Bob Costello, senior economist for the American Trucking Assns., figures the economy “may continue to get worse before it improves” but he is nonetheless “optimistic when looking down the road six to eight months and beyond.”
Speaking at a Bridgestone/Firestone commercial tire dealer meeting in Las Vegas, Costello explained that his confidence rests on the fact the economy's “underlying fundamentals” are strong.
“There is plenty of monetary stimulus, thanks to low interest rates, with more tax cuts coming, and inflation is well under control — this means the Fed should be able to leave interest rates low.”
Given all those positives, Costello said the economy should experience uneven, moderate growth with improvement in the second half. He cautioned against expecting a “big surge,” but advised that stronger growth levels are likely to return in 2004.
Turning to trucking's prospects, he foresees freight volumes improving in tandem with the economy. “Capacity will be relatively tight,” he observed. “Already shippers are starting to worry if there are enough trucks.”
On the other hand, he said insurance rates will likely increase, albeit more modestly at this point, and fuel prices will remain volatile but hopefully stay lower.
Costello also noted that driver wages will rise once the economy improves. “That could pinch carrier bottom lines,” he remarked. “But I consider that a ‘good’ problem to have-it means freight is moving.”
Looking further out, Costello sees an even brighter horizon for trucking. “Total truck tonnage is going to increase nearly 30% in the next 12 years.
