Dec. 30, 2008
“We know this forecast will be a blow to many industry participants.” –Eric Starks, president, FTR Associates, Nashville, IN The funny thing is, the quote above from Eric Starks came from his FIRST revised outlook for the trucking market back in ...

We know this forecast will be a blow to many industry participants.” –Eric Starks, president, FTR Associates, Nashville, IN

The funny thing is, the quote above from Eric Starks came from his FIRST revised outlook for the trucking market back in October, when things only looked bad. NOW, of course, things are decidedly worse – with four full quarters of economic shrinkage branding this downturn as a full-blown recession, highlighted by a 4% annualized fall in U.S. GDP [gross domestic product] during the fourth quarter of (thankfully soon to be over) 2008, according to FTR’s analysis.

All in all, Starks believes the numbers indicate we’re in the midst of a 1982-style recession – definitely a bad place to be. From FTR’s view, here’s what a 1982-like recession would mean to the truck market: Tonnage would fall by 10% year-over-year, followed by a decline trucking margins and in truck equipment utilization rates – probably to below 80%. That would translate into a major slide in equipment purchases next year, perhaps below 75,000 units for U.S. retail Class 8 sales for 2009.

OK, bad karma – we get it. Question is, will all of this necessarily come true? Are there any counter-balancing forces at work? You could argue that if the incoming Obama administration passes its two-year $1 trillion infrastructure upgrade and expansion plan, we’d see a big spike in freight demand from many sectors, especially the construction industry.

Also, despite the big pre-buy in 2006 to get ahead of truck price increases due to the 2007 emission reduction standards, many fleets are still running older trucks. Many experts feel that aging equipment is going to catch up to many fleets in 2009, forcing them to buy replacement vehicles and thus bumping up sales for both the new and used trucks.

Obviously, a lot is going on – good as well as bad – that impacts trucking, making any attempt at prognostication pretty suspect. But I’m going to throw my hat in the ring here all the same – heck, I predicted Obama would be president the last time I did this back in Dec. 2007 and seriously surprised myself with the result on that one.

Yet let me also say this – many predictions I fervently do NOT want to come true, especially a major terrorist attack in Europe or North America. Do I think one is likely? Yes. Do I want it to happen? Absolutely NOT! My hope is that interdiction efforts continue to be successful, preventing horrors such as the Madrid train bombings in Spain back in 2004 and, of course, our own day of darkness – September 11, 2001.

That being said, let’s gaze into the foggy crystal ball before us and see what can be seen …

HOS under fire: Public Citizen has already launched its next round of court challenges to the revised hours of service (HOS) rules put in place back in 2004. This time, though, with the Democrats in control of both the White House and Congress, expect their effort to succeed. I think we’ll see another big revision of HOS rules take place within the next four years, with allowable drive time being cut from 11 hours back to 10, if I was to hazard a guess.

Green light for heavier trucks: We’ll see a 17,000 pound increase in federal highway and bridge truck weight limits, raising the current limit from 80,000 pounds to 97,000 pounds when the Highway bill gets reauthorized by mid-2009. As a result, commercial trailers get a third axle to reduce the impact of that weight on the roadways. I also think heavier truck weights win as part of a bargaining effort with HOS reform; rolling back drive time hours in return for more freight capacity.

Infrastructure plan passes: The Obama administration passes its two-year $1 trillion infrastructure investment plan – expect a lot of highway congestion, though, as repair and expansion efforts shift up into high gear.

Taxes for fuel: Government spending needs money. Getting people to use alternative fuels while reducing energy consumption – especially where oil is concerned – requires incentives. The best way to kill those two birds with one stone are higher taxes on gasoline and diesel fuels – pushing them back up to $4 a gallon each.

Freight recovers slowly: By the third quarter 2009, freight volumes are going to start increasing again – largely as a result of construction demand from the Obama infrastructure program. By the end of 2009, freight volumes should grow 4% compared to 2008.

Union organizing expands: Organized labor – the AFL-CIO, the Teamsters – were behind Obama from almost day one. In return for that support, they’ll get a far freer hand in organizing efforts in many industries – especially trucking. So expect to see broader unionization efforts underway by mid-2009.

There you have it – the dice are rolled. Let’s see what comes true and what doesn’t as 2009 gets rolling here in a few days.

About the Author

Sean Kilcarr 1 | Senior Editor

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

Leveraging telematics to get the most from insurance

Fleet owners are quickly adopting telematics as part of their risk mitigation strategy. Here’s why.

Reliable EV Charging Solution for Last-Mile Delivery Fleets

Selecting the right EV charging infrastructure and the right partner to best solve your needs are critical. Learn which solution PepsiCo is choosing to power their fleet and help...

Overcoming Common Roadblocks Associated with Fleet Electrification at Scale

Fleets in the United States, are increasingly transitioning from internal combustion engine vehicles to electric vehicles. While this shift presents challenges, there are strategies...

Report: The 2024 State of Heavy-Duty Repair

From capitalizing on the latest revenue trends to implementing strategic financial planning—this report serves as a roadmap for navigating the challenges and opportunities of ...