accessible with major airlines, it’s affordability, and the electricity of a Disney property and as well as other Orlando attractions add to the experience of this conference. We’re excited to be rolling out next year’s agenda shortly and will continue to add educational and networking value that attracts transportation and logistics decision-makers.” Towering 27 stories above the world’s favorite destination of the Walt Disney World Resort, the Buena Vista Palace Hotel & Spa is just minutes from downtown Orlando and in relative close proximity to the Orlando International Airport.
“The NASSTRAC annual conference promotes strategic thinking, learning, and invaluable networking for transportation and logistics executives,” said NASSTRAC president Eric Morley, director of logistics for Best Buy Co. “NASSTRAC continues to provide high-level content, practical ideas, and networking opportunities that help those of us in this arena to increase efficiencies, streamline the supply chain, and increase the bottom line for our organizations. I’d encourage any logistics professional who is looking for new, innovative ways to contribute to their company’s success to attend this event.” For conference details call NASSTRAC at 952-442-8850, ext. 208 or visit www.NASSTRAC.org. |
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