Freight economy’s recovery will be slow: FTR conference

Sept. 15, 2009

The worst is over for the freight economy, but recovery will be slow and uneven, according to speakers at the recent FTR Associates Freight Transportation conference, which took place August 25-27, 2009, in Indianapolis IN. More than 170 attendees were presented with the views of professionals from the Federal Reserve, Wall Street, freight carriers, shippers, suppliers, and consulting firms, as well as FTR itself.

Some specific points made during the conference:

Subdued consumer spending will slow the pace of recovery, leading to continued high unemployment. Unlike most previous recessions of this magnitude, economic growth will be subdued despite the depth of the current downturn. This indicates that growth in freight volumes will be gradual.
The industry is at the bottom of the steepest decline in freight since the 1980-82 downturn. Freight is down 15% from the previous peak.
Freight transport will continue to be a buyer’s market for the near term, as depressed freight levels and substantial excess capacity will continue to be the rule. This will put continued pressure on carrier margins.
High levels of excess capacity are expected to continue, in some instances due to banking’s current reluctance to foreclose on heavily discounted assets at near-bankrupt carriers.
Equilibrium for carriers may not be reached until 2011 unless there is a more rapid recovery than currently expected.
Both rail and motor carrier equipment sales are expected to slow the improvement in freight, and will recover very slowly. Sales may not reach the peak 2006 levels for a decade or more.

Next year’s conference is scheduled for September 14-16, 2010. E-mail [email protected] for an invitation.