ATA Sees a Brighter Tomorrow for Truck Carriers

Despite the recent soft freight market and resulting volatility, American Trucking Associations’ Chief Economist Bob Costello and Diane Swonk, founder and CEO of DS Economics remain optimistic about manufacturing and resulting freight volumes over the next 10 years.

Swonk and Costello shared those long-term optimistic views at the recent ATA management conference. More recent reports seem to bare out their optimism.

New orders and shipments are down 2.6 percent and 2.7 percent respectively compared to figures from the same time last year, but a recent Commerce Department report showed new orders for manufactured goods rose 0.2 percent in August. That marks the second straight monthly hike after two consecutive months of weakness. While the level of such shipments was nearly unchanged, it is up five out of the last six months.

Meanwhile, orders for nondefense capital goods other than aircraft, increased 0.9 percent in August. Analysts hope that this measure, which is a proxy of business investment, is a sign that businesses are starting to spend to expand and modernize their facilities. Also the ISM New Orders Index registered 55.1 percent, an increase of 6 percentage points from the August reading. The Production Index registered 52.8, 3.2 percentage points higher the month before.

Trade among Canada, Mexico and the United States, which has been a critical part of the trucking economy, also factors into their assessments, Costello said. Since 1995, the value of goods moved by trucks among the three countries has risen 168 percent to $712 billion. “In the post-North American Free Trade Agreement era, we’ve seen growth in exports moved by truck outstrip overall growth of domestic freight over the past two decades.”

For more information on the role the trucking industry plays in moving goods across borders in North America, download ATA’s “Trade Moves North America Forward” report.

While there was a 5.9 percent climb in tonnage in August, Costello said he believes the increase was due more to volatility.

“I expect the truck freight environment to be softer than normal as well as continued choppiness until the inventory correction is complete,” Costello said in the ATA’s September tonnage report. And the ATA’s Oct. 18 report certainly bears that out as it reported a fall in tonnage of 5.8 percent in September.

While there’s a lot of uncertainty about the direction of the economy, Swonk and Costello both see a possible bottoming of the cycle and signs for a modest rebound in 2017. And then continued growth through the next 10 years.

“The economy has been running a relay race, with only one runner – the consumer – carrying the baton for too long,” Swonk said. “Next year, there will be more runners in the race to grab the baton, but they won’t be breaking any speed records.”

Looking out to 2027, the ATA’s forecast for freight transportation shows growth in both overall freight volumes and in the amount of goods moved by truck. According to the forecast, overall freight tonnage will grow a total of 35 percent. Over that same timeframe, the amount of freight moved by trucks will grow slightly less at 27 percent.

Truckload volumes will grow 2 percent annually between 2016 and 2022 and 1.6 percent per year after that until 2027. Less-than-truckload volume will grow year after year 3 percent through 2022 and 2.8 percent from 2023 to 2027. Private carrier volumes will grow 2.3 percent annually until 2022 and 2.1 percent each year over the next five years. A full copy of the “U.S. Freight Transportation Forecast to 2027” can be purchased from ATA by visiting the ATA store –

As ATA president and CEO Chris Spear said in a recent ATA news release, trucks will continue to move the vast majority of America’s goods, underscoring the industry’s critical role in the country’s future.

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