Stronger truckload rates predicted

While most forecasters see truckload rate growth continuing at 2.5% through 2013, Noel Perry of FRT Assocs. and Transportation Economics believes carriers could enjoy much stronger growth, with year-over-year rate increases touching 7% by the fourth quarter.

The primary driver for such growth would be a much larger capacity shortage than many anticipate, Perry said during an FTR “State of Freight” webinar.  Proposed new Federal safety rules, if put into place, will push drivers out of the industry and decrease productivity for the remaining, resulting in a shortage of 300,000 drivers by the end of the year, he said. 

“If [FMCSA] does everything they say they will, the industry will need 800,000 additional drivers by the end of 2016,” Perry said.  Such a scenario would put truckload capacity back to the historic lows experienced in 2004, he added.

Looking at the overall economy, Perry pointed to “the good news” seen in stabile energy prices, a housing recovery “that is finally contributing to growth after eight years of hurting it,” and light vehicle sales returning to levels not seen since 2008.

Government debt continues to pose a serious threat to overall economic health, Perry said, “but I am heartened by progress so far” to cut the Federal deficit through January’s tax increases and, to a lesser extent, the March sequester.  “If they keep it up, the budget deficit won’t kill this recovery,” he said.

However Perry cautioned that recessions are part of the normal economic cycle and will return. “If you think it won’t happen, you’ll have to give me a reason why we won’t repeat the historical cycle” he said. Asked to put a date on the next downturn, Perry’s “wild guess” was a probability of less than 5% for this year, less than 30% by the end of 2014, less than 60 % by the end of 2015 and less than 80% by the end of2016.

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