According to the latest forecast from FTR Associates, the freight market will fall for seven consecutive quarters, bottoming out in the third quarter of 2009 at more than 9% below the year-end 2007 levels.
FTR does not hesitate to call the current downturn a full-blown recession, noting a 4% or more annualized fall in GDP during the current quarter, the first time that has been measured since the 1982 recession.
“The most recent economic data reports indicate that the U. S. GDP annualized change for Q4 might be as much as a 6% drop,” FTR said. “It is early evidence that the 1982-like recession that FTR has been warning its clients about could be underway. The 1982 event included -6.2% and -4.9% quarters.”
FTR said that a deep recession such as the one in 1982 would have a devastating impact on the truck market. Tonnage would fall by 10% year-over-year, and a fall in freight like that would reduce the required stock of trucks by 270,000. This would lead to a surplus of 200,000 units, divided between the used truck market, parked trucks and underutilized trucks.
The surplus would drive capacity utilization below 80%, which has not happened in more than a decade, FTR said. In addition, trucking margins and equipment purchases would fall, as well as U.S. retail sales.
Overall, FTR predicted total U.S. tonnage would decrease 1.9% in 2008 and another 3.9% in 2009 before rebounding by .9% in 2010. It also predicted that Class 8 sales would decrease 25% in 2009 but increase 11.9% in 2010, and Class 4 to 7 vehicles would decrease 13.9% in 2009 and increase 12.4% in 2010.