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Chamber sees more demand, more consolidation

Jan. 5, 2006
The U.S. Chamber of Commerce, a broad lobbying group for U.S. businesses, yesterday announced its generally positive outlook on the economy

The U.S. Chamber of Commerce, a broad lobbying group for U.S. businesses, yesterday announced its generally positive outlook on the economy. Its 2006 State of American Business briefing predicts U.S. economic growth of 3.5%, with growth in consumer spending and capital investments to be 2.7% and 9.6%, respectively.

A transportation specialist of the U.S. Chamber of Commerce told FleetOwner that shipper demands will spur the existing trend consolidating trucking companies into global, one-stop-shop transportation providers while tight freight capacity will force shippers to fully utilize the entire transportation network.

“The real challenge is every year, with more cargo coming into the country, how to move that safely and efficiently at a time when the industry has challenges making sure they have the right amount of drivers,” Ed Mortimer, director of transportation infrastructure for the Chamber, told FleetOwner.

Thomas Donohue, president & CEO of the U.S. Chamber, said in a prepared statement on U.S. businesses that “restrictive immigration and visa policies, along with inadequate education and training have tightened the supply of qualified workers—bad timing with the first wave of baby boomers about to retire.”

Indeed, the trucking industry is no more immune to the demographic shift than other businesses.

“[The aging driver population] does have an affect on the LTL carriers because what you’re seeing is that distribution centers are changing with those demographics,” Mortimer said. “We see they’re getting older and getting to the point that many are beginning to retire. Plus for drivers, it’s a tough job. They’re not always home every night and there are other less time-intensive jobs that pay better.”

And although the U.S. economy is set for 3.5% growth in 2006, transportation and trucking capacity growth won’t be consistent with that.

“We’re seeing more freight than can moved,” Mortimer said. “Railroads will play a part in alleviating that but it’s going to take a combination of the whole transportation network. While trucking is a large part of it, there other components such as rail and barges.”

From the perspective of the Chamber, the trucking industry plays a significant role in enabling the U.S. to compete with foreign markets based on the premise that companies need an effective logistics chain to succeed.

But global competition goes both ways as well. Memphis, TN-based FedEx, Atlanta, GA-based UPS and Overland Park, KS-based YRC Worldwide (formerly named Yellow Roadway) all have widely publicized expansion initiatives into Asia, and particularly China.

“There’s the recognition of the value in a global transportation network. Shippers want a trucking company that can take care of the all of the shipping needs they have,” Mortimer continued. “They consolidate but they also offer one-stop shopping.

“That said, there will always be a need for owner-operators and small trucking companies because they do invaluable work for the regional economies,” he said. “Among small carriers there will be more competition but at the same time there will be more freight that can be moved [due to the growing economy and tight capacity].”

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