GDP belies negative trucking reports

GDP belies negative trucking reports

Today the U.S. Dept. of Commerce announced that the U.S. economy grew 4.8% in the first quarter -- the largest such jump seen in 2 ½ years

Today the U.S. Dept. of Commerce announced that the U.S. economy grew 4.8% in the first quarter -- the largest such jump seen in 2 ½ years. The economy was boosted both by solid consumer spending and white-hot capital expenditures.

This news comes against the backdrop of truck carriers reporting mixed quarterly results. Some said profits were fattened due to high demand and strong economic fundamentals but others said increasing competition and ballooning costs crimped earnings.

Today the American Trucking Assns.(ATA) released its monthly for-hire truck tonnage index, which seems to support the latter view as for-hire volumes fell 3.2% in March following a 3.6% February decline.

See Tonnage slid in March

But Ed Mortimer, director of transportation infrastructure for the U.S. Chamber of Commerce, considers the discouraging indicators “short-term blips” in a prosperous trend for the trucking industry. Part of that is due to an unusually strong surge in gift card sales during the critical 2005 holiday shopping season.

“Normally after the holidays, January is slow,” Mortimer told FleetOwner. “What happened this year is that January and February [retail sales] kept going because of the proliferation of gift cards.”

And as retail sales lull were delayed freight tonnage slipped, producing a lull in February and March, Mortimer explained.

GDP spending a boon

The effects of record high energy prices have yet to make any noticeable dent in consumer spending. In fact, consumer spending rose 5.5%-- the largest rally since the gangbuster third quarter ‘03 increase of 5.8%.

Spending on durable goods—items that are meant to last three years or longer—jumped 20.6%. This more than made up for the 16.6% plummet in such spending in 4Q 2005. Durable-goods spending tends to be volatile as it relies heavily on automotive and aerospace industries.

Consumer spending on nondurable goods rose a healthy 5.4% while spending on services rose 2.8%. Spending on equipment and software—otherwise known as capital spending—remained a consistent bright spot for the economy, up 16.4%. In eight of the past 11 quarters, capital spending maintained double-digit growth.

“If you look at all the data, this economy is humming pretty well,” said Mortimer, explaining this will ultimately drive another surge in trucking. “Trucking companies moving more freight will still have a tough time because of fuel costs. But I think they’re doing a much better job recovering those costs.”

Mortimer doesn’t see any sign of slackening trucking capacity. “We know the freight is coming. There may be a month of two where you might see a little blip [in tonnage]. But, if anything, we need more drivers and more trucks. We don’t have the luxury of saying trucking should cut back.”

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