PHILADELPHIA. Freight volumes should start to climb again by the end of the year, according to Bob Costello, chief economist for the American Trucking Assns.
Delivering his industry forecast during the annual ATA management conference, Costello said current softness in freight is not due to any underlying economic drivers. Rather concerns over truck capacity constraints earlier this year pushed manufacturers and retailers to build up higher than normal inventories. As they work through that inventory, there will be “a healthy rebound” in freight volumes.
“Are things going to go gangbusters? No,” Costello said. “But are things going to look up once we get through this inventory cycle? Absolutely.”
Both Costello and IHS chief economist Nariman Behravesh repeatedly characterized the U.S. economy as “strong” and “the bright spot” among global markets.
With consumer spending accounting for 70% of the U.S. economy, Bahravesh said low energy prices, growing employments, rising disposable income and high household net worth all point to “very solid” growth in spending in 2016. Overall he forecast 2.5% to 3% GDP growth for the coming year driven largely by domestic demand.
The one negative identified by Costello is continued capacity constraint due to the driver shortage. While truckload carriers continue to most impacted by drivers, LTL and private fleets are now also beginning to have some problems attracting qualified drivers, he pointed out.
Fleets looking to become more attractive to drivers are helping boost tractor sales this year as they move to replace older equipment. While few are adding tractor capacity because of drivers, trailer capacity has seen a jump as fleets increase hook-and-drop activity to offset the driver shortage, according to Costello.
By the end of the year, the industry will be short 48,000 drivers, he said. By comparison during the last major driver shortage in 2005, trucking had 20,000 open jobs. Overall the driver shortage is forecast to hit 175,000 by 2024, “and that will slow down the U.S. economy,” Costello said.
“There’s no one cause [for the shortage], and no one solution,” he told the ATA membership. “We’ve seen pay rise in the low double digits these last few years, and that will continue.” More time at home, allowing younger drivers in interstate operations, and better treatment of drivers by everyone in the supply chain will also be part of solving the driver shortfall, according to Costello.
“This [shortage] is far from over, and we have our work cut out for us,” he concluded.