Freight volumes are projected to increase over the short and long-terms, giving fleets the necessary cash to keep replacing aging equipment with new units, according to industry experts and a new report.
"In general, freight continues to do okay, and we expect some more growth to occur in the second quarter of this year,” Eric Starks, president of FTR Associates, told Fleet Owner. “We should also see a strong pickup in the second half of 2011 as well.”
Starks said FTR is currently projecting truck freight growth of 5% this year and also expects capacity to remain tight as fleets focus on replacing equipment rather than increasing the size of their operations. The group plans to offer more detail in its freight transportation forecast June 9 during its quarterly State of Freight webinar.
Longer term, the American Trucking Associations (ATA) – in conjunction with consulting firms IHS Global Insight and Martin Labbe Associates – predicts that trucking will continue to be the dominant mode of freight transport in the U.S., and should benefit from a strong uptick in freight expected to occur through 2022.
“The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue, comprising 67% of tonnage and 81% of revenue in 2010,” noted Bob Costello, the ATA’s chief economist, in the group’s U.S. Freight Transportation Forecast to 2022 published last week.
Overall, total freight tonnage is expected to grow by 24% by 2022, and revenue for the freight transportation industry is projected to rise 66% in that same time period, Costello said. He emphasized that trucking’s share of that market will rise to 70% by 2022, though the industry’s share of freight revenues will only increase to 81.4% from 81.2%.
Intermodal volumes, Costello pointed out, are also expected to grow. ATA expects intermodal tonnage – freight moved by a modal combination of truck and rail – to rise 6.6% a year between 2011 and 2016, and 5.5% annually through 2022. Revenues for intermodal transportation will jump from $11.1 billion in 2010 to $30.7 billion in 2022, he added.
“We are also expecting to see growth in intermodal, especially domestic intermodal shipments, as concerns over fuel prices and available trucking capacity persists,” noted FTR’s Starks. “Overall, however, we don’t see a huge freight shift from truck to intermodal.”
Near-term freight demand is also expected to fuel a continuation of the ongoing truck sales boom at least for another couple of years, according to Steve Latin-Kasper, director of market data and research for the National Truck Equipment Association (NTEA).
During a presentation at PHH FirstFleet’s 2011 Truck Conference, he noted that IHS Global Insight projected Class 3-8 sales should increase 16.7% overall this year and 16.2% in 2012 before sliding down to 12.4% in 2013 and 8% in 2014.
However, he feels that the ongoing surge in freight volumes is actually going to push Class 3-8 sales a lot higher in the short term. “I would not be surprised to see a 25% to 35% increase in sales in 2011 and 2012, respectively,” he said at the conference. “We’ve got a good long run of global economic growth ahead of us.”