Strong GDP, freight bolster trucking’s year-end outlook

Oct. 28, 2011
Strong third-quarter U.S. gross domestic product (GDP) growth coupled with a decent bump-up in freight volumes is creating more positive year-end vibes for the trucking industry.

Strong third-quarter U.S. gross domestic product (GDP) growth coupled with a decent bump-up in freight volumes is creating more positive year-end vibes for the trucking industry.

“Let me say that while it’s not necessarily making us more bullish on our outlook for trucking, it is making us decidedly less bearish,” Steve Tam, vp-commercial vehicle sector with ACT Research, told Fleet Owner.

The Bureau of Economic Analysis (BEA) this week reported that U.S. GDP reached 2.5% in the third quarter, almost double the 1.3% GDP growth rate experienced in the second quarter this.

“We initially though GDP would increase by 1.8% in the third quarter, so the numbers came in stronger than expected,” ACT’s Tam said. “Now we’re thinking GDP in the fourth quarter may reach 2.5%”

Freight volumes are up as well, with the American Trucking Assns. (ATA) for-hire truck tonnage index jumping 1.6% in September after falling a revised 0.5% in August.

Compared to the months of September and August in 2010, tonnage is up 5.9% and 4.9%, respectively

More critically, though, in the third quarter tonnage is up 0.4% from the second quarter. That’s important, according to Bob Costello, ATA chief economist, because right before the last two recessions hit, truck tonnage took a nosedive. But that’s not happening this time, he pointed out..

“I continue to believe the economy will skirt another recession because truck tonnage isn’t showing signs that we are in a recession,” Costello stressed. “Tonnage is suggesting that we are in a weak growth period for the economy-- but not a recession.”

Costello also pointed out that the quarter-to-quarter bump-up in freight volumes, while small, is a sign of small gains for the broader economy, and not an indicator of contraction.

ACT’s Tam stressed, however, that his firm isn’t quite sure as of yet what’s driving these increases in freight and GDP. What is clear, however, is that they will help bolster truck sales through the last months of 2011.

“On the sales side for sure these kinds of results will help boost activity,” he said. “We typically see a 10% spike in sales anyway in December, with a corresponding drop in January. While order rates will be largely unaffected, what we could see is a more ‘evening out’ of that typical peak and valley.”

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